What are the advantages of having a facility investment strategy?

This chapter discussed long range facility investment strategies and provides a road map to guide renovation, construction and capital investment. What are the advantages of having a facility investment strategy?  What are some common strategies?

200-225 word answer APA and references.  Chapter is below.

“Reaching Consensus on a Long-Range Facility Investment Strategy
IN THE TRADITIONAL facility master planning process, facility deficiencies and future space projections are often translated directly into facility “options” that are represented by architec-
tural drawings. A preferred design solution is subsequently selected. Renovation or construction cost estimates and a phased construction schedule are developed, with individual projects identified for funding approval and staged implementation. As part of the implementation of the facility master plan, the design architect is then commissioned to provide more detailed architectural drawings and to prepare construc- tion documents.
The problem with this approach is that alternative operational concepts are often evaluated (if evaluated at all!) based on an architec- tural rendering rather than on sound business principles and consis- tency with specific strategic planning and operations improvement objectives. For example, alternative surgery suite configurations, such as a combined inpatient/outpatient suite versus a separate outpatient surgery suite, may be drawn by the architect when such a decision should be made prior to the design process and should be based on an evaluation of case mix and workload volumes, operational costs, surgeon preferences and revenue generation, and customer access. This kind of facility master planning process, where the planning team jumps prematurely into design with the sole output being an
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architectural block drawing of planned future department locations and building projects, is no longer relevant given the dynamic health- care industry. If market conditions change and workload projections do not come to fruition or if department leadership changes such that one or more projects prove infeasible, the entire plan is deemed outdated and shelved.
The gap between the identification of facility deficiencies and future space needs, and the subsequent architectural solutions, should be bridged with a thorough evaluation of priorities and capital investment trade-offs. Consensus on the resulting long-range facility development strategy, or “capital investment strategy,” allows the planning team to begin a phased implementation of the facility master plan with confidence. They can readily alter their course as needed to reflect unanticipated changes in the market, reimbursement, regulations, and technology.
The long-range facility investment strategy essentially provides a road map to guide renovation and construction (and capital investment) over a defined planning horizon. It helps senior leadership to understand key facility issues and priorities facing the organization and to reach consensus on capital investment goals and objectives. It also aligns facility investments with the organization’s strategic (market) plan, operations improvement initiatives, planned IT invest- ments (IT strategic plan), and financial resources. Documentation of an agreed-on facility investment strategy assists in the education of physicians, employees, and other stakeholders relative to long-range planning goals and priorities. Unlike the traditional facility master plan, adherence to defined strategies allows for a dynamic process that does not become obsolete if one or more individual projects are derailed.
From my experience, the most common facility investment strategies developed by healthcare organizations generally involve the following:
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• Bed allocation and nursing unit reconfiguration
• Clinical services reconfiguration and upgrading
• Outpatient services configuration and provision of physician office space
• Building infrastructure upgrading and equipment acquisition/replacement
• Patient experience improvement
Bed Allocation and Nursing Unit Reconfiguration
Today, much of the costly inpatient care in the United States is still delivered in facilities that were designed when cost-based reimburse- ment was the norm, nurses were easy to recruit, and the nurse-call system was considered “high-tech.” Inpatient care is often fragmented into small, specialized units organized by acuity level, with much of the care delivered by specialists from large, centralized ancillary departments. Simple patient care activities, such as a chest x-ray or a blood test, may require numerous steps and personnel, resulting in prolonged turnaround times, delayed decision making, extended lengths of stay, and ultimately increased costs. Along with a high number of semiprivate patient rooms, this results in frequent patient transfers that involve multiple departments and staff throughout the organization. After being encouraged over the past two decades to reduce surplus inpatient bed capacity in response to declining admissions, use rates, and lengths of stay, some hospitals are struggling to accommodate growing inpatient volumes, particularly high-acuity patients.
Because of the large amount of space devoted to inpatient care in the typical hospital, with inpatient care representing a disproportionately large percentage of an organization’s total costs, healthcare organiza- tions with aging facilities need to develop a strategy for reconfiguring inefficient nursing units, updating outdated facilities, and in some cases expanding or replacing beds. A long-range facility reconfiguration plan should address inpatient nursing unit configuration by service line, acuity, and type of patient accommodation—private, semiprivate, short-stay, or observation—and should correspond to anticipated high-bed and
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low-bed scenarios. For healthcare organizations with inadequate accommodations for high-acuity patients, a limited number of private rooms, and aging facilities, a phased plan for ongoing bed replacement is necessary. Potential bed expansion must also be addressed in growing and aging markets.
