6 Strategies to Mitigate Risks in Development Projects

By John Marshall & Danielle Bergner

June 17, 2022


Rising material and labor costs have had a major impact on the healthcare industry. Construction costs have doubled in some cases, driving a shift away from new projects and toward the renovation of existing facilities. Does redevelopment offer a faster and more cost-effective solution for health systems trying to grow in today's challenging landscape?


Inflation, supply chain constraints, labor shortages, material shortages, and rising interest rates. These risks are the volatile five, or V5 for short. The healthcare industry arguably feels the strain of these economic conditions more acutely than any other business or trade.



In a good year, the complexity of hospital operations and health system economics present inherently challenging decision metrics. Now, with the V5 forces at play, the healthcare decision matrix, especially as it relates to construction of new facilities, is notably more complex and nuanced. As a result, healthcare facility planners are increasingly considering renovation of existing facilities as a potential alternative to now projects, but is renovation the answer?


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