Healthcare: Expanding Area’s Health Facilities Benefits Builders

By Steve Sinovic for San Diego Business Journal

San Diego — Hospital and health center expansions are good medicine for the San Diego economy, and particularly for the construction industry, which is profiting from investment in health care infrastructure.

The sight of Caterpillar’s equipment churning fresh dirt on several construction sites across the area has been a psychological boost for a region just now emerging from the recession as well as a financial boost to companies such as McCarthy Building Cos. Inc., which recently completed a wing of Rady Children’s Hospital-San Diego and is continuing work on expanding Scripps Mercy Hospital’s Emergency Department.

The boom in health care is not unique to San Diego. Nearly $30 billion worth of nonfederal hospital construction, both new and upgraded, is under way in the U.S., according to the U.S. Census Bureau.

The impetus for growth — and a source of payrolls for those in the construction field — is the ever-increasing demand for health services from a growing population, said Ben Meyers, director of business development for the San Diego division of McCarthy Building Cos., which has a strong focus on health care projects.

The sprouting of new specialty clinics and the expansion of the existing hospitals not only raises the standard of patient care in the region, but also generates opportunities for construction providers like McCarthy, said Meyers.

Notable Hospital Project

The company was the general contractor for Rady Children’s new $260 million, 279,000-square-foot patient care pavilion at the acute care pediatric hospital, which is located at 3010 Children’s Way in Kearny Mesa.

“We finished ahead of schedule with great partners in the subcontractor community,” said Meyers, who stated the company derived $180 million from the project, which was funded by hospital funds, bonds approved by voters and philanthropy.

The project received $62 million in funding from a 2004 state bond, according to

“This is our biggest job to date in the area,” said Meyers. “It really kicked off our presence here in San Diego.”

It was also a substantial investment for Rady, which will now become the largest children’s hospital in California. The hospital began spending money on the project back in early 2007.

“This is the largest project Rady Children’s Hospital has done in its history,” said Tim Jacoby, vice president of facilities, planning and construction for the hospital, which comprised a 490,000- square-foot campus before the acute care pavilion was built.

“We’re actually moving patients into the facility this weekend,” said Jacoby, referring to the Oct. 10 move-in date.

The facility will house a much-needed surgical center, 84 medical-surgical beds, a neonatal intensive care center and a cancer center to help meet the increasing demand for children’s critical care in the San Diego area, said Jacoby.

The facility will include 16 operating rooms with associated support departments, a 28-bed hematology and oncology unit, a 10-bed bone marrow transplant intensive care unit, a 32-bed neonatal intensive care unit and 84 acuity adaptable medical surgery beds.

Lengthy Construction Process

Every year, Rady Children’s cares for approximately 140,000 children and performs more than 20,000 surgeries.

“Before we broke ground in April 2007 we (McCarthy and Rady) had contracts in place,” said Jacoby. “At that point, we were trying to lock in prices as early as possible, such as the steel contract, so folks could start buying.”

At its peak, the project probably had 450 construction workers at the job site, said Jacoby.

“I don’t know how many times walking through the building that folks would say, ‘thank you’ (for the job opportunity),” said Jacoby.

“And the pride that they took in the job was there,” he added. “Many of them have kids, so they could see this project as a potential benefit for their own families at some future time.”

Current and future projects will not only engage the work force, but will also benefit local suppliers and vendors, said Meyers. He said the company works hard to procure supplies within 50 miles of its jobs in order to reduce transportation costs and mitigate its carbon footprint.

Lion’s Share of Specialty Work

In San Diego, McCarthy is capturing a good share of the most recent investments in medical infrastructure. In addition to the recently completed project at Rady, McCarthy is working on a 13,796-square-foot expansion of the Scripps Mercy Hospital Emergency Department, which has a construction price tag of $265 million; and the builder is part of the prime contracting team with Clark Construction Group LLC for the new 500,000-square-foot hospital to be located near the Oceanside gate of Marine Corps Base Camp Pendleton. The project could be worth $451 million.

“San Diego is a good health care town,” said Meyers, who is eyeing potential work with Kaiser Permanente, which is planning to build a new medical office building in mid-2011 in San Marcos.

“There are some good synergies here,” Meyers added.

He said McCarthy has nine staff members dedicated to project management and pursuing contracting opportunities in the area.

McCarthy Building Cos. has been ranked among the top five national health care builders by Modern Healthcare since the magazine began its annual ranking more than 30 years ago.

Back at Rady, which is the 13th largest employer in a recent ranking by the San Diego Business Journal, building expansion may also lead to additional job opportunities at the new facility, said Jacoby.

“We have already hired some support staff, and the clinical staff will ramp up based on our patient census,” he said.


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