Re-evaluating What We Can and Cannot Afford to Build

Canada’s healthcare system, like others worldwide, faces increasing pressure from rising patient numbers and the urgent need to expand infrastructure. Acute care hospitals have traditionally played a vital role in community healthcare, but growing project sizes and rising construction costs make these specialized facilities more expensive and difficult to fund.

Why are hospital construction costs rising faster than in other sectors? What is driving the trend towards larger, more complex hospitals? Are we trying to address too many health and societal issues in one large project? Can mega-hospitals remain adaptable over 20-30 years? Would smaller, focused facilities for pre- and post-acute care reduce pressure on acute hospitals and improve efficiency? How can we balance clinical needs with financial sustainability?

Construction cost trends since 2020 show increases of ~50% for non-residential and ~85% for residential construction. Residential construction outpaced non-residential due to unprecedented housing demand and a sharp rise in lumber prices. Before 2020, annual increases generally kept pace with inflation.

Hospital costs have outpaced those of standard building types. Prior to 2020, hospitals generally kept pace with institutional projects. However, dramatic increases in hospital construction costs became evident around 2023, likely starting earlier, as the market took time to reveal them.

While rising hospital costs are driven by factors such as limited contractors and complex facilities, we still plan for larger hospitals without considering pre- and post-care facilities that could ease acute-care pressures and improve community health outcomes. It is a complex situation, but the time has come for the government and the private sector to re-evaluate what we can and cannot afford to build.