What to Consider When Deciding to Renovate, Expand, or Replace a Healthcare Facility
A practical framework for healthcare leaders evaluating aging facilities, evolving care models, and long-term capital investments.
Contributors: Trent Rehfeldt, Tamara Hartner
Read time: 5 minutes
Article Summary
Renovate, expand, or replace? Those decisions often begin with a discussion about buildings, budgets, and space needs. The strongest organizations take a different approach. They start with a facility assessment to understand what’s limiting performance today, then align on the role the facility needs to play in the health system’s broader strategy. Before committing capital, four questions can help clarify the right path forward.
Key Takeaways
- Start with a facility assessment before choosing a solution.
- Infrastructure limitations can determine whether renovation remains viable.
- Future care delivery models should influence facility decisions as much as current needs.
- Code, seismic and compliance requirements can shift the business case toward replacement.
- Operational disruption should be evaluated alongside cost, scope, and schedule.
Before Asking the Questions
Healthcare leaders are often asked to make facility decisions under pressure, whether it's growing demand, aging infrastructure, or changing care delivery needs. The temptation can be to jump straight to a preferred solution and then determine whether it will work.
A facility assessment helps organizations understand capacity constraints, infrastructure conditions, operational challenges, and future service needs before significant resources are committed. It also creates early alignment among clinical, operational, facilities, finance, design, and construction stakeholders around a shared understanding of the challenge. From there, the conversation shifts from selecting a project type to determining which investment best supports long-term organizational goals.
Health systems are making billion-dollar decisions in an environment that's changing faster than ever. The goal isn't to squeeze a few more years out of a building or default to a new one. It's to understand how that facility fits into the organization's long-term strategy and what role it needs to play in the future of care delivery.
Four Questions to Ask Before Choosing Renovation, Expansion, or Replacement
1. Will Existing Infrastructure Limit What's Possible?
Aging infrastructure is often the factor that determines whether a facility can continue to evolve.
Many healthcare facilities were designed for care models that look very different from today's environment. Advanced imaging, digital health platforms, robotics, and other emerging technologies place new demands on power, utilities, and building flexibility that many older facilities were never designed to support. These limitations aren't always visible, and a facility that appears capable of supporting growth may have underlying mechanical, electrical, or utility constraints that limit future services.
Legacy Health's Unity Center for Behavioral Health faced that reality as demand for substance use disorder treatment continued to grow. The building itself dates to the 1980s and has evolved alongside changing care needs, transitioning from a community hospital to state psychiatric care and, ultimately, today's behavioral health center. To meet increasing demand, Legacy Health explored a new nine-bed substance use disorder program and expanded triage capacity. But accommodating the new program required more than identifying available space. The team needed to understand whether the building's existing mechanical systems could support increased patient volume and evolving operational requirements.
By evaluating infrastructure requirements early and incorporating critical mechanical upgrades into the expansion strategy, the team helped ensure the facility could support its next phase of care delivery while maintaining operations throughout construction. At launch, the nine-bed program was projected to care for more than 800 patients annually.
2. Can the Building Support Future Models of Care?
A facility that works today may not support how care is delivered tomorrow.
Health systems are increasingly planning around patient journeys, service integration, and flexibility rather than individual department silos. That shift is driving demand for adaptable clinical environments, integrated specialty care, and facilities that can evolve as care delivery changes.
Hennepin Healthcare faced this challenge as it considered how to bring together outpatient services that had become dispersed across its downtown campus. The solution was the Clinic & Specialty Center, consolidating 26 outpatient and specialty clinics from nine locations into one coordinated care environment. Rather than simply recreating existing departments in a new building, the facility was planned around how patients and care teams move between services, improving connectivity while creating flexibility for programs to evolve.
The result is a facility designed to support coordinated care today while giving the health system flexibility to adapt as needs change.
Bringing 26 clinics together in one location created a more connected and adaptable care environment.
3. When Is Replacement a Better Investment Than Renovation?
In many cases, compliance requirements reshape the decision entirely.
Code requirements, seismic upgrades, and regulatory considerations can significantly affect the viability of a renovation strategy. Healthcare leaders must evaluate whether investing in substantial upgrades to an aging facility creates enough long-term value compared with building new.
