March 10, 2025 • 26 mins
Grant Geiger, CEO of EIR Healthcare, explores how modular construction is transforming healthcare building projects by addressing the industry's unique challenges of high costs, slow timelines, and technology integration.
What makes healthcare construction unique isn't the materials or processes—it's the motivation behind the projects. Unlike economically-driven commercial developments, healthcare facilities often expand based on community need rather than financial returns. And with more hospital systems shifting to a "hub and spoke" model with smaller satellite facilities, the opportunities for modular building has never been greater.
In this episode, Grant shares his thoughts on the potential for modular healthcare construction to produce buildings that not only deliver care for patients but deliver faster, more predictable timetables for stakeholders. By eliminating the "blank sheet of paper" approach that currently dominates healthcare construction, modular methods promise facilities that can be built faster, cheaper, and with better patient outcomes—a win for providers, patients, and healthcare systems as a whole.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Institute.
Welcome everyone.
My name is John McMullen.
I'm the Marketing Director hereat MBI.
Today I'm joined by GrantGeiger, CEO at EIR Healthcare.
Grant is here to talk aboutchanges and advancements in
(00:21):
healthcare building projects andthe potential these bring for
modular construction.
Grant welcome Thanks, John.
Good morning, Tell me aboutyourself, Grant.
What's your background and whatled you to EIR Healthcare.
Speaker 2 (00:34):
Well, it's a little bit of a windy road, but I
actually have been in thehealthcare industry for 20 years
coming up.
Started actually in thehealthcare IT space, working on
implementing electronic medicalrecords in hospitals around the
country and, from a technologyperspective, stuck with
healthcare.
And you know, today I'm inmodular.
(00:55):
But you know, what got me intomodular construction was
actually some of the design andengineering of my late father,
who had implemented and wasawarded patents around modular
construction of patient rooms.
So that caught my attention andin 2016, I left my corporate
(01:16):
job and started EIR Healthcare.
And here we are.
Speaker 1 (01:21):
Very good.
It seems to be a sort of atheme I've noticed with a lot of
guests here.
They've left their corporategig and started modular and
we're all thankful for it.
So that's cool, tell me aboutEIR Healthcare itself.
How did the company start, whatwas your process for that and
what's its mission?
Speaker 2 (01:38):
Yeah, yeah, absolutely.
So.
You know, at the end of the day, with Air Healthcare, what I
tell folks, eir, is that we dotwo things we do modular
construction and we dohealthcare projects.
We're not interested indeviating from that.
We believe that the healthcareindustry itself is unique in
such a way that, you know, whatwe do lends itself to, you know,
(01:59):
supporting that industry.
And really the fundamentalquestion that we ask ourselves
every day is how do we find away to deliver healthcare at a
lower cost?
Right, you know some of yourlisteners may not be as familiar
with the healthcare industry,but you know the sort of macro
trends that we look at is thatwe have 10,000 people every day
(02:21):
and 65 years old, we spend moreper capita than, I think, the
next 10 countries in terms ofour health care expense
expenditure and we technicallyhave worse outcomes than most of
the Western world.
So, for all the advances that wehave and we should be proud of
what we've done in the healthcare space, you know and from a
from a clinical and from ahealth care perspective what we
(02:43):
do today, it's still veryexpensive, and so what we are
always looking at is what issomething that we can do to help
reduce costs, to help delivercare into areas where care is
not able to get to.
We're talking about ruralhealthcare, those that are
impoverished people that youknow do not have insurance,
things like that.
(03:03):
But how do we find solutions toengage people so they get
access to healthcare?
And you know we do a little bit, you know, in our own little
way, but you know our mission isto try to improve those
outcomes.
Speaker 1 (03:16):
What can you tell me about the healthcare building
industry in general?
How does it typically work andhow does modular construction
generally benefit that sector ofthe building industry?
Speaker 2 (03:27):
Yeah.
So I mean I wouldn't say thatthe healthcare building industry
is all that much different, inthe traditional sense of
construction, than any otherindustry in terms of multifamily
or residential or commercial orwhatever that may be.
At the end of the day, you'restill going through the same
processes, you're still usingthe same people architects,
engineers, general contractorsso those things don't
(03:50):
necessarily change.
The only thing that I think isthe biggest difference is that
it's probably the only industrywhere the development and
expansion of healthcarefacilities is not purely
economically driven.
So what I mean by that is youknow, if you're a developer
who's building ADUs, for examplein California, or if you're a
(04:13):
developer who's buildingmultifamily housing across the
United States, like with threeover ones or five over ones,
things like that you knowthere's generally a pro forma
and there's a financial metricthat's driving that.
There's a lender involved.
There's a whole component ofhow that's being done.
There's an expected return.
Healthcare construction doesn'tnecessarily, is not necessarily
(04:35):
driven that way.
Right, the development of thatnew bed tower with 300 beds or
the opening of that newchildren's hospital in your town
the funding for it and themechanism for why it's being
built may not be economic at alland who's funding it and how
it's being funded.
It may be donations, it may begrants and tax dollars, and so I
(04:56):
bring all that up because yousee a lot of development that's
getting done in the healthcarespace and it may seem
counterintuitive.
So I think that's something thatpeople need to understand.
And then I think the otherthing is generally, I think one
of the things that we see that'sa huge issue and it makes it a
little bit unique is that thehealthcare industry construction
(05:18):
moves extremely slow.
So when we talk to some of thelarge health systems in the
United States, they're lookingat building bed towers and their
timeline and their horizon maybe 10 years to when that tower
finally opens.
