Building a hospital is a complex and expensive undertaking, involving a variety of factors that influence the total cost. From materials to labor to specialized systems, hospital construction requires careful planning and management to ensure all needs are met.

In recent years, the healthcare construction industry has experienced volatility, particularly in the aftermath of the pandemic. However, current trends indicate that construction costs are beginning to level off after a period of inflation.

Working on plans to build a hospital in 2025? Take a deeper look at the costs associated with building a hospital, including key factors influencing those costs, construction trends and future predictions.

As of the latest data, the national average cost to build a hospital ranges between $439.85-$454.33 per square foot. This figure is based on a two to three story complex, with either curtain wall and rigid steel or with brick veneer and wood frame respectively.

Based on current builds, most hospitals fall between the range of 200,000 square feet and 446,000 square feet. Using Gordian’s latest square foot data, the total cost to build a hospital in 2025 can fall anywhere between $87.97 million to over $202.63 million.

Unsurprisingly, the cost of materials plays a significant role in determining the overall price of hospital construction. Historically, materials like steel, copper, aluminum and concrete have been major contributors to cost fluctuations. According to recent research from Gordian, construction cost inflation is at its lowest since 2019, with prices rising by just 2% in the last year for small hospitals. However, some material costs continue to rise, albeit at a slower pace compared to the volatile years of 2021 and 2022.

Steel and conductive metals (e.g. copper and aluminum) have seen significant deceleration in price increases, with prices flat-lining or even decreasing in 2024.

Concrete and lumber costs have seen slight increases but have not reached the record highs of previous years. These materials still contribute to overall project costs, but their price volatility has decreased.

Labor is one of the largest ongoing costs in any construction project, and hospital construction is no exception. Skilled laborers such as electricians, HVAC installers and plumbers are in high demand, and their wages have seen steady growth in recent years. Although wage growth in 2024 cooled from the rapid pace of 2022 and 2023, labor costs continue to exceed core inflation, making them a major factor in hospital construction expenses.

The demand for construction workers with specialized skills remains high, which puts upward pressure on wages. Additionally, the complexity of hospital systems, such as mechanical, electrical and plumbing (MEP) installations, requires skilled labor, making these systems some of the most expensive aspects of hospital construction.

The design and functionality of hospitals are major determinants of cost. For example, hospitals with advanced medical technology or specialized units (such as trauma centers or operating rooms) require more expensive infrastructure, systems and equipment. The inclusion of high-tech, state-of-the-art facilities can significantly increase the overall budget.

The installation of mechanical systems (e.g. HVAC), electrical systems and plumbing systems continues to be one of the largest cost contributors to hospital construction. These essential systems are critical to the functionality of the building, but they can also drive up costs significantly. For example, outpatient surgery centers, which have seen growing demand in recent years, often have the highest costs associated with their HVAC and mechanical system installations.

While the costs involved in building a hospital are significant, there are several ways to mitigate and manage these expenses:

1. Plan Efficiently: Streamlining the design process and creating an efficient building layout can reduce both material and labor costs.
2. Sustainable Construction: Focusing on sustainability can sometimes lower long-term operational costs, though the initial investment in green building materials and systems may be higher.
3. Smart Materials Selection: Choosing cost-effective materials that don’t compromise quality can help save money, especially for structural elements and finishes.
4. Outsourcing & Pre-Construction Planning: Outsourcing certain tasks and working closely with a general contractor to develop pre-construction estimates can help identify potential cost savings before breaking ground.

As we look to 2025 and beyond, hospital construction costs are expected to stabilize further. The deceleration of material price inflation, particularly in critical categories like steel and copper, will likely keep costs from spiraling. However, labor costs will continue to exert upward pressure, especially for skilled workers.

Given these trends, healthcare developers will need to balance the costs of cutting-edge infrastructure with the demand for high-quality healthcare facilities that meet the needs of modern medical practices.

The cost to build a hospital remains substantial, influenced by a combination of material prices, labor rates and specialized systems required for healthcare facilities. While costs have leveled off somewhat since the pandemic-driven spikes of 2021 and 2022, there are still challenges ahead for developers looking to build hospitals in 2025.

For those planning a hospital construction project, it is essential to keep track of ongoing cost trends and plan for fluctuations in material and labor prices. By understanding the key cost drivers and leveraging cost-effective construction strategies, it’s possible to navigate the complexities of healthcare facility construction without exceeding one’s budget.