Healthcare Update - November 2009

By Brian Hamilton

Although healthcare construction and renovation is down this year like every other commercial segment, its long-term future is bright as the huge baby boomer generation, whether it likes it or not, ages and begins to break down, placing a much greater demand on medical services.

According to consulting firm FMI Consulting, between 2000 and 2020, the 65-and-older population will increase 56%—from 35 million to 55 million. Today’s elderly population is likely to double by 2040, FMI said.

Healthcare construction is expected to fall less than any other category of non-residential construction this year and in 2010. The consensus opinion among seven different firms, including McGraw-Hill Construction, Reed Construction Data, Global Insight, and others, is that healthcare would fall 1.5% this year and 0.8% next year. Overall, non-residential construction is expected to fall nearly 16% this year and nearly 12% next year.

Healthcare construction nationwide hit an annual rate of $50.1 billion in June but is forecast to finish the year at $48.2 billion, after finishing last year at $47.5 billion, up 7% from 2007, according to Reed Construction Data of Atlanta. The firm expects spending of $49.1 billion next year and $53.9 billion in 2011.

Last year, 69% of healthcare construction spending was for hospitals, about 21% was for medical offices, and the remainder for projects like assisted living facilities according to FMI.

Hospital construction has fared better than long-term care and medical buildings, primarily because financing for many current projects was secured before the recession hit full force, and many of them are public projects funded by bonds, while assisted living facilities tend to be developer financed and access to funds has been more restricted in the tight credit market. However, Reed Construction Data Chief Economist Jim Haughey says that some hospital managers may have put projects on hold until the Washington healthcare reform effort becomes more defined. There could be a much greater slowdown if Medicare payments are severely cut.

Designer Robin Landow of Landow & Landow Architects of Lake Success, New York, says most of the healthcare work her firm has these days is retrofitting. “There is construction going on when they have special needs, but facilities are using spaces that they have and are thinking creatively,” she says.

However, the healthcare segment could also benefit from the $787 billion American Recovery and Reinvestment Act. The Veterans Affairs department received $601 million for non-recurring maintenance projects and another $150 million for buying or building long-term care facilities. In addition, the Military Health System is scheduled to receive $1.3 billion for hospital construction, according to the Defense Department.

In general, there is also a fair amount of pent-up demand. The last explosion of public and non-profit hospital construction came after the Hill-Burton Act was passed in 1946, which provided federal grants for community hospital construction. Many of those facilities are now in need of updating or replacing. Many newer hospitals are in need of renovation.

Necessities in Healthcare Flooring
Acute care and long-term care each have distinct needs in floorcovering but there are a lot of similarities as well. Maintenance and durability are a major consideration in both, no matter what kind of floorcovering is used. For example, both areas have to stand up to “wheel traffic” from everything from gurneys to wheelchairs and, increasingly, assisted living facilities have to deal with seniors who use motorized scooters to get around. The scooters, which tend to be fairly heavy, can loosen flooring and leave wheel marks and indentations, among other problems.

Both areas also have to contend with bodily fluids. In a hospital, that could mean everything from blood to urine, while assisted living facilities often have incontinent residents. That puts a premium on flooring that can be cleaned quickly and completely to keep bacteria from growing. Any carpet in a healthcare setting needs to have a moisture barrier backing that’s non permeable, and broadloom is attractive because there are fewer seams and those are usually heat welded. However, carpet tile firms say their products are equally effective, because tiles can be pulled up and cleaned or replaced.

Safety is also a top priority, and flooring has to be engineered to keep patients from slipping and falling. Late last year, Medicare also upped the ante by declaring that it won’t reimburse hospitals for injuries resulting from falls in healthcare facilities, lumping it in with inexcusable errors like amputating the wrong arm. So, healthcare facilities have an even greater financial incentive to choose the right flooring.

Creating slip-proof flooring is a fairly exacting process. It not only involves the components and the finish, but the design itself. For example, a busy pattern or one with severe contrast in an assisted living facility can cause disorientation.

“We look at patterns and use them to add interest, but patterns that move visually are a problem,” Landow says. “Things can become confusing and (seniors) might be stepping over things that aren’t there.” In assisted living settings, a carpet with loop pile construction has less friction than a cut pile, so it tends to be better for seniors who shuffle when they walk.

Managing acoustics is also a major consideration in healthcare design, partly because there are a lot of conversations that need to remain private, and designers tackle this in different ways. One designer might use carpet or rubber to soften sound but others might use wall covering or ceiling tiles in conjunction with other kinds of flooring like sheet vinyl or linoleum, which tends to be quieter than VCT.