And what's unfortunatelyhappened, which is extremely
acute to the healthcare industry, is that healthcare driven by
(05:39):
technology, much more so thanmultifamily, again, residential
or these other parts of thebuilding industry and so
healthcare is being forced nowto make technological decisions
for buildings that actually, bythe time they're being built,
they're obsolete, and so I thinkthat's an interesting component
too.
That makes it a little bitdifferent, but at the end of the
day, the process is still thesame, the buildings are still
(06:01):
the same, they're still usingthe same wood the same drywall,
all those types of things.
Speaker 1 (06:18):
It's just, you know it has a little bit of that your
company has built.
Recently I saw on your websitethat you've done at least two
for Good Samaritan Hospital,which is large hospital systems
like ones you mentioned.
What can you tell me aboutthose projects?
Speaker 2 (06:33):
Yeah.
So I mean, we'll talk aboutthem and I'll give you another
one too in a minute.
But I think you know, with GoodSamaritan, they're a client in
Bakersfield, california, and, asI said earlier, their
development and their growth isnot driven by a IRR or by an
investor.
Their growth and their drive isactually done by the need for
(06:55):
providing clinical care in ruraland remote areas.
And so in this case, with GoodSamaritan, the funding for their
construction projects isactually backed by the state of
California, and so the state hasreally come in and said, hey,
you know what?
There's actually a need forthese types of clinics and these
(07:15):
types of buildings, becausethere is a what they call a
health care desert.
So there's a lack of healthcare options for people in this
area.
We're going to provide fundingand for them, their particular
focus is around behavioralhealth, mental health and those
types of that subset of issues.
So you know, with them we'recurrently working on two, six
(07:36):
thousand square foot clinics.
Those clinics we now are goingthrough an entitlement process
and production for those isstarting this year.
So they aren't completed, john.
I think it just to be clearabout that.
But you know, we think that'spart of a larger trend across
the United States, which iswe're seeing that healthcare
(07:57):
systems are.
They call it a hub and spokemodel.
So you have a main hospitalthat's your hub and then you
have a spoke system of smallerambulatory or outpatient type
centers, and so that has manydifferent permutations.
But in our example inCalifornia it's around
behavioral health, but it verymuch as easily could be the same
(08:18):
thing but could be done inTexas, could be done in Florida,
could be in New York orsomewhere else.
Speaker 1 (08:24):
I've been lucky enough, I will say, to tour a
large modular hospital that wasin construction at the factory,
and I guess this goes back to alittle bit your background in IT
.
It was fantastically complexjust in terms of the technology
and everything that had to beconnected module to module
throughout the hospital just tomake this thing work.
(08:44):
I'm curious how advances indigital networking and computing
are impacting hospitalconstruction, whether they be a
bed tower, like you mentioned,or the smaller ambulatory
centers, and how is thatimpacting modular construction?
Are you able to give anyexamples of maybe what's changed
over the past few years withthis, you know, explosion in
(09:07):
data processing and networkingand computing, and how have you
had to adapt to that?
Speaker 2 (09:12):
Yeah, that's a good.
It's a really good point, john.
I think previous to this I usedto work, actually, in a data
center that had well, stilltoday actually has a third of
all medical records in theUnited States.
So we were responsible for, youknow, approximately 90, 100
million people's medical records.
So you know the technologypiece.
I would say you know to yourpoint.
(09:34):
Hospital construction andhealthcare in general has always
been very tech heavy.
The difference that we'reseeing today, I think, is two
things.
One is that it's going fromwhat used to be hardwired and
wired components to wireless andremote type services.
So you know, and and I meanvery, very literally we're going
from you know, and I mean very,very literally we're going from
(09:57):
you know when I started inhealthcare IT, from you know
hospitals having, you know, aserver room and having servers
in their hospital to now runningthings off of AWS and doing
other types of things.
The point is, you know, there'sbeen a massive expansion in not
only the technology platformsthat are being used by hospitals
(10:18):
but also the integration withwhat I'll call the physical and
the virtual space.
What Modular really lends tothat and makes it really's trade
is going to have to come inonce the building is
substantially complete or youknow, as part of fit out and put
(10:42):
in RFID sensors and technologyand you know IoT, whatever it
may be pieces and actually buildthem into the process of what's
going on in the modular factoryso that when the modules roll
off the line and they're gettingready to be shipped to the site
(11:02):
, all of those things havealready been commissioned,
they've already been tested andthey're already installed.
So we're cutting down on thetime for when it takes to open
that clinic and that facility.
Speaker 1 (11:13):
Well, you bring up your factory.
I'm curious Tell me about yourfactory.
How is it set up?
Is it any different than othermodular manufacturers who are
putting out large multifamilybuildings or smaller
single-family residential homes?
What's going on in your factory?
Speaker 2 (11:31):
Well, here's the interesting thing, John we don't
own a factory, so we areagnostic.
Well, here's the interestingthing, john we don't own a
factory, so we are agnostic.
The way we position ourselvesin the market and the way we
work with our clients is that wework with a suite of
manufacturers, many of them MBImembers, and we actually take
(11:54):
our client through a processwhere we say, okay, based on
your needs of what you'reactually building, here are
three or four, depending on howmany.
There are factories that couldactually meet the criteria for
what you're trying to build.
And we've interviewed them,we've vetted them, we've looked
at it and here's arecommendation, and here's our
first and here's the secondary,and you make, as a client, the
final decision.
We're transparent in thatpricing.
(12:15):
We're not trying to make a buckon it.
What we're trying to really dois make sure that the process is
successful.
I was the non-executive chairmanof a modular manufacturer
company by the name of Edmarisfor eight years, so I've been on
the factory side.
I've toured dozens of factoriesaround the world and what I've
(12:35):
come to realize is it's notnecessarily at this point in the
industry.
