Hospital costs briefly reverse course

Construction costs for new two- to three-story hospitals have seen some decreases, according to an analysis by international construction data and services firm Gordian.

Costs increased from a range of 1% to 1.8% from the start of 2024 to the middle of 2025. However, from the second half of 2024 to mid-2025, costs have declined 0.2% to 1%. This trend is consistent with overall trends that Gordian observed in the second half of 2024.

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While the total percent costs per square foot stayed consistent in most categories, exceptions included increases in finishes and concrete. Finishes are becoming a more expensive cost center, comprising an average of 14.3% of the square foot cost for a health care building model. In contrast, the percentage of the total cost for equipment has decreased for all building types. This is because equipment rental rates have seen slight decreases and diesel costs have declined around 10% over the last year.

The primary cost centers within health care building construction have only seen slight changes compared to previous years. Mechanical, electrical and plumbing categories still comprise the highest cost per square foot, but plumbing costs comprised slightly less of the total costs per square foot than in 2024.

Moving foward, Gordian is seeing signs of increasing volatility, along with higher materials costs in some sectors. So, even though costs stayed mostly consistent to start the year, health care facilities should not expect that trend to continue during the second half. Facilities professionals instead should plan for increases in project costs, particularly involving steel and conductive metals.

Adam Raimond is a program manager at Gordian, provider of data-driven solutions for all phases of the building life cycle. He can be reached at adam.raimond@gordian.com.