KEY POINTS
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After a significant dip, hospital construction is surging. Starts reached $33.8 billion in 2024 and are projected to climb past $34 billion by 2029, signaling a strong, sustained investment cycle for the healthcare sector.
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Growth is not just in large hospitals. Health systems are expanding with smaller, distributed facilities like ambulatory centers and medical office buildings, bringing care closer to communities and creating diverse construction opportunities.
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A large portion of spending is directed toward renovating existing facilities. Upgrading infrastructure, like HVAC and electrical systems, is a major priority for health systems to enhance efficiency, resilience, and the overall patient experience.
Post-Pandemic Rebound and Spending Trends
After a period of fluctuation, the hospital construction market is demonstrating renewed vigor. According to ConstructConnect data, spending on hospital starts saw a significant dip in 2020 to $13.4 billion amidst global uncertainty.
The following years showed a steady but uneven recovery, culminating in a powerful surge to $33.8 billion in 2024. While 2025 has moderated to a strong $25.5 billion, the underlying trend points toward a sustained cycle of investment.
This rebound comes as health systems move past the “pause” of the early 2020s, restarting deferred projects and launching new initiatives. Capital constraints and project delays drove the initial decline from 2020 to 2023.
Now, with greater clarity, organizations are deploying capital to address aging infrastructure and meet evolving patient needs.
Renovation and Modernization Take Center Stage
While new, ground-up hospital towers capture headlines, a significant portion of capital is flowing into the renovation and upgrading of existing facilities.
Many health systems are prioritizing the modernization of aging campuses to improve building systems such as HVAC and electrical systems, bring facilities up to current codes, and enhance the patient experience.
This emphasis on infrastructure is crucial for operational resilience and efficiency. A recent industry survey highlighted that over 60% of health systems expected to increase spending on infrastructure upgrades. This trend signifies a broad effort to ensure that legacy facilities can support modern medical technology and delivery models.
For contractors and architects, this translates to a steady pipeline of complex renovation and systems-integration projects.
Shown is a chart of actual and forecast US Hospital Construction Starts in billions of dollars. Actual Construction Starts are shown through 2025, with forecast data for 2026 to 2029 in the shaded region. Data and image powered by ConstructConnect Project Intelligence
A Strategic Shift to Outpatient and Satellite Facilities
The traditional, centralized hospital campus is no longer the sole focus of healthcare construction. A significant trend reshaping the industry is the strategic pivot toward a distributed network of care.
Health systems are aggressively expanding their footprint with ambulatory surgery centers, medical office buildings (MOBs), cancer treatment centers, and freestanding emergency departments.
This “site of care” shift brings services closer to where patients live and work. It also reflects a financial strategy, as outpatient services are a growing source of revenue for providers. This move toward smaller, more numerous projects spread across metropolitan and suburban areas creates diverse opportunities for construction firms.
While large-scale hospital expansions continue, much of the growth is happening in these satellite facilities designed for convenience and specialized care.
Hospital Design and Delivery Innovation
The way hospitals are designed and built is also evolving. To meet tight schedules and control costs, many projects are leveraging innovative construction methods.
Prefabrication and modular construction are becoming more common, with some large-scale projects reporting significant time savings by using prefabricated components for everything from patient rooms to complex mechanical systems.
At the same time, design is becoming more human-centric. Recognizing the impact of the physical environment on healing and staff well-being, architects are incorporating trauma-informed and biophilic design principles.
This includes maximizing natural light, providing views of nature, and using warmer, more welcoming building product materials. Furthermore, significant investment is being made in staff-centric spaces—such as respite rooms and collaboration areas—to help reduce burnout and improve retention.
Outlook: A Strong Forecast for Hospital Construction
Looking ahead, the future for hospital construction appears exceptionally bright. The combination of an aging population, the need to replace outdated facilities, and the competitive drive to capture market share will continue to fuel capital spending.
ConstructConnect forecasts a robust growth pattern for the remainder of the decade.
- 2026 Forecast: Hospital construction starts are projected to climb to $28.4 billion.
- 2027 Forecast: The upward trend continues, with spending expected to reach $30.4 billion.
- 2028 Forecast: Growth accelerates further, with starts forecasted at $32.6 billion.
- 2029 Forecast: The decade is expected to close on a high note, with starts projected to hit $34.3 billion.
This sustained, multi-year expansion underscores a fundamental strengthening of the healthcare construction market. For general contractors, architects, engineers, and building product manufacturers, this outlook signals a period of significant and lasting opportunity. The demand for specialized, efficient, and human-centered healthcare facilities is set to define the construction landscape for years to come.
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