You know, what we're focused onis the quality of the work that
comes out of the factory, notnecessarily how much robotics
they have, how much automationthey have, because you have to.
You have to look at the wholepicture and how do you get the
delivery of the of the endproduct right?
(12:56):
And and how do you fit thedelivery of the end product
right and how do you fit themodular factory part of it into
the overall process?
Speaker 1 (13:02):
Speaking of the end product, what can you tell me
about building strategies forhealthcare facilities in general
?
In the wake of all thetechnologies that we've talked
about, hospital groups seem tobe changing the way that they're
building new facilities.
You mentioned the hub and spokemodel earlier.
How are these changes affectingEIR and similar companies in
(13:24):
the way they provide buildings?
Speaker 2 (13:26):
That's a good question, john.
I think the reality is thathealthcare is changing, and it's
changing in a way that isbecoming, I don't want to say,
more personalized, but probablythe footprint of it is going to
feel smaller.
But what I like to tell peopleis that, with all the crazy
(13:47):
things that are going on inhealthcare, people love today to
talk about GLP-1s, things likeOzempic Wagovi and that's a
weight loss type approach.
But what's interesting about itis we're finding that there's
now such a large enough subsetof the population that's taking
these types of prescriptionsthat it's actually going to have
downstream effects on clinicaloutcomes for patients down the
(14:11):
road.
And I bring all this up becausewhat I tell people all the time
is the technology or the waythat healthcare is being
delivered may be changing, butat the end of the day, you still
have four walls where you haveto go somewhere to receive
healthcare right, like you cando a telehealth appointment on
your phone Some of yourlisteners, myself as well, you
know I do telehealth docappointments, things like that.
(14:33):
But the healthcare experience isnot going to go away, and so
you know, I think in terms ofthe industry, you know what
we're seeing is consolidationamong hospitals and health
systems and we're seeing thefootprint shrink into a smaller
type facility.
And so you know, and ourresponse to that as EIR
(14:53):
Healthcare is that we have found, really, that our sweet spot is
sort of in this five to 20,000square foot space, where there's
a lot of volume, there's a lotof repeatability in terms of a
hospital or a health systemsaying I'm going to need five of
those, I'm going to need fiveclinics.
How do we come up withsomething?
And you're always going to haveyour bed towers.
(15:14):
The large, huge, big healthsystems are always going to
continue to build those types ofthings.
But you know, I think thedelivery of it is changing and
it's getting, you know, smallerand it feels more personal, but
you know it's still an in inbuilding healthcare facilities,
(15:37):
be they large or small.
Speaker 1 (15:40):
What's the biggest challenge with working with your
factory partners, yourmanufacturing partners, and
getting those delivered?
Speaker 2 (15:47):
I think the biggest challenge is, well, I think, two
things.
First of all, the healthcareindustry.
By nature, and not just thehealthcare construction, but
healthcare overall is generallya somewhat conservative industry
, right, I mean, you know youhave cutting edge R&D and you
know, and pharma get them backout the door and back at home or
wherever they need to be andthey're going.
(16:07):
But I also think that theopportunity is probably greater
(16:34):
in healthcare than it is inothers, because healthcare has
the highest, probably, level ofstandardization in terms of what
they're looking for and thelook and feel and all of that
kind of stuff.
Right, aesthetics matter, butthey matter in a different way
than, for example, in amultifamily-type setup.
So the other part is it'sactually, it's really, and
everybody says this in our space, but I think it's probably the
(16:58):
regulation and the approvalprocess, right.
So, like we're in Californiawith these projects we have to
work with, it's now HCAI used tobe OSHPD and they exist for a
reason.
They exist for a very goodreason and we like them, but
that adds more complexity to theproject than, again, for
example, building residentialhomes, right, and so to go
through that approval process tomake sure you know things that
(17:22):
we are building is within thecode requirements, not just for
the building type but also forthe clinical use.
But also for the clinical useand, for example, if it's
behavioral health, are you usingligature-safe beds,
ligature-safe window treatments,all these types of things that
make it more safe?
But I think the process overallit can be a challenge because
(17:45):
you could have something assimple as a 5,000 square foot
clinic but the entitlementprocess could take you 12 months
by itself.
Speaker 1 (17:53):
You mentioned the healthcare industry being sort
of a laggard in adopting modular, and you mentioned that there
is probably more opportunity forthe healthcare industry to
adopt modular.
So in your opinion, do youthink we're more likely to see a
lot more modular healthcareprojects in the near future, or
are hospital groups anddevelopers sort of still
discovering that modular is apossibility and it might take a
(18:16):
while?
Speaker 2 (18:17):
Yeah, I think it may take a while.
I think it's not near future.
I think the thing is, you haveto remember, you know, in the
United States today I don't knowthe exact number off the top of
my head but it's, I think it'sover 3000 hospitals are in the
United States.
And so the way I like toexplain to people is there's
sort of like the Fortune 500,and then there's like the
Russell 2000 or 3000, to use afinancial analogy.
(18:40):
And so I think I had a verywell-known VP of construction
for a health system tell me once.
He said Grant, the way Iexplain modular construction in
healthcare is that there's apool, right, and we're all
looking at a pool.
And way I explain modularconstruction in health care is
that there's a pool Right, andwe're all looking at a pool and
we're all looking at how deep itis and we're all standing
around it as meaning the needsof construction and we're saying
, yeah, I think the pool isthree feet deep, but none of us
(19:02):
and this is at the Fortune 500level, right, we're somewhat,
we're reluctant to want to bethe first ones to jump into that
pool, right, because we don'tknow what that is, and you know.
