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The costs of modernizing health infrastructure

Health agencies face growing demands on their capital and attention. They must expand and modernize services for growing and aging populations, manage aging asset bases and respond to rapidly rising costs across construction, operations and maintenance. These pressures have intensified in the years following COVID-19, highlighting the need for smarter, future-focused investment.

Instead of simply building more or bigger hospitals, health systems must prioritize infrastructure that supports new models of care including virtual and remote consultations, designs that support faster recovery and earlier transitions to home-based care and facilities built to integrate digital health solutions. These changes can reduce the size and cost of physical infrastructure while improving care outcomes and system efficiency.

Standardization and construction innovation also help control costs. Moving away from custom designs supports the use of modular and kit-of-parts construction, reducing build time and expense.

But design decisions must go beyond capital cost. A whole-of-lifecycle approach ensures infrastructure provides long-term value to the health system. Avoiding short-term savings that lead to higher long-term costs is key to maximizing taxpayer value and sustainable system performance.

Strategic asset management of existing facilities is equally critical. In the Australia and New Zealand region, several agencies are beginning to build internal capability in this space. By preserving clinical capacity while planning for renewal and expansion, agencies can avoid investing in underperforming or outdated assets.

Ultimately, infrastructure investments should maximize impact − ensuring more of every dollar goes toward delivering care rather than building and running facilities.

Engineering a positive legacy

Public agencies across the Asia-Pacific and globally are investing heavily in health infrastructure. In Australia alone, the pipeline of major health projects totals $42B AUD ($27B USD).

To deliver lasting value, the focus must move beyond traditional performance metrics—like bed counts, square footage or cost per square meter—toward broader measures of economic, social, environmental and inclusive impact. These reflect the real purpose of public health infrastructure: improving long-term community wellbeing.

Achieving this requires clear metrics set early in planning and embedded throughout programs. Aligning all stakeholders on these goals helps ensure they remain prioritized throughout delivery.

This broader lens must also be protected from short-term cost cutting. Value engineering efforts should avoid undermining outcomes that matter most over the life of an asset. Quantifying long-term and off-site benefits helps justify and preserve them.

Policies that address environmental, social and governance (ESG) goals help drive broader value across portfolios. Examples include electrification and decarbonization mandates, as well as inclusive planning efforts with First Nations and Māori communities. These initiatives show how infrastructure can support equity, sustainability and lasting societal change.

When viewed as a transformative force, capital investment in health infrastructure can do more than deliver care. It can help build a healthier, more inclusive and resilient future.

A digital and AI-enabled future for healthcare

Technology is reshaping healthcare and health infrastructure must be designed to keep up.

Even today, readily available technologies can improve both clinical delivery and facility operations. Advanced diagnostics and artificial intelligence (AI) tools are already helping providers make faster, better decisions and deliver more personalized care.

But realizing the full potential of technology depends on appropriate investment in information and communication technology (ICT) infrastructure. This is a balancing act. Underinvesting risks early obsolescence. Overinvesting in unproven or overly complex solutions risks waste and redundancy.

The answer lies in a strong, organization-wide digital and ICT strategy. Frameworks such as the HIMSS (Healthcare Information and Management Systems Society) help health systems map the steps needed to adopt new technologies and build infrastructure that can adapt to future innovation. These frameworks also cover organizational needs—from cybersecurity to policies, procedures and workforce development.

With clear strategic alignment and flexible infrastructure, health systems can avoid overinvestment in static solutions and instead build for ongoing evolution.

Challenge accepted

Despite the complexity of rising costs and increasing demand, the opportunity to shape better health infrastructure has never been greater.

We can’t wait for the perfect moment to act. Every project—whether it’s a new hospital, a clinical redesign or an asset renewal—is a chance to improve how we deliver care.

Realizing this opportunity takes shared vision, coordinated action and collaboration across the health ecosystem. Innovation, sustainability, digital enablement and long-term thinking must be part of the solution.

Everyone—clinicians, planners, designers, constructors, government and technical providers—has a role to play. By working together on integrated solutions, we can meet today’s challenges and build the foundation for a healthier future.

With more than $10B AUD ($6.5B USD) in health infrastructure projects delivered across Australia and New Zealand in the past decade, and decades of international experience, һ����logo�׷��� brings deep capabilities in health planning, architecture, engineering, digital and advisory services. We’re helping clients develop infrastructure that delivers better care and better outcomes—for communities today and for generations to come.