Children’s hospital price tag of €1.9m per bed unusually high

The €1 billion tender accepted for the proposed new Children’s Hospital in Dublin indicates an expensive development on a cost-per-bed basis, according to a source with knowledge of the industry.

The price to be charged for building the hospital also appears high when compared with the cost of hospitals built recently in the UK and and US.

The source, who has experience of building hospitals, said he considered a €1 million per bed price as reasonable, including equipment.

The proposed new Children’s Hospital on the St James’s Hospital campus in Dublin, is to be built at a cost of €1 billion, with the contract having been awarded to Bam Ireland, one of the country’s largest construction groups.

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The project will involve a 473-bed hospital, a 53-bed family accommodation unit, and a research and innovation centre, as well as satellite hospitals at the Adelaide and Meath, and the Connolly Hospital campuses.

Including the family accommodation, the project will involve a per-bed cost of about €1.9 million.

According to the Revista healthcare real estate service in the US, this is slightly ahead of the per-bed cost of building hospitals in California, which is ahead of the US generally. There the per-bed cost is approximately $2 million (€1.85 million).

Cooling-off period

The bid from Bam was the lowest of four on a shortlist for the project. The decision is subject to a 14-day cooling off period to allow for objections or other legal issues.

Figures available online from the Statista data group give a cost for a general hospital in London of £3,500 per square metre. This would indicate a cost of €478.8 million for the 118,113sq m Children’s Hospital, excluding the other aspects of the project.

Efforts to contact a spokesperson for Bam were not successful.

Bam is part of Dutch multinational Royal Bam, and Bam Ireland is well known as a significant operator in the Irish market, with recent projects including roads built under the public-private partnership model, school and hospital infrastructure, and commercial buildings.

It built the the pipeline tunnel for Shell’s Corrib gas project in Co Mayo, and the City Gate Park in Mahon, Co Cork, the largest commercial development built during the recession.

The latest filed accounts for Bam Contractors Ltd, the Irish holding company, show it increased its business during 2015 by 15 per cent, to €385 million, with turnover falling marginally in the Republic and Northern Ireland but increasing internationally, where the group was involved with sister companies and joint ventures. Profit before tax was €10.7 million, up from €5.6 million the previous year. The average number of employees was 542. The bulk of the group’s work is in the Republic.

Rising costs in the construction sector, driven by an improving economy, is being blamed for most of the projected increase in the cost of the hospital project. Building inflation has risen from 3 per cent when the project was first mooted for St James’s site to almost 9 per cent, according to a recently published industry analysis.

It was not realistic to make cost comparisons on hospital projects based solely on the number of beds delivered, the Department of Health said in a statement. The capital costs take into account education, training and research aspects of the project.