So we've had a lot ofconversations with large
academic medical centers thatyou know, quite frankly, are not
ready for it because they havesuch a large, their processes
(19:24):
are so complicated, theirclinical pathways are so robust
that to change the delivery ofthis construction product let's
call it fundamentally changessome of the things that they do
as a business, and so I don'tthink we're going to see things
happen overnight.
But again, maybe the sort ofplay is at this 5 to 20,000
(19:47):
square foot area there's a lotof this stuff being built.
As we as an industry meaningthe modular industry can
continue to be successful atthis space, then we will
continue to see, I think,modular grow and expand in the
healthcare you know, in thehealthcare industry.
You know I had a, again reallylarge health system VP of
construction was sitting in oneof our conferences a couple of
(20:09):
years ago and he said you know,grant, I don't understand,
because every time we sit downto build a new tower, we start
with a clean sheet of paper andwe sit down with the architect
and we design what the tower isgoing to look like, but we know
every single time what ourpatient room is going to look
like, because we have a standardpatient room and they have a
standard patient design.
So why am I constantly startingwith a blank sheet of paper
(20:32):
every time I am starting a newproject?
Why am I not just taking mymodel room in Revit or whatever
it may be and dropping that intomy next design and keep on
iterating?
Right and that's what we'retrying to focus on is like, how
do we drive lean principles andthat Toyota production
processing concept of iterationto the design of hospital
(20:54):
construction?
Speaker 1 (20:56):
Well, I think that VP of construction is thinking
exactly along the right lines.
What is your elevator pitch?
So, when you're having theseconversations, you're talking
with VPs of construction at bigcompanies that want to build
modular, what's your pitch tothem as to why they should
consider modular and what aretheir responses?
Yeah, so I mean it's reallysimple.
Speaker 2 (21:17):
At the end of the day , the pitch is this we're
proposing a new solution to youin terms of how you can deliver
healthcare.
Our process, if you work withus, is going to give you an end
product that is going to bebuilt.
Most cases I can't guarantee,but I will say most likely is
going to be built.
Most cases I can't guarantee,but I will say most likely is
going to be built either fasteror cheaper than traditional
construction, and there'sdifferent ways for us to look at
(21:39):
that.
But generally speaking, thathas held true.
And on top of that, what we areproposing is if you, as an
organization, commit to modularconstruction as your sort of
means to an end, it will openthe doors for you in terms of
your technology platform, yourtechnology integration, how you
treat patients, and we believeand we do believe this very
(22:01):
strongly potentially is gettingyou to the point where you will
improve patient outcomes.
And patient outcomes areimportant to a lot of these
hospitals and health systemsbecause that's tied to how they
get reimbursed from the federalgovernment.
And so if we can improve yourpatient outcomes and we can
change the economic formula ofhow you're reimbursed, everybody
(22:21):
wins because you're going tosave time, save money and your
patients are going to be happierdoing it.
Speaker 1 (22:26):
What's your outlook for the industry over the next
few years?
The modular healthcare industrythat is.
There's a lot of new federalpolicies, there's a lot of
tariff talk, there's immigrationtalk.
What does all that mean for thehealthcare building industry
and for EIR and modular buildingitself?
Speaker 2 (22:46):
Yeah, that's the million-dollar question right.
I mean I think, yeah, just a few.
Look, I mean, nobody has acrystal ball.
I think at the end of the day,I think that if we have an
opportunity to bring this typeof manufacturing and this type
of technology in-house, meaninginto the United States, and we
(23:09):
can drive that, I think that'sultimately good for everybody.
While I'm not necessarily a bigfan of the tariffs, I think the
tariffs, inadvertently, arekind of creating that
opportunity, because being ableto now build something in a
lower cost country right, as wealready know and then bring it
to the United States now we gotto slap 25, as of this morning,
(23:30):
actually right 25% on top ofsomething from Canada or Mexico.
That changes the economics,right, and so I think that
that's good for us long term asan industry.
But ultimately I think that thehealthcare modular industry
overall has a long road ahead ofit in a good way, a long runway
(23:51):
, because the cost ofconstruction within healthcare
is already extremely high, thetimeline is already extremely
long, and so any opportunitieswhere there exists for us to
provide value-added opportunityto reduce those things is going
to be good for us.
It's hard to really crunch thisnumber.
(24:12):
I know we always look atconstruction starts and what
percentage of those in theUnited States are modular.
It's really hard to drill downinto that in the healthcare
industry because it's not reallyreported.
But I suspect that if you wereto take modular in a broad sense
not just meaning volumetricmodular panels, but even talking
about bathroom pods, talkingabout even mechanical racks you
(24:36):
know things like that of nature.
I suspect that we've seen apretty steady increase in the
utilization of modular withinthe healthcare industry and I
think it's going to continue toincrease.
Speaker 1 (24:46):
What's next for EIR, both going you know, going into
2025 and beyond, if you're ableto say what's on the horizon for
you guys.
Speaker 2 (24:55):
Yeah, so I mean we're obviously looking to get our
buildings into the ground.
We have another building whichwe didn't mention, but I want to
just give a shout out.
We're working on a 10,000square foot medical office
building right now in Brooklyn.
We just finished the foundationand modular production is
starting actually this month onthat.
So we got a lot of work cut outfor us this year on the
(25:16):
building side.
But the future for us is reallyabout not only getting these
buildings into the ground butstarting to really develop the
technology aspect behind it tosupport them and working with
our partners to do that.
So you know, what we're reallydriving ourselves to is how do
(25:38):
we use the building, how do weuse modular construction to
build the building?
But then how do we also use thebuilding to collect data and
insight as to what's going oninside so that we can, for our
clients and for ourselves, haveinsight into building better
clinics, better hospitals downthe road, and not starting with
(25:58):
that blank sheet of paper, asthat VP of construction said,
and actually starting withsomething that is tested and we
actually have some data pointson.