What kind of flooring is used in a healthcare setting in any particular area isn’t necessarily cut and dried, says designer Stan Spellman of Spellman Brady & Co. of St. Louis. There are a lot of competing interests, and designers have to take them into account.

“The nursing staff and the administration are all going to have opinions about it, and maintenance has huge opinions about it,” he says. “Some maintenance people love carpet and some hate it. If they know how to work with it, they tend to like it, but if they have the wrong carpet, they’re going to hate it.”

The maintenance factor is one of the biggest headaches that hospitals and their flooring suppliers face. For example, a high shine is often equated with clean or sterile, which isn’t necessarily the case. However, sometimes hospital personnel will think that their hospital satisfaction surveys will drop if the floors don’t shine. And sometimes an unknowing maintenance staff will try to polish flooring like linoleum as it would VCT, and end up ruining its antibacterial properties. Wax also can trap contaminants, and high glare can be disorienting for old people. The maintenance issues are often compounded in small facilities that tend to have a lot of turnover in their maintenance departments.

“It’s a constant battle,” Spellman says. “You have to make sure they have information at their fingertips.”

There’s also been some interesting research into flooring in hospitals. Dr. Debra Harris of Rad Consultants, who’s done some research for carpet tile maker Interface Inc. and others, has found that a patient’s visitors tend to stay longer in a room that has carpet in it, instead of a hard surface, which is seen as helpful in patient recovery. She has also taken a look at air quality in hospital rooms at bed level height, and has found that the air in carpeted rooms is cleaner than over a hard surface like VCT. The reason, she says, is that particulates get trapped in the carpet, while they tend to get kicked up when someone walks over a hard surface. Harris also notes that healthy bacteria in carpet tends to keep other bacteria from proliferating. Nevertheless, she says, nurses tend to think of carpet as less sanitary.

Design Trends
In general, designers are trying to make healthcare settings less institutional and more homelike—for the benefit and comfort of both patients and staff—and flooring designs are following. Carpet designs for healthcare are often based on hospitality designs. Landow says she likes wood look sheet vinyl used in conjunction with linoleum and handrail accents to warm up a space.

“You can use color in flooring but it depends on the area,” Landow says. “It doesn’t have to be beige and grey. In a compromised population, what you don’t want to have is a lot of contrasting patterns, and you don’t want to have dark walls because they close in on you. So why not have color on the floor? We tend to use color fairly boldly.”

Landow says she often finds a carpet pattern she likes, perhaps in a residential line, that’s not made for healthcare—for example it might not be 100% solution dyed, which is critical in a healthcare setting. In that case, she’ll work with the manufacturer to have custom carpet created. “The options are there but the mass market is not always what we are looking for.”

Designer Alison Blessing of the San Francisco firm Anshen + Allen says she usually doesn’t try to be trendy but is partial to biomimicry textures and patterns in all floorcoverings but especially in carpet. She likes to use familiar patterns and install them to make areas very distinct from one another.

Sustainability
Most designers and manufacturers we talked to say their clients are interested in sustainable products but most aren’t willing to go to the extra trouble or expense to earn LEED certification. Nevertheless, that isn’t stopping designers from using the greenest products they can find.

“We go beyond LEED and look at toxicity, which is something that LEED doesn’t address,” Blessing says. “The hardest thing to find out is the chemistry.” Generally she relies on the manufacturers for correct information. She’s interested in flooring that won’t pollute groundwater if it ends up in a landfill, among other things. She’s also concerned about particulate matter than can be absorbed through the skin.

Unlike other designers we spoke to, Blessing stays away from VCT, a staple in healthcare, and other vinyls, because of their PVC content, as well as their maintenance characteristics. She prefers linoleum and rubber, which have more natural ingredients and are easier to maintain, but are generally more costly at the outset.

When a more formal presentation is needed for a front door, she turns to porcelain tile or aggregate flooring like terrazzo. However, these products, like hardwood and laminate, have limited uses in a healthcare setting. Wood or laminate might be used in a hospital gift shop.

