Healthcare Proposal Activity Growth Levels Off

The healthcare market has been one of the most consistent and strong among all major construction sectors through the pandemic and dating back nearly a decade, as measured by proposal activity in the PSMJ Resources Quarterly Market Forecast survey of architects, engineers and contractors.For each quarter of 2019 and 2020, healthcare’s net plus/minus index ranked among the three hottest major markets of the 12 included in the PSMJ survey.

That streak ended in the first quarter of 2021, as healthcare slid to a tie for seventh, its lowest ranking in years. Healthcare’s NPMI rose 9 percentage points from the previous quarter, but that represented the lowest increase among all markets. For example, the commercial users sector rose 64 percentage points, while education was up 55, despite having the lowest overall NPMI of the dozen markets measured.

What does it all mean? The markets are leveling out as the economy returns to a more normal state, leaving healthcare’s growth rate in the middle of the pack.

“While proposal activity in the healthcare market did take a hit at the start of the pandemic, it has been relatively resilient as capital improvement projects come back to life,” states Gregory Hart, senior PSMJ consultant and manager of the Quarterly Market Forecast survey. “While other markets have been more volatile, it’s steady as she goes right now for healthcare.”

Healthcare Market Proposal Activity – 2007 to 2021

Healthcare is one of only three markets that didn’t fall below a zero quarterly NPMI during the pandemic. Among the healthcare submarkets, continuing care facilities was the standout with an NPMI of 62%, an increase of 25% from the fourth quarter of 2020. That was tied for seventh best NPMI among the 58 submarkets measured by the QMF survey. The remaining three healthcare submarkets were in the middle of the pack. Medical office buildings scored a 42%, up just 5 percentage points, while hospitals (up 5 NPMI percentage points) and medical labs (down 13) tied with an NPMI of 38%.

Senior living facilities (independent and assisted) reported the 12^th best performance among submarkets with a 59% NPMI, up 32. In the QMF survey, it falls under the housing sector, which led all major markets with an NPMI of 77%. Among all markets combined, the overall NPMI rose from 5% in the fourth quarter of 2020 to a near-record 51%.