By Tasha Anderson for AZBEX
The first BEX Virtual Leading Market Series topic of 2021 was Healthcare and more than 200 people logged on Wednesday, March 3rd, to hear about current and future opportunities in Arizona Healthcare construction, and, as an added bonus, got to watch two cats duking it out in the background. Because it’s not a virtual meeting without at least one pet getting involved, am I right?
The panel consisted of Mark Barkenbush, Vice President Facility Services for Banner Health; Steve Eiss, Vice President Construction & Real Estate Development for Northern Arizona Healthcare; Peter Gray, Associate Vice President Construction Management for HonorHealth; and Steve Whitworth, President of Kitchell, who sponsored and moderated the virtual event.
Upcoming Healthcare Projects
The panelists dove right into the presentation by sharing projects that are currently in their pipelines. Barkenbush noted the sizeable expansions of the Banner Desert and Banner Gateway Centers that are currently under construction, and discussed an expansion to Banner Thunderbird Medical Center, which Banner Health is wrapping up construction documents for.
“Coming out of the pandemic, we couldn’t afford to advance all three, from a funding standpoint, at one time, so we’re hopeful that perhaps that one will start in 2022,” Barkenbush explained. He also touched on the Riverwalk Banner Sports Medicine Center in Scottsdale, land purchases in Prescott and Laveen as part of their longer-term strategies, and outpatient facilities, facility renewals and tech management projects throughout the valley.
Gray talked about how the pandemic impacted many of HonorHealth’s projects last year.
“Roughly 80 percent of our 2020 program was deferred,” he said of their medium to large projects. “We didn’t cancel anything, but deferred it, and we’re currently projecting that the 2020 program will come to fruition here in 2021.” Gray went on to say that 2021-2022 will be a “double-up” year with a heavy focus on plant rooftop equipment, infrastructure, unit refreshes, and systems redevelopment and redesign.
Gray ended by noting HonorHealth wanting to make investments to their Osborn, Shea and Deer Valley Campuses within the next few years. “We went through some bond refinancing recently and that freed up some pretty good working capital to target some more strategic projects.”
Solutions to Rising Construction Costs
Whitworth asked the panelists what their solutions were to help mitigate the rising cost of materials and the consensus of the group was a push to prefabricated buildings.
Both Eiss and Barkenbush discussed the safety component of prefab as it reduces the amount of trade workers on site. Barkenbush noted that it would ultimately reduce the chances of COVID-19 being passed around, which would usually shut down production. Eiss said he would like to see if that safety component would trickle down to their insurance rates.
Gray touched on finding a wider range of subcontractor markets and get to market earlier on some of the work. He talked about having multiple Guaranteed Maximum Price (GMP) contracts instead of one in order to “mitigate the ebb and flow on some of the spikes in escalation of the materials.”
CARES Act Funding and The Future Safety Measures
Toward the end of the presentation, Whitworth asked the panelists about the importance of the CARES Act government stimulus. Again, all of the panelists were in agreement that, in the last year, the stimulus was very much necessary to keep operations moving forward.
“If you look at our financial forecast that came out in April, we were projected to probably lose $300M last year, and if you look at our final performance, we had about $310M of net operating income, so a complete swing in the other direction and the majority of that was CARES Act stimulus funding,” Barkenbush said.
The panelists also agreed that they expect and hope that some, if not all, of the current safety measures in place will stay after the pandemic is gone.
“Some of what we learned about how to more nimbly work our trades through the buildings, I hope that stays,” Eiss said. “Some of our more savvy superintendents have gotten really good at understanding what the flow of work looks like and, pandemic aside, that’s only going to benefit us from a safety and quality perspective, to be able to better utilize those subs and get them organized better.”
In all, the first virtual Leading Market Series of 2021 went off without a hitch and provided insight into future construction opportunities in the Healthcare market.
The next virtual Leading Market Series will be on Thursday, April 1st, 2021 and the topic will be about Building Project Teams that Work. Registration will be open soon!