The Players
Linoleum specialist Forbo is trying to get hospitals and others in healthcare to use its Marmoleum Composite Tile rather than VCT. Unlike VCT, Forbo says, MCT doesn’t shrink over time, it looks better longer, and needs far less maintenance. MCT doesn’t require stripping and waxing, which offers better indoor air quality over the life of the floor. In addition, Forbo markets its Marmoleum sheet flooring for anywhere that welded sheet vinyl is used, with the exception of operating rooms or burn units. Forbo believes that use of rubber has peaked, which should provide opportunities for its linoleum products. Forbo is also trying to position its Flotex product, which it obtained when it purchased Bonar a year ago, for use in assisted living facilities, where carpet is used heavily. Flotex comes in sheet or tiles, mimics carpet, but has smooth, straight nylon fibers and is completely waterproof. The firm just introduced a global tile collection containing 89 patterns with two different printing techniques.

More than half of InterfaceFlor’s healthcare business is hospitals. Most of them are private or part of a university, and many of them are annuity accounts. InterfaceFlor has been in this segment for about 28 years. Assisted living, which it has been working on for the last four or five years, is a newer area for InterfaceFlor but it sees the potential for significant growth and believes that within five years the segment could equal the size of its hospital business. Its i2 non-directional carpet tiles enable a maintenance staff to swap out tiles and not worry about pattern conformity. The tiles have a mottled, shaded look and dye lots can be merged, so that facilities don’t have to keep a lot of extra tile on hand. InterfaceFlor also has plenty of patterns for the hospitality market that can be applied to the senior market by working with the coloration. In general it doesn’t designate any products for a specific commercial segment. The firm’s tiles are used in lobbies, adminstrative areas, conference rooms, waiting rooms, and occasionally corridors, but are rarely used in patient rooms and never in clinical areas. Use of its tiles also varies by region. A hospital in the Midwest might have as much as 50% of its flooring as carpet, but that might drop to 10% on the West Coast.

Johnsonite’s merger with Tarkett gave it a much broader portfolio for the healthcare segment, with vinyl sheet products and linoleum, along with its extensive rubber offering. Johnsonite doesn’t push specific products but takes a flooring systems approach and believes it has a product for virtually any application, depending on a designer’s priorities. All its different products are integrated into a color story and designers can choose the most appropriate flooring and know that they can coordinate them all. However, its Optima homogeneous sheet flooring and its CityScape rubber tile do well in healthcare. Johnsonite also specializes in wider-wheel traffic transitions, which is a major design issue in healthcare settings.

Johnsonite says it is seeing signs of increasing activity in healthcare as some projects that were put on hold are being released. In some cases, the design was completed but the projects never broke ground.

Mannington, the only major firm that sells both resilient and carpet products, is active in healthcare and the segment is performing well. It’s seeing a trend toward more hard surface products in hospitals and its luxury vinyl tile products are doing particularly well, along with its homogeneous and heterogeneous sheet products that have incorporated antimicrobials. Assisted living is also using a lot of LVT, particularly in wood and stone looks. Carpet is more popular in common areas.

Over the last year, Mannington has had a number of product introductions for healthcare. This month it is adding four solution dyed patterns with high performance backing to its Stream of Consciousness broadloom collection. This features organic and fluid patterns such as concentric circles and small scale geometrics. It’s also available in tile.

Mannington is also offering a new Mannington rubber product, thanks to its acquisition of Burke, called Audio Spectra, which features three patterns in 12”x24” tiles and 15 colors. Another new product is BioSpec MD, an addition to its top selling homogeneous sheet line that contains an antimicrobial agent.

Its Classics Collection, in both broadloom and tile, has a hospitality feel. Although tile has grown, senior living is still predominately a high performance broadloom market because there’s concern about the seams in tile. It’s seeing renewed interest in the use of carpet in corridors due to concerns about slip and fall, as well as acoustics.

Although Shaw carries both soft and hard surfaces, the vast majority of its healthcare business is in carpet, both high performance broadloom and tile. Although hospital work makes up about 60% of its healthcare business, the firm is seeing a lot of activity in continuing care projects as the rate of occupancy is good and interest in high performance carpet is increasing. It sees plenty of growth potential in healthcare and is putting more resources into product development for that market. It’s not uncommon for one of these projects to need 1,500 yards of carpet. Much of the carpet sold into this sector is custom with Shaw’s EcoWorx backing, but Shaw is likely to introduce some new running lines for healthcare in the first quarter next year. Its Legacy collection, which contains three running line broadloom patterns and five custom patterns, is used primarily in common areas. Its Graphic Nature collection, which won a Silver award at NeoCon in 2008, features three tile and three broadloom patterns and is used in common areas, corridors, and waiting rooms in acute care facilities. Its Montage tile is also being increasingly used in continuing care facilities.

