Healthcare Financing Insights

Healthcare Trends: Renovations and Expansions

Healthcare Trends: Renovations and Expansions


“First American has been a big help to our growth process. Previously, many of our patients had to go to the emergency room to see a doctor – but now they can receive affordable, quality health care services close to home. We're improving lives every day, and we're grateful to First American for the role they've played in this success.” 

-Michael Victor, CFO Foothill Community Health

Building renovations and expansions are top priorities for most providers. More and more providers are increasing their budget allocations to building projects and using leasing and financing to fund these projects. This year, many providers have allocated equal or more of their capital budget for construction projects as they did in 2016. From 2016 to 2017, 43% of hospitals increased their budget for infrastructure upgrades and 36% increased their budget for new construction. Even more impressively, when it came to renovations, 48% of hospitals increased their budget and 52% had an increased allocation for off-site facilities. Overall, the amount spent on healthcare construction in 2016 exceeded $40 billion and is expected to increase each year by 5% through 2020.

The majority of providers find renovating and expanding to be necessary in order to meet the growing demands of their communities and to improve patient experiences. Furthermore, there is a great amount of pressure for providers to reduce costs and increase efficiencies while maintaining financial stability. In a time where patients have a wide range of provider choices, it is imperative to have updated, welcoming facilities to get patients in the door and increase their care. 

Costs Providers are Financing: 

  • Building controls & automation  
  • Security systems
  • Boilers & generators 
  • Plumbing, piping, & air systems 
  • Buildouts
  • FF&E 

2016 Percentage of Hospital Capital Budgets Allocated to Construction: 

  • Facility Infrastructure – 16%
  • Facility Renovation – 24%
  • New Construction – 25%

"Investing in renovations or expansions will help providers grow top-line revenue by adding new lines of serice and increasing patient satisfaction. First American can help you fund these important expansions by matching the incoming revenue of the new services to the finance payments. Additionally, this leaves your main bank line free for day to day operations." 

– Jared Rifenbary, Assistant Vice President
First American Healthcare Finance

Interested in learning more? View our infographic.

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