As discussed in Chapter 3, identifying the range of beds that may be needed and then developing a flexible facility investment strategy that can be adjusted as certain benchmarks are achieved are important for facility planning purposes. Specific strategies may involve the following:
• Constructing additional new beds to meet the high-bed scenario, or replacing some of the existing, outdated beds with new beds if the high-bed scenario turns out to be overly aggressive
• Constructing larger acuity-adaptable patient rooms, with some of the rooms having the capability to accommodate two patients if the bed-need projection is underestimated or to accommodate seasonal fluctuations in census
• Redeploying existing patient rooms as either privates or semiprivates to offset inaccuracies in projecting future demand
• Developing a day recovery or observation unit that is both less expensive and quicker to construct than a traditional inpatient nursing unit to supplement inpatient bed need
Clinical Services Reconfiguration and Upgrading
Healthcare organizations are reconfiguring and often realigning clinical services among multiple locations at increasing rates. Such plans should be based on a formal, well-conceived strategy to enhance customer access, to reduce operational costs, and to minimize ongoing capital investments by planning flexible, multiuse space. Although future expansion may be planned for EDs or interventional imaging services, many hospital-based departments are being downsized because of the shift of treatments and procedures to the point of care. With increasingly miniaturized and mobile equipment, such as table-top lab test analyzers and portable digital imaging units, and the gravitation of services to the physicians’ office as equipment becomes
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less costly to acquire, such as ultrasound and EKG, large, centralized departments need to be reconfigured. With the high cost of the most advanced, floor-mounted imaging equipment, such as high-speed CT and PET scanners, departments are often expected to schedule patients on extended shifts and weekends, thus increasing their workload capacity significantly without increasing their space.
Because of the many current issues associated with diagnostic and treatment services on the hospital campus, specific strategies and actions should be defined to guide ongoing investments in facility upgrading and acquisition of new technology and medical equipment.
Outpatient Service Configuration and Provision of Physician Office Space Most healthcare organizations require a focused facility investment strategy that corresponds to their market strategies for penetrating target markets and increasing market share, physician recruitment, development of centers of excellence, and so on. The facility development strategy may address construction of freestanding, community-based outpatient facilities; new outpatient facilities in partnership with surgeons or physician specialists; expansion or construction of physician office space on the hospital campus; or expansion of existing space for new or growing programs or services.
In particular, a strategy may be developed to move high-volume, routine outpatient services off site to less costly and more easily accessible facilities. This approach also reduces traffic and congestion on the main hospital campus and frees parking spaces. Examples include outpatient physical therapy, radiation oncology, dialysis, and primary care clinics.
Building Infrastructure Upgrading and Equipment Acquisition/Replacement Unless a specific healthcare facility has been replaced within the recent decade, a strategy is generally required to address the need for continued maintenance and updating of the physical plant as facilities are retooled and renewed to meet changing demand and technology. Actions related to the acquisition or replacement of new equipment are also frequently included as part of a long-range facility investment strategy and should be integrated with the organization’s IT strategic plan.
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Patient Experience Improvement
In an effort to promote customer loyalty, provide a healing environ- ment, and satisfy employers and payers, most healthcare organizations include some aspect of improving the patient’s experience as one of their facility investment strategies. This may involve improving wayfinding and access to necessary services, collocating related services to provide one-stop shopping, and upgrading the interior decor and provision of enhanced amenities. I have found that an understanding of the following points is key to improving the patient’s experience.
All Patients Are Not the Same
Healthcare customers tend to simply be categorized as inpatients or outpatients. Just as inpatients vary from the acutely ill with life- threatening conditions to the short-stay patient undergoing a routine procedure, outpatients also have different needs and expectations depending on their acuity and the nature of the care that they require. At the same time, the distinction between an inpatient and an outpa- tient is blurring with new care delivery models, alternate care settings, and technological advances. Today, unless admitted through the ED, most patients arrive at the hospital as an outpatient and are generally admitted post-procedure. With the explosion of minimally invasive surgery and same-day medical procedures, the only difference between an inpatient and an outpatient is often the length of their recovery—for example, four, six, or eight hours versus a 30-hour stay or next-day discharge. These patients experience the same reception and intake processes and require the same predischarge instructions regardless of whether they are classified as an inpatient or outpatient.