Speaker 1 (26:09):
Well, grant, this has been a great conversation.
I really appreciate your timetoday.
Thank you for being here and Ican't wait to see what the
future holds for EIR.
Thanks, john, looking forwardto it.
Thank you, my name is JohnMcMullen.
This has been another episodeof Inside Modular, the podcast
of commercial modularconstruction.
Until next time.
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Institute.
Welcome everyone.
My name is John McMullen.
I'm the Marketing Director hereat MBI.
Today I'm joined by GrantGeiger, CEO at EIR Healthcare.
Grant is here to talk aboutchanges and advancements in
(00:21):
healthcare building projects andthe potential these bring for
modular construction.
Grant welcome Thanks, John.
Good morning, Tell me aboutyourself, Grant.
What's your background and whatled you to EIR Healthcare.
Speaker 2 (00:34):
Well, it's a little bit of a windy road, but I
actually have been in thehealthcare industry for 20 years
coming up.
Started actually in thehealthcare IT space, working on
implementing electronic medicalrecords in hospitals around the
country and, from a technologyperspective, stuck with
healthcare.
And you know, today I'm inmodular.
(00:55):
But you know, what got me intomodular construction was
actually some of the design andengineering of my late father,
who had implemented and wasawarded patents around modular
construction of patient rooms.
So that caught my attention andin 2016, I left my corporate
(01:16):
job and started EIR Healthcare.
And here we are.
Speaker 1 (01:21):
Very good.
It seems to be a sort of atheme I've noticed with a lot of
guests here.
They've left their corporategig and started modular and
we're all thankful for it.
So that's cool, tell me aboutEIR Healthcare itself.
How did the company start, whatwas your process for that and
what's its mission?
Speaker 2 (01:38):
Yeah, yeah, absolutely.
So.
You know, at the end of the day, with Air Healthcare, what I
tell folks, eir, is that we dotwo things we do modular
construction and we dohealthcare projects.
We're not interested indeviating from that.
We believe that the healthcareindustry itself is unique in
such a way that, you know, whatwe do lends itself to, you know,
(01:59):
supporting that industry.
And really the fundamentalquestion that we ask ourselves
every day is how do we find away to deliver healthcare at a
lower cost?
Right, you know some of yourlisteners may not be as familiar
with the healthcare industry,but you know the sort of macro
trends that we look at is thatwe have 10,000 people every day
(02:21):
and 65 years old, we spend moreper capita than, I think, the
next 10 countries in terms ofour health care expense
expenditure and we technicallyhave worse outcomes than most of
the Western world.
So, for all the advances that wehave and we should be proud of
what we've done in the healthcare space, you know and from a
from a clinical and from ahealth care perspective what we
(02:43):
do today, it's still veryexpensive, and so what we are
always looking at is what issomething that we can do to help
reduce costs, to help delivercare into areas where care is
not able to get to.
We're talking about ruralhealthcare, those that are
impoverished people that youknow do not have insurance,
things like that.
(03:03):
But how do we find solutions toengage people so they get
access to healthcare?
And you know we do a little bit, you know, in our own little
way, but you know our mission isto try to improve those
outcomes.
Speaker 1 (03:16):
What can you tell me about the healthcare building
industry in general?
How does it typically work andhow does modular construction
generally benefit that sector ofthe building industry?
Speaker 2 (03:27):
Yeah.
So I mean I wouldn't say thatthe healthcare building industry
is all that much different, inthe traditional sense of
construction, than any otherindustry in terms of multifamily
or residential or commercial orwhatever that may be.
At the end of the day, you'restill going through the same
processes, you're still usingthe same people architects,
engineers, general contractorsso those things don't
(03:50):
necessarily change.
The only thing that I think isthe biggest difference is that
it's probably the only industrywhere the development and
expansion of healthcarefacilities is not purely
economically driven.
So what I mean by that is youknow, if you're a developer
who's building ADUs, for examplein California, or if you're a
(04:13):
developer who's buildingmultifamily housing across the
United States, like with threeover ones or five over ones,
things like that you knowthere's generally a pro forma
and there's a financial metricthat's driving that.
There's a lender involved.
There's a whole component ofhow that's being done.
There's an expected return.
Healthcare construction doesn'tnecessarily, is not necessarily
(04:35):
driven that way.
Right, the development of thatnew bed tower with 300 beds or
the opening of that newchildren's hospital in your town
the funding for it and themechanism for why it's being
built may not be economic at alland who's funding it and how
it's being funded.
It may be donations, it may begrants and tax dollars, and so I
(04:56):
bring all that up because yousee a lot of development that's
getting done in the healthcarespace and it may seem
counterintuitive.
So I think that's something thatpeople need to understand.
And then I think the otherthing is generally, I think one
of the things that we see that'sa huge issue and it makes it a
little bit unique is that thehealthcare industry construction
(05:18):
moves extremely slow.
So when we talk to some of thelarge health systems in the
United States, they're lookingat building bed towers and their
timeline and their horizon maybe 10 years to when that tower
finally opens.
And what's unfortunatelyhappened, which is extremely
acute to the healthcare industry, is that healthcare driven by
(05:39):
technology, much more so thanmultifamily, again, residential
or these other parts of thebuilding industry and so
healthcare is being forced nowto make technological decisions
for buildings that actually, bythe time they're being built,
they're obsolete, and so I thinkthat's an interesting component
too.
That makes it a little bitdifferent, but at the end of the
day, the process is still thesame, the buildings are still
(06:01):
the same, they're still usingthe same wood the same drywall,
all those types of things.
Speaker 1 (06:18):
It's just, you know it has a little bit of that your
company has built.
