Hospital News

Depending on your point of view the hospitals have been a hot project type in recent weeks. On the upside, the West Virginia University Hospital system interviewed 4 contractors/teams Feb. 22 for a big phase of its South Tower expansion. The candidates for this $140 million +/- package were teams from  Gilbane, Massaro, PJ Dick & Yates. There doesn’t appear to be a shoe-in or inside track team and the WVUH was expected to make a decision this week.

Highmark has the foundations and structural steel packages out for bid for its $100 million Wexford medical mall. After taking bids for these packages, Highmark and Astorino and said to have a general construction package for the remainder of the project. Contracts were let earlier for some site prep and utilities.

Now for the bad news. The federal deficit/budget/sequestor fiasco is way overblown for its true impact on the economy – at least in the short term. With the fiscal year 40% gone, the actual reduction in spending for 2013 is going to be less than 1% of the total discretionary spending. For the Pittsburgh economy, however, the impact is more direct in that the NIH research grants that are in the crosshairs are vital to UPMC’s research. That hospital system isn’t the only one effected of course, but it’s the one with a $250-300 million capital budget that has been put on ice. The $394 million CIS project at Shadyside Hospital is the biggest victim, although it appears that the 1,000-car parking garage will go forward as a hard bid within a month or so. Projects like the $40 million St. Margaret’s expansion or the $100 million-plus Magee expansion have ben shelved. Apparently any human resources for these have been pulled off the projects. Plans for the $70 million Mercy energy plant have been put on hold for 6 months or so. The FY2013 budget was already scaled back compared to recent years so this latest development is unwelcome for firms doing business in the healthcare sector.

The one significant project moving ahead is the $18 million Children’s Hospital outpatient facility in South Fayette Twp. Bids will be taken on March 21 from Landau, Mascaro, Massaro, MBM, PJ Dick & Rycon.

The potential loss of grants is one of three hits UPMC took recently. The hospital was somewhat prominent in last week’s Time article about the costs of healthcare, which was critical of executive pay and called out UPMC’s top exec among the non-profits. Competition in the insurance and hospital sectors were also highlighted as reasons why UPMC’s income over expenses shrank significantly in the first half of their fiscal year.

These pullbacks pose a challenge for Turner Construction, which had been selected to do pre-construction as CM for the CIS/Shadyside garage projects with the expectation that work would start later this year.

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