There are also different types of outpatients, as shown in Figure 6.1, ranging from those seeking care for life-threatening conditions to those focused on fitness and wellness. Various types of care for outpatients include the following:
• Emergency/urgent care that requires immediate treatment for life-threatening or urgent conditions, as well as care for patients who consider themselves to be in immediate need of medical care
• Routine/episodic care may involve an occasional or once-a-year visit to the healthcare campus for routine care, such as an annual physical or a chest x-ray
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• Acute ambulatory/short-stay care may involve a once-in-a-lifetime experience, such as outpatient surgery or an outpatient cardiac catheterization
• Chronic/recurring ambulatory care involves frequent or ongoing visits, multiple times per week or month, for services such as physical therapy, cancer care, and dialysis
• Fitness/wellness activities may include exercise regimens and health education for individuals who do not perceive themselves as “patients”
Each type of outpatient has different needs and expectations relative to site access and wayfinding, convenience, recognition by staff, educa- tion, and discharge instructions. The sharing of space by different types of outpatients also needs to be considered. Viewing recovering patients exercising in a cardiac rehabilitation area may be inspirational and reassuring for a patient undergoing a heart catheterization or presurgery testing for open-heart surgery. However, it may not be advisable to mix patients undergoing chemotherapy with healthy patients undergoing annual health screening procedures.
Separating Perception from Reality
Many factors affect the patient’s and staff’s perceptions of inadequate facilities, as shown in Figure 6.2. Understanding the actual facility issues before investing millions of dollars in renovation or new con- struction is important. The initial first impression is also important, which is why the hospitality industry invests so many dollars in its entrance facades and entry lobbies. Patients may also have different perceptions and expectations depending on their age, socioeconomic status, cultural diversity, education, and exposure to the media. However, the patient’s perception of high-quality care may require more than contemporary, state-of-the-art facilities. Good design should also facilitate efficient processes, eliminate clutter, and create a pro- ductive work environment for care providers. Staff attitudes may ulti- mately affect patient satisfaction more than facilities.
Improving the Patient Experience Does Not Always Mean Higher Costs
Acute care hospitals have been traditionally organized around depart- ments rather than around the patients’ needs. In addition to the
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customer service center and express testing concepts described in Chapter 4, other new models for delivering services to the patient result in a win-win situation by achieving both improved customer sat- isfaction as well as reducing costs. Examples include the following:
• Organizing patients by specialty rather than by acuity level and collocating a comprehensive range of services for a specific patient diagnosis or medical condition, such as a heart center or geriatric center;
• Creating acuity-adaptable or universal patient rooms (further described in Chapter 11); and
• Acquiring Internet-based information/communication systems that allow patients and their families access to information at any
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time while reducing the labor costs associated with information desks and call centers.
Improving the Patient Experience Begins Before Design
Goals to improve the patient’s experience need to be established and documented well before commencement of the design process. Critical to improving the patient’s experience is the integration of space programming and design with the organization’s market strategy, clinical service line planning, operations redesign, and investments in new technology and information systems.
The Patient Is Not the Only Customer
For an institution to be successful, it must consider other customers and their needs:
• Family members and visitors may have a more extensive exposure to the organization than the patient while they are parking, wait- ing during the patient’s procedure, and determining the patient’s status at various points in time. The experience of family mem- bers and visitors may have a significant impact on the patient’s perception.
• Staff may interact more positively with patients and their family members if they have a productive work environment and feel that they are appreciated.
• Employers are demanding convenient access to services, a perception by the employee of quality care, and cost-effective services for their employees.
• Other major payers demand cost-effective care, such as Medicare. • Institutional partners may require market branding, with a
consistent quality of care and facility image at all service locations.
Improving Wayfinding
Development of a simple and efficient wayfinding system to direct customers to their specific destination on the healthcare campus is closely related to any strategy for improving the patient’s experience. This is becoming increasingly important in a competitive market with
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an aging and less ambulatory patient population. Wayfinding begins with the customer’s arrival on the healthcare campus, and it involves signage and directional cues that assist the customer in identifying the appropriate building entrance, parking, and arriving at the desired service location. Key principles of wayfinding and signage for the healthcare campus include the following:
• A “shopping center” concept should be used, with an easily iden- tifiable front door supported by dedicated entrances for customers who come frequently to a specific service.
• Customers should be able to see the front door before parking their cars—everyone wants to park adjacent to the front door, so not knowing where it is creates confusion and anxiety. In particular, I have found that directional signage in parking decks, orienting the customer to the appropriate elevator and hospital entrance, is frequently overlooked in the planning of signage systems.