Recently I saw on your websitethat you've done at least two
for Good Samaritan Hospital,which is large hospital systems
like ones you mentioned.
What can you tell me aboutthose projects?
Speaker 2 (06:33):
Yeah.
So I mean, we'll talk aboutthem and I'll give you another
one too in a minute.
But I think you know, with GoodSamaritan, they're a client in
Bakersfield, california, and, asI said earlier, their
development and their growth isnot driven by a IRR or by an
investor.
Their growth and their drive isactually done by the need for
(06:55):
providing clinical care in ruraland remote areas.
And so in this case, with GoodSamaritan, the funding for their
construction projects isactually backed by the state of
California, and so the state hasreally come in and said, hey,
you know what?
There's actually a need forthese types of clinics and these
(07:15):
types of buildings, becausethere is a what they call a
health care desert.
So there's a lack of healthcare options for people in this
area.
We're going to provide fundingand for them, their particular
focus is around behavioralhealth, mental health and those
types of that subset of issues.
So you know, with them we'recurrently working on two, six
(07:36):
thousand square foot clinics.
Those clinics we now are goingthrough an entitlement process
and production for those isstarting this year.
So they aren't completed, john.
I think it just to be clearabout that.
But you know, we think that'spart of a larger trend across
the United States, which iswe're seeing that healthcare
(07:57):
systems are.
They call it a hub and spokemodel.
So you have a main hospitalthat's your hub and then you
have a spoke system of smallerambulatory or outpatient type
centers, and so that has manydifferent permutations.
But in our example inCalifornia it's around
behavioral health, but it verymuch as easily could be the same
(08:18):
thing but could be done inTexas, could be done in Florida,
could be in New York orsomewhere else.
Speaker 1 (08:24):
I've been lucky enough, I will say, to tour a
large modular hospital that wasin construction at the factory,
and I guess this goes back to alittle bit your background in IT
.
It was fantastically complexjust in terms of the technology
and everything that had to beconnected module to module
throughout the hospital just tomake this thing work.
(08:44):
I'm curious how advances indigital networking and computing
are impacting hospitalconstruction, whether they be a
bed tower, like you mentioned,or the smaller ambulatory
centers, and how is thatimpacting modular construction?
Are you able to give anyexamples of maybe what's changed
over the past few years withthis, you know, explosion in
(09:07):
data processing and networkingand computing, and how have you
had to adapt to that?
Speaker 2 (09:12):
Yeah, that's a good.
It's a really good point, john.
I think previous to this I usedto work, actually, in a data
center that had well, stilltoday actually has a third of
all medical records in theUnited States.
So we were responsible for, youknow, approximately 90, 100
million people's medical records.
So you know the technologypiece.
I would say you know to yourpoint.
(09:34):
Hospital construction andhealthcare in general has always
been very tech heavy.
The difference that we'reseeing today, I think, is two
things.
One is that it's going fromwhat used to be hardwired and
wired components to wireless andremote type services.
So you know, and and I meanvery, very literally we're going
from you know, and I mean very,very literally we're going from
(09:57):
you know when I started inhealthcare IT, from you know
hospitals having, you know, aserver room and having servers
in their hospital to now runningthings off of AWS and doing
other types of things.
The point is, you know, there'sbeen a massive expansion in not
only the technology platformsthat are being used by hospitals
(10:18):
but also the integration withwhat I'll call the physical and
the virtual space.
What Modular really lends tothat and makes it really's trade
is going to have to come inonce the building is
substantially complete or youknow, as part of fit out and put
(10:42):
in RFID sensors and technologyand you know IoT, whatever it
may be pieces and actually buildthem into the process of what's
going on in the modular factoryso that when the modules roll
off the line and they're gettingready to be shipped to the site
(11:02):
, all of those things havealready been commissioned,
they've already been tested andthey're already installed.
So we're cutting down on thetime for when it takes to open
that clinic and that facility.
Speaker 1 (11:13):
Well, you bring up your factory.
I'm curious Tell me about yourfactory.
How is it set up?
Is it any different than othermodular manufacturers who are
putting out large multifamilybuildings or smaller
single-family residential homes?
What's going on in your factory?
Speaker 2 (11:31):
Well, here's the interesting thing, John we don't
own a factory, so we areagnostic.
Well, here's the interestingthing, john we don't own a
factory, so we are agnostic.
The way we position ourselvesin the market and the way we
work with our clients is that wework with a suite of
manufacturers, many of them MBImembers, and we actually take
(11:54):
our client through a processwhere we say, okay, based on
your needs of what you'reactually building, here are
three or four, depending on howmany.
There are factories that couldactually meet the criteria for
what you're trying to build.
And we've interviewed them,we've vetted them, we've looked
at it and here's arecommendation, and here's our
first and here's the secondary,and you make, as a client, the
final decision.
We're transparent in thatpricing.
(12:15):
We're not trying to make a buckon it.
What we're trying to really dois make sure that the process is
successful.
I was the non-executive chairmanof a modular manufacturer
company by the name of Edmarisfor eight years, so I've been on
the factory side.
I've toured dozens of factoriesaround the world and what I've
(12:35):
come to realize is it's notnecessarily at this point in the
industry.
You know, what we're focused onis the quality of the work that
comes out of the factory, notnecessarily how much robotics
they have, how much automationthey have, because you have to.
You have to look at the wholepicture and how do you get the
delivery of the of the endproduct right?
(12:56):
And and how do you fit thedelivery of the end product
right and how do you fit themodular factory part of it into
the overall process?
Speaker 1 (13:02):
Speaking of the end product, what can you tell me
about building strategies forhealthcare facilities in general
?