Shaw has found that one obstacle to selling carpet in continuing care is that many facilities have in the past purchased inappropriate carpet that has not performed well. Newer carpet can be cleaned aggressively, will last up to ten years, and won’t necessarily have to be replaced for every new tenant.

Armstrong sees healthcare as an opportunity for growth, and next year it is coming out with new sheet vinyl offerings in its homogeneous sheet Medintone and Medley lines to address that market. These products will have a more residential feel to them, with wood and textile looks, and a more sophisticated color palette.

Armstrong is also seeing more interest in LVT in healthcare, which provides more custom design options.

It has a slip resistant line of vinyl sheet flooring for wet and dry areas called Safeguard. Its Stonetex VCT also sells well.

Armstrong also offers its Color Continuum tonal step color process that unites hue, value and chroma, and functions like the paint selection tools.

LVT specialist Centiva is active in all healthcare sectors. All its products are homogeneous tile and planks. Its wood looks and its Pearlescent products have done particularly well, but Centiva is also known for its custom design work and this accounts for a large part of its healthcare business. For example, it worked on the Mayo Clinic Children’s Hospital and all the flooring it provided was custom designed tile with a nature theme, using its precision cutting system, which it believes is the best in the industry. Centiva has designers that work directly with designer/specifiers, and all its products are made in the U.S. Its products are thicker than typical vinyl, which makes them more comfortable for nurses. Centiva will also recycle old vinyl flooring in hospital projects and turn it into new flooring. Although there is a cost, it is generally less than landfill tipping fees.

Mohawk offers products to the healthcare market, in hard and soft categories, and it sees healthcare as having solid growth potential as well as challenges. Mohawk has plans to launch new products in most categories in the next 12 months. Its business is strongest in acute care, and its strategy includes tighter focus on long-term care. There will be a growing emphasis on placing carpet in specific patient care settings, and its Durkan and Lees brands have been active in this area.

To date, Mohawk’s 2009 new construction healthcare business is comparable to 2008, while sales into remodeling have declined somewhat. In 2010, it expects that slower new construction business will be offset by growth in renovation, with business overall remaining at 2009 levels.

Mohawk says that while many projects are on hold, many continue but with tighter budgets that make carpeting an appealing option to more expensive surfaces. And changes in the healthcare delivery system itself are driving trends, as that industry adapts to providing care to a growing aging population, and a declining number of healthcare providers. Mohawk says these changes are challenging designers to become adept in acoustics and ergonomics. Also, its healthcare flooring designs are changing as facilities move to a more homelike feel.

Over the next year at least, Tandus believes there will be more opportunity in renovation than new construction, partly because the healthcare industry is interested in improving patient and staff comfort. One way to do that is with carpet, which is softer under foot and can help physically keep a setting warmer. Carpet patterns and color can also be used for wayfinding and to cut glare.

Tandus is also optimistic that its C&A Powerbond product can drive healthcare sales. This product has a closed cell cushion, like sheet vinyl, but its wearlayer is a tufted nylon that looks like carpet. It’s durable and very easy to clean and, unlike carpet, can withstand flooding from a pipe break. It can also help with sound absorption. It’s ideal for high traffic areas, entryways, corridors, or areas where there might be spills, human or otherwise. It’s also a very slip resistant surface.

Tandus also offers color coordinated collections that include Powerbond, along with carpet tile and broadloom. Its Provence collection, designed specifically for healthcare, is part of the “inunison” concept from Tandus, which unites Crossley LifeLong broadloom with Powerbond and ER3 modular tile. It provides a unified look throughout a setting.

Healthcare is the largest segment for luxury vinyl tile firm Amtico, which does a brisk business with its Spacia and Stratica lines in numerous wood, stone and tile looks. Amtico is known for its style and design. The majority of its healthcare work is renovation, a trend the firm sees continuing. Its products are used most often in lobbies, common areas, patient rooms, and nurses’ stations. Made from Surlyn, Stratica is a PVC free tile in various wood and stone looks, and is popular with designers who want to avoid vinyl. Spacia is a high quality vinyl tile.

Nora is the dominant rubber player in healthcare, which also includes animal hospitals and zoo veterinary facilities. The firm is segment focused and healthcare is its largest segment—mostly acute care. Increasingly, Nora says, its products are being used throughout a facility, even where carpet has a stronghold, because of its softness, acoustics, hygiene, and maintenance characteristics, as well as its durability. It says that Kaiser Permanente, the largest managed care organization in the U.S., has standardized on its products. Its hottest product is NoraPlan Environcare, a three year old product that comes in a sheet and tile in varying thicknesses and 48 colors.

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