3rd Quarter Healthcare Projects Proposal Activity Rebounds

Proposal activity for healthcare facilities rebounded to near-pre-COVID levels, achieving a 3rd quarter net plus/minus index of 30% in PSMJ’s Quarterly Market Forecast. The healthcare market’s 3rd quarter growth indicator, which was third-highest among the 12 markets assessed in the survey, was up from 10% in the 2nd quarter during the heat of the COVID shutdowns.

Adding to the improved outlook, all four of the healthcare market’s submarkets were well into positive territory following a 2nd quarter in which only medical labs (9%) showed growth, quarter over quarter, while the other three (hospitals, continuing care facilities and medical office buildings) were flat. CCFs were the third-highest of the 58 submarkets measured by PSMJ in the 3rd quarter at 42%, while labs (20%), hospitals (18%) and MOBs (16%) all had respectable growth numbers for the quarter.

PSMJ’s NPMI expresses the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. The QMF has proven to be a solid predictor of market health since its inception in 2003. A consistent group of over 300 firm leaders participate regularly, with 162 contributing to the most recent survey.

Healthcare’s recovery was mirrored across most markets in the survey. The number of markets with a positive NPMI increased from 4 to 7, and all but one of the 12 major markets improved. Housing (38%) and water/wastewater (37%) continued to form a trio, with healthcare, of markets least affected by the pandemic. The weakest markets were once again in the commercial and education sectors.

Healthcare Market Proposal Activity – 2007 to 3rd quarter 2020 (NPMI)

“The healthcare market had a little bit of a dip when the crisis first hit, when a lot of the healthcare providers were having some revenue problems,” says PSMJ Director David Burstein, P.E., AECPM. “But they seem to have overcome those, and they are allocating money for capital projects again.”

Geographically, the Midwest and Southeast regions showed the strongest growth with 38% NPMIs each, while the West was third at 24%.

Healthcare Market Proposal Activity By Region – 3rd Quarter 2020 (NPMI)

The healthy improvement in proposal activity for all four healthcare submarkets offers a solid long-term outlook for the market. Continuing care facilities grew the most from the 2nd quarter to the 3rd, as 52% of respondents said proposal activity increased in the 3rd quarter when compared to the 2nd quarter, as opposed to only 10% who said it decreased.

Continuing Care Facility Submarket Proposal Activity – 2008 to 3rd quarter 2020 (NPMI)