In the wake of all thetechnologies that we've talked
about, hospital groups seem tobe changing the way that they're
building new facilities.
You mentioned the hub and spokemodel earlier.
How are these changes affectingEIR and similar companies in
(13:24):
the way they provide buildings?
Speaker 2 (13:26):
That's a good question, john.
I think the reality is thathealthcare is changing, and it's
changing in a way that isbecoming, I don't want to say,
more personalized, but probablythe footprint of it is going to
feel smaller.
But what I like to tell peopleis that, with all the crazy
(13:47):
things that are going on inhealthcare, people love today to
talk about GLP-1s, things likeOzempic Wagovi and that's a
weight loss type approach.
But what's interesting about itis we're finding that there's
now such a large enough subsetof the population that's taking
these types of prescriptionsthat it's actually going to have
downstream effects on clinicaloutcomes for patients down the
(14:11):
road.
And I bring all this up becausewhat I tell people all the time
is the technology or the waythat healthcare is being
delivered may be changing, butat the end of the day, you still
have four walls where you haveto go somewhere to receive
healthcare right, like you cando a telehealth appointment on
your phone Some of yourlisteners, myself as well, you
know I do telehealth docappointments, things like that.
(14:33):
But the healthcare experience isnot going to go away, and so
you know, I think in terms ofthe industry, you know what
we're seeing is consolidationamong hospitals and health
systems and we're seeing thefootprint shrink into a smaller
type facility.
And so you know, and ourresponse to that as EIR
(14:53):
Healthcare is that we have found, really, that our sweet spot is
sort of in this five to 20,000square foot space, where there's
a lot of volume, there's a lotof repeatability in terms of a
hospital or a health systemsaying I'm going to need five of
those, I'm going to need fiveclinics.
How do we come up withsomething?
And you're always going to haveyour bed towers.
(15:14):
The large, huge, big healthsystems are always going to
continue to build those types ofthings.
But you know, I think thedelivery of it is changing and
it's getting, you know, smallerand it feels more personal, but
you know it's still an in inbuilding healthcare facilities,
(15:37):
be they large or small.
Speaker 1 (15:40):
What's the biggest challenge with working with your
factory partners, yourmanufacturing partners, and
getting those delivered?
Speaker 2 (15:47):
I think the biggest challenge is, well, I think, two
things.
First of all, the healthcareindustry.
By nature, and not just thehealthcare construction, but
healthcare overall is generallya somewhat conservative industry
, right, I mean, you know youhave cutting edge R&D and you
know, and pharma get them backout the door and back at home or
wherever they need to be andthey're going.
(16:07):
But I also think that theopportunity is probably greater
(16:34):
in healthcare than it is inothers, because healthcare has
the highest, probably, level ofstandardization in terms of what
they're looking for and thelook and feel and all of that
kind of stuff.
Right, aesthetics matter, butthey matter in a different way
than, for example, in amultifamily-type setup.
So the other part is it'sactually, it's really, and
everybody says this in our space, but I think it's probably the
(16:58):
regulation and the approvalprocess, right.
So, like we're in Californiawith these projects we have to
work with, it's now HCAI used tobe OSHPD and they exist for a
reason.
They exist for a very goodreason and we like them, but
that adds more complexity to theproject than, again, for
example, building residentialhomes, right, and so to go
through that approval process tomake sure you know things that
(17:22):
we are building is within thecode requirements, not just for
the building type but also forthe clinical use.
But also for the clinical useand, for example, if it's
behavioral health, are you usingligature-safe beds,
ligature-safe window treatments,all these types of things that
make it more safe?
But I think the process overallit can be a challenge because
(17:45):
you could have something assimple as a 5,000 square foot
clinic but the entitlementprocess could take you 12 months
by itself.
Speaker 1 (17:53):
You mentioned the healthcare industry being sort
of a laggard in adopting modular, and you mentioned that there
is probably more opportunity forthe healthcare industry to
adopt modular.
So in your opinion, do youthink we're more likely to see a
lot more modular healthcareprojects in the near future, or
are hospital groups anddevelopers sort of still
discovering that modular is apossibility and it might take a
(18:16):
while?
Speaker 2 (18:17):
Yeah, I think it may take a while.
I think it's not near future.
I think the thing is, you haveto remember, you know, in the
United States today I don't knowthe exact number off the top of
my head but it's, I think it'sover 3000 hospitals are in the
United States.
And so the way I like toexplain to people is there's
sort of like the Fortune 500,and then there's like the
Russell 2000 or 3000, to use afinancial analogy.
(18:40):
And so I think I had a verywell-known VP of construction
for a health system tell me once.
He said Grant, the way Iexplain modular construction in
healthcare is that there's apool, right, and we're all
looking at a pool.
And way I explain modularconstruction in health care is
that there's a pool Right, andwe're all looking at a pool and
we're all looking at how deep itis and we're all standing
around it as meaning the needsof construction and we're saying
, yeah, I think the pool isthree feet deep, but none of us
(19:02):
and this is at the Fortune 500level, right, we're somewhat,
we're reluctant to want to bethe first ones to jump into that
pool, right, because we don'tknow what that is, and you know.
So we've had a lot ofconversations with large
academic medical centers thatyou know, quite frankly, are not
ready for it because they havesuch a large, their processes
(19:24):
are so complicated, theirclinical pathways are so robust
that to change the delivery ofthis construction product let's
call it fundamentally changessome of the things that they do
as a business, and so I don'tthink we're going to see things
happen overnight.
But again, maybe the sort ofplay is at this 5 to 20,000
(19:47):
square foot area there's a lotof this stuff being built.
As we as an industry meaningthe modular industry can
continue to be successful atthis space, then we will
continue to see, I think,modular grow and expand in the
healthcare you know, in thehealthcare industry.
