By Scott Creekmore
The construction industry as a whole is growing, and the health care sector continues to be a big part of that growth. There is tremendous pressure for hospitals and health systems to reduce costs and increase efficiencies while improving patient care as well as financial stability. While this may be daunting, streamlining processes and putting in place a few key best practices can save both time and money over the course of these construction projects, allowing for greater focus on patient welfare.
Health care construction spending in 2016 exceeded $40 billion and is expected to increase 5 percent annually through 2020, according to the U.S. Census Bureau. More than 50 percent of construction projects completed between 2012 and the first quarter of 2016 were construction renovations (including alterations and additions), according to information provided by the Healthcare Facilities Symposium. So, how can facilities keep up with these challenging demands and plan properly for the future?
During a recent webinar presented by Gordian, a construction data and software company, David Clark, associate vice president of facilities, construction and design at Jackson Health System in Miami, provided insight into how the health system plans for the future with facility master planning. While many projects are currently ongoing, the actual Jackson Health facility master plan was developed in 2012 around three critical questions:
- How are we operating today?
- Are we meeting the needs of the community?
- How do we develop a strategy to improve and expand operations?
Jackson Health has six hospitals and 12 satellite facilities that together span more than 7.6 million square feet of occupied building space managed by the health system’s respective construction and facilities departments. These departments manage an average of 40 to 50 active projects a year.
With the development of an initial facility master plan, Jackson Health cultivated a new capital program, from which it defined signature projects. These signature projects included expansions and renovations of both the Jackson North Community Hospital and the Jackson South Community Hospital, building a new rehabilitation hospital, patient tower for transplant services and 100-bed hospital in West Miami Dade County.
Interestingly enough, project priorities have been evenly split between renovation projects and replacement projects. Perhaps one of the most difficult decisions included deciding whether a building was worth renovating or if it would it be better to demolish and build from the ground up. This is not an easy decision to make and requires careful consideration.
During the webinar, Clark was asked what matrix Jackson Health uses in determining whether to renovate by adding structures versus building new from the ground up. The organization uses a Phase I, Phase II, Phase III, due diligence process when reviewing renovation project requests.
- Phase I: Look at the project initiative request, look at historical data and estimate cost per square foot to determine ROI on proposed project
- Phase II: Bring on professionals, including architects and engineers, to look more in depth at aging facilities to see if infrastructure can support new project initiative and revisit ROI
- Phase III: Bring the engineering department and architects together with non-clinical departments such as IT to ensure departments can perform non-clinical services to match project initiatives in the structure; continue with cost benefit analysis, and if it is determined that it will work, proceed to renovate; if not, look at other options such as a new build or minor expansion
In making such a crucial decision, accurate construction cost data is key. Often project estimates are compiled from individual pieces of data pulled from different sources. This can lead to less than satisfactory estimates, which will inevitably lead to losses of time and money. They may even lead to erroneous conclusions on whether to move forward with a renovation or a rebuild. Therefore, compiling current, accurate and localized construction cost data is a key best practice during the planning stage of a project.
Square foot models further offer a solution to this crucial element. Instead of piecing individual pieces of data, this tool offers customizable estimations based on factors such as building type and location. During the planning process, comparing the numbers for a renovation square foot model versus a new construction square foot model provides a clear vantage over which option best suits the project at hand.
While the above methods on their own can lead to notable improvements within health care facilities, it is when they are strategically put into action together that major time and cost savings become a reality. This will lead to both better bottom lines and better patient care.
Scott Creekmore is the director of account management, healthcare for Gordian. Creekmore has managed job order contracting programs for Harris County, Harris County Hospital District, University of North Texas, University of Texas Health Science Center at San Antonio, USPS and City of New Orleans.