Cost of Building New Hospitals Drastically Escalates

Health New Zealand plans to build smaller hospitals and reuse existing infrastructure as per the Nationwide Service and Campus Planning report. Building new hospitals and improving upon old ones is expected to cost almost $47 billion over the next ten years.

A briefing to Health Minister Shane Reti, released to the media under the Official Information Act, further estimates the price of resolving other problems at old public hospitals to be hundreds of millions of dollars.

The report says that unless the current “care model changes”, an extra 4900 beds will be needed by 2043 and nine out of ten hospital beds will be filled by someone aged 65 years or older by 2043.

The report also said that the average 80-year-old uses ten times more hospital bed days per year than the average 45-year-old.

Building Health Infrastructure to Meet Demands

New Zealand’s population is projected to increase by 15 per cent over the next two decades. The nation’s population is ageing, with the percentage of people aged 65 and older rising from 17 to 22 per cent. By 2043, the number of people over 80 is expected to double, “disproportionately” straining health services.

Officials explain that the projected $46.9 billion price tag for existing plans for 300 infrastructure projects will still not be enough to meet the needs of the growing and ageing population.

A Long-Time Concern

The New Zealand Infrastructure Commission reported in February in the Building a Healthy Future report that over the next three decades, the nation will have to spend $115 billion on hospitals unless things change. One key factor is that half of New Zealand’s hospital infrastructure is over 40 years old.

“We built a lot of public infrastructure in the 1950s, 60s and 70s which is now reaching the end of its design life,” said Te Waihanga Chief Executive Ross Copland.

“Hospitals make up around 10 per cent of this. New Zealand’s wider social infrastructure assets, such as our schools, courthouses, and prisons, are ageing, too. It is forcing us to consider how we can extend the useful life of existing assets while reducing the cost of their replacements.”

The report saw the New Zealand Institute of Economic Research (NZIER) model hospital building costs 30 years into the future. Over half of the $115 billion would go towards renewing and upkeeping current health infrastructure. “This has been driven by alarming increases in the cost per metre to build new hospitals, which are now over $20,000 per square metre. Our design efficiency also ranks poorly in comparison to international benchmarks.

“It’s important to acknowledge that these are estimates based on assumptions and incomplete data,” Copland says.

“But the underlying finding is clear: if we don’t change the way we currently plan, build, and use hospitals, our current levels of public debt would roughly double by 2050 just from spending on public hospitals.

“There is a lot we can learn from other countries about how to build infrastructure more efficiently, including concepts like ‘long-life, loose fit’ – where buildings are planned for the long term and allow for changing uses.”