You know I had a, again reallylarge health system VP of
construction was sitting in oneof our conferences a couple of
(20:09):
years ago and he said you know,grant, I don't understand,
because every time we sit downto build a new tower, we start
with a clean sheet of paper andwe sit down with the architect
and we design what the tower isgoing to look like, but we know
every single time what ourpatient room is going to look
like, because we have a standardpatient room and they have a
standard patient design.
So why am I constantly startingwith a blank sheet of paper
(20:32):
every time I am starting a newproject?
Why am I not just taking mymodel room in Revit or whatever
it may be and dropping that intomy next design and keep on
iterating?
Right and that's what we'retrying to focus on is like, how
do we drive lean principles andthat Toyota production
processing concept of iterationto the design of hospital
(20:54):
construction?
Speaker 1 (20:56):
Well, I think that VP of construction is thinking
exactly along the right lines.
What is your elevator pitch?
So, when you're having theseconversations, you're talking
with VPs of construction at bigcompanies that want to build
modular, what's your pitch tothem as to why they should
consider modular and what aretheir responses?
Yeah, so I mean it's reallysimple.
Speaker 2 (21:17):
At the end of the day , the pitch is this we're
proposing a new solution to youin terms of how you can deliver
healthcare.
Our process, if you work withus, is going to give you an end
product that is going to bebuilt.
Most cases I can't guarantee,but I will say most likely is
going to be built.
Most cases I can't guarantee,but I will say most likely is
going to be built either fasteror cheaper than traditional
construction, and there'sdifferent ways for us to look at
(21:39):
that.
But generally speaking, thathas held true.
And on top of that, what we areproposing is if you, as an
organization, commit to modularconstruction as your sort of
means to an end, it will openthe doors for you in terms of
your technology platform, yourtechnology integration, how you
treat patients, and we believeand we do believe this very
(22:01):
strongly potentially is gettingyou to the point where you will
improve patient outcomes.
And patient outcomes areimportant to a lot of these
hospitals and health systemsbecause that's tied to how they
get reimbursed from the federalgovernment.
And so if we can improve yourpatient outcomes and we can
change the economic formula ofhow you're reimbursed, everybody
(22:21):
wins because you're going tosave time, save money and your
patients are going to be happierdoing it.
Speaker 1 (22:26):
What's your outlook for the industry over the next
few years?
The modular healthcare industrythat is.
There's a lot of new federalpolicies, there's a lot of
tariff talk, there's immigrationtalk.
What does all that mean for thehealthcare building industry
and for EIR and modular buildingitself?
Speaker 2 (22:46):
Yeah, that's the million-dollar question right.
I mean I think, yeah, just a few.
Look, I mean, nobody has acrystal ball.
I think at the end of the day,I think that if we have an
opportunity to bring this typeof manufacturing and this type
of technology in-house, meaninginto the United States, and we
(23:09):
can drive that, I think that'sultimately good for everybody.
While I'm not necessarily a bigfan of the tariffs, I think the
tariffs, inadvertently, arekind of creating that
opportunity, because being ableto now build something in a
lower cost country right, as wealready know and then bring it
to the United States now we gotto slap 25, as of this morning,
(23:30):
actually right 25% on top ofsomething from Canada or Mexico.
That changes the economics,right, and so I think that
that's good for us long term asan industry.
But ultimately I think that thehealthcare modular industry
overall has a long road ahead ofit in a good way, a long runway
(23:51):
, because the cost ofconstruction within healthcare
is already extremely high, thetimeline is already extremely
long, and so any opportunitieswhere there exists for us to
provide value-added opportunityto reduce those things is going
to be good for us.
It's hard to really crunch thisnumber.
(24:12):
I know we always look atconstruction starts and what
percentage of those in theUnited States are modular.
It's really hard to drill downinto that in the healthcare
industry because it's not reallyreported.
But I suspect that if you wereto take modular in a broad sense
not just meaning volumetricmodular panels, but even talking
about bathroom pods, talkingabout even mechanical racks you
(24:36):
know things like that of nature.
I suspect that we've seen apretty steady increase in the
utilization of modular withinthe healthcare industry and I
think it's going to continue toincrease.
Speaker 1 (24:46):
What's next for EIR, both going you know, going into
2025 and beyond, if you're ableto say what's on the horizon for
you guys.
Speaker 2 (24:55):
Yeah, so I mean we're obviously looking to get our
buildings into the ground.
We have another building whichwe didn't mention, but I want to
just give a shout out.
We're working on a 10,000square foot medical office
building right now in Brooklyn.
We just finished the foundationand modular production is
starting actually this month onthat.
So we got a lot of work cut outfor us this year on the
(25:16):
building side.
But the future for us is reallyabout not only getting these
buildings into the ground butstarting to really develop the
technology aspect behind it tosupport them and working with
our partners to do that.
So you know, what we're reallydriving ourselves to is how do
(25:38):
we use the building, how do weuse modular construction to
build the building?
But then how do we also use thebuilding to collect data and
insight as to what's going oninside so that we can, for our
clients and for ourselves, haveinsight into building better
clinics, better hospitals downthe road, and not starting with
(25:58):
that blank sheet of paper, asthat VP of construction said,
and actually starting withsomething that is tested and we
actually have some data pointson.
Speaker 1 (26:09):
Well, grant, this has been a great conversation.
I really appreciate your timetoday.
Thank you for being here and Ican't wait to see what the
future holds for EIR.
Thanks, john, looking forwardto it.
Thank you, my name is JohnMcMullen.
This has been another episodeof Inside Modular, the podcast
of commercial modularconstruction.
Until next time.
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