While code and seismic requirements may shape the options available, these decisions are rarely made at the building level alone. Leading health systems evaluate facilities within the context of broader campus and portfolio strategies, considering how each asset supports patient access, operational efficiency, care delivery, and organizational priorities. What may appear to be a facility issue can ultimately become a system-wide capital planning decision.
At Astera Health Critical Access Hospital, the combination of aging infrastructure, modern facility requirements and long-term organizational needs ultimately made replacement a stronger investment than renovation. Today, the former hospital serves as a legacy campus for administrative use, while clinical services operate in the new facility.
As organizations assess aging infrastructure, the question often shifts from "Can this building be renovated?" to "What role should this facility play in the future of our health system?" Answering that question helps clarify where reinvestment makes sense and where alternative strategies may better support long-term organizational goals.
Seismic or code requirements may trigger the conversation, but the decision goes beyond compliance. Building condition, operational impacts and long-term needs all influence whether renovation remains the right investment.
4. What Will It Take to Maintain Care During Construction?
Even the right construction strategy can create risk if it cannot be delivered without disrupting patient care. Whether construction occurs within an occupied facility or across an active campus, operational impacts should be factored in as rigorously as cost and schedule.
Construction phasing, patient safety, staffing impacts, and operational continuity should all be evaluated alongside project costs, especially in occupied hospital construction. In many cases, the ability to maintain care during construction becomes a critical factor in determining whether renovation, expansion, or replacement is the best path forward.
At Children's Hospital Colorado, a new 25-bed inpatient unit needed to be built between two occupied patient care floors, including a bone marrow transplant unit serving highly vulnerable pediatric patients. Any disruption had the potential to affect not only patient care, but the hospital's ability to maintain critical inpatient capacity. With a limited construction window before respiratory season, the team relied on intensive planning and coordination to complete the work three weeks early while maintaining continuity of care and achieving zero unplanned outages.
For health systems operating near capacity, even temporary loss of inpatient beds can have operational and financial implications. Understanding those impacts early can influence everything from project phasing and sequencing to whether renovation is ultimately the right strategy.
Complex phasing and operational planning helped maintain continuity of care during construction adjacent to vulnerable patient populations.
The Bottom Line
There is no universal answer to whether a healthcare facility should be renovated, expanded, or replaced. The most effective organizations begin by understanding the role a facility needs to play within the broader health system, then evaluate infrastructure, care delivery requirements, compliance considerations, and operational impacts through that lens.
In many cases, the decision is not really about the building. It's about how to invest limited capital in ways that support patient care, system performance, and organizational priorities over time. A thoughtful facility assessment helps leaders make that decision with greater confidence.
Related publication: This article is adapted from an opinion piece by Trent Rehfeldt originally published by the Daily Journal of Commerce Oregon on August 13, 2026.
FAQs
A facility assessment helps organizations understand capacity constraints, infrastructure conditions, operational challenges, and service needs before significant resources are committed. Identifying limitations early can clarify whether renovation, expansion, or replacement is the best path forward. At Legacy Health's Unity Center for Behavioral Health, evaluating building systems early helped the team determine what infrastructure upgrades were required to support additional treatment capacity.
Many health systems are planning facilities around patient journeys, integrated services, and flexibility rather than individual departments. Designing environments that can accommodate changing patient volumes, service lines, and operational needs allows organizations to evolve without major facility disruptions. Hennepin Healthcare's Clinic & Specialty Center reflects this approach by bringing 26 outpatient and specialty clinics together in one coordinated care environment.
The answer often extends beyond the condition of the building itself. Infrastructure limitations, compliance requirements, operational impacts, and broader health system priorities can all influence the decision. In some cases, the cost and complexity of upgrading an aging facility may outweigh the benefits, making replacement the stronger long-term investment. At Astera Health, those factors ultimately supported the decision to build a new critical access hospital.
Maintaining operations during construction starts long before work begins. Successful projects require early planning around patient safety, clinical workflows, staffing, infection control, utility reliability, and construction phasing to minimize disruption to care delivery. At Children's Hospital Colorado, a new inpatient unit was constructed between two occupied patient care floors in a highly sensitive care environment. Through detailed phasing and planning during preconstruction, the team maintained uninterrupted operations and achieved zero unplanned outages.