Three major hospital construction projects will cost 40 percent more than initially thought as Northern Light Health encounters steep increases to the cost of labor and building materials.
It means that the replacement of hospitals in Greenville and Blue Hill and the construction of a new 50-bed unit at Acadia Hospital in Bangor will cost the hospital network almost $27 million more than projected when the state gave all three projects the greenlight last year. The increase brings the total cost for the three projects to $93.6 million, according to documents from the state Department of Health and Human Services, which signs off on hospital expansion projects.
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Northern Light sought approval from the state over the winter to increase the price tag, citing a tight labor market that has made it difficult for contractors to find enough workers, building materials that are coming in at higher costs and requiring more lead time to obtain, and a number of other major construction projects in the eastern Maine and nationally that are adding to the competition for workers and materials.
The jump in projected cost is part of a nationwide trend of higher price tags on construction projects.
“Construction costs are as volatile as they have been anytime in the past half-century,” Northern Light wrote in a letter to state regulators seeking approval to increase the projects’ price tag.
The Maine Department of Health and Human Services signed off on all three requests to raise construction costs, according to memos from Commissioner Jeanne Lambrew filed March 10. In all three documents, Lambrew wrote the department found the projects are still needed by the communities they serve and remain economically feasible, regardless of the cost increase.
Not only is Northern Light encountering shortages in materials and labor, but material prices continue to increase so often that suppliers set cost estimates that are only good for a day rather than the industry standard of 30 days, according to documents.
On the labor side, Northern Light pointed to one contractor who normally fielded a crew of 40 workers every year through 2020 but managed to hire only about five workers last summer and has since left the business. In addition, Northern Light said that its vaccine mandate for all workers adds to the difficulty of finding enough construction workers.
After a $14 million cost increase, the cost of a new, 50-bed unit at Northern Light Acadia Hospital, one of Maine’s two private psychiatric hospitals, will now cost more than $49 million.
The hospital received permission from the state in November 2021 for a new, two-story facility on its existing Stillwater Avenue campus to help address a growing need for psychiatric care. The facility will feature 50 single-occupancy rooms with pediatric beds. The construction work at the hospital will also involve converting all of the hospital’s double-occupancy rooms to single-occupancy rooms.
Though it’s licensed for 100 beds, Northern Light has said it can’t use all its beds because it’s unsafe to place many patients together in the same room. The expansion will allow the hospital to use all 100 beds safely, according to state documents.
The hospital remains fully operational and able to serve the community during construction.
At Northern Light Health’s Blue Hill hospital, the cost to replace the 100-year-old facility on the same site increased by about $5.7 million, a 31 percent jump that will bring the total cost to $23.9 million.
Similarly, the replacement of Northern Light’s C.A. Dean Hospital in Greenville will cost about $6.8 million, or 50 percent, more than planned, bringing the total cost to $20.5 million.
The Blue Hill and Greenville hospitals are both 25-bed hospitals that the federal government designates as critical access, meaning they serve patients in rural areas and receive greater Medicare reimbursement than more urban hospitals.
Northern Light spokesperson Andrew Soucier said construction has already begun at the Blue Hill hospital, though a neighbor has appealed the town’s approval of the project. Construction will begin in Bangor and Greenville this spring, Soucier said. The change in costs hasn’t affected the project timelines.
“Given the critical role these projects will play in preserving access to rural healthcare at Blue Hill and CA Dean Hospitals and meeting the rising statewide demand for behavioral health services provided at Acadia Hospital, Northern Light Health is moving forward without delay,” he said.
Increased fundraising will cover at least part of the added costs.
“We’re inspired by the commitments that generous donors have already made to the projects, and we believe that philanthropy will continue to play a key role in their success,” Soucier said.