• The customer service center concept should be implemented and located contiguous with the main entrance, using a hub-and-spoke concept.
• A home base should be provided for families and visitors who may be arriving at different times to meet and gather, and appropriate amenities and communication systems should be available.
• Signage should serve the needs of patients and visitors; staff orientation should be done through in-service education.
• The number of potential destinations should be minimized; simple and logical names should be used for these destinations with a minimum amount of information to allow expedient decision making at any given intersection or decision node—for example, Diagnostic Center as a single destination rather than separate signs for Radiology, Nuclear Medicine, and Ultrasound.
• Signage should be consistent with constant reinforcement; this is particularly important when travel distances are lengthy. Intermittent seating should also be provided.
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• Directional signage should be supplemented with architectural cues such as different floor coverings, ceiling heights, water features, statues, and dominant artwork that can be easily remembered and recalled to assist in orientation at any given point.
The development of a wayfinding program and a budget should occur in conjunction with immediate, short-term, and long-range facility reconfiguration strategies. A single administrative person should be responsible for signage and wayfinding, and a formal process should be in place for requesting new signs and for approval, ensuring consistency with the facility master plan.
Other Strategies
Depending on an organization’s unique situation, additional strategies may be developed, such as the following:
• Relocate administrative offices outside the hospital to less costly and flexible space; an off-campus location may be chosen to free- up parking and reduce traffic congestion on the hospital campus.
• Relocate or consolidate selected building support services into a modernized but less costly facility; an off-campus location may be considered that can support more than one hospital site, such as a warehouse, laundry, or kitchen, or a decision may be made to outsource specific services.
• Acquire land to enlarge the current campus to replace or renew aging buildings or wings, to provide additional parking, or to construct a new physician office building or specialty center.
Figure 6.3 provides an example of a healthcare organization’s key investment strategies and the corresponding actions (tasks) required for implementation of one of the strategies.
Decisions to develop specific centers of excellence are complicated. An organization needs to initially understand the specific physical and virtual elements that give customers the perception of a “center” and to then identify which functional components and services will need to be physically adjacent versus virtually and electronically connected.
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Unless the center is being constructed as a freestanding facility on a new site, some physical components could be located within existing space while others are in a new addition. The trade-offs between the cost (initial capital and ongoing operational) of achieving physical adjacency versus settling for less-than-perfect convenience for the customer need to be reviewed and weighed carefully. The potential for increased revenue; reimbursement issues; and the demands of donors, partners, or investors may also affect the requirements of the physical design. Physicians often have difficulty imagining a center that is not an imposing edifice or at least a freestanding building. From the patient’s perspective, once they arrive at a well-identified entrance and are greeted by a friendly and competent receptionist, they are generally oblivious to where they are treated as long as they are not asked to walk a great distance. An elevator ride with a short walk to space in an existing building is not considered a hardship, even though the physician leaders may feel that new construction is mandatory.
Every healthcare organization is delighted to have a private donor fund a building project. However, sometimes the donor has no interest in the organization’s long-range capital investment strategy but wants to build a building or fund a program that is not even on its radar screen. Most institutions are not in a position to reject such donations, and it is a rare administrator who has the backbone to turn down money rather than to compromise the organization’s long-range facili- ty development plan. Do not be deluded into thinking there are no strings attached to donor money. These projects can become very diffi- cult and emotionally draining. It helps, though, if the fundraising arm of the organization is integrated with the facility planning process such that the organization can seek donations that are aligned with its long- range facility master plan. Most importantly, the real issue associated with constructing an unnecessary or oversized building is affording the ongoing operational costs even though the initial construction is financed by someone else (Waite 2005).
It is not unusual today for board members to ask the question, What happens if we do nothing? This may appear to be a viable strategy
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Consolidate Surgery Beds: 27 Ortho/Neuro Beds (9,800 DGSF) 25 General Surgery Beds (8,200 DGSF)
Consolidate Cardiology Beds: 20 CV Surgery Beds(8,100 DGSF) 20 Cardiology Beds (7,800 DGSF)
Physician Offices (Leased) 9,100 DGSF
Redeploy Vacated Child Birth Center for New Cath Lab 9,400 DGSF
Cancer Center 13,400 DGSF
for an organization that is looking for a merger partner or is trying to conserve capital to build a replacement facility. However, it is important to differentiate between doing nothing and maintaining the status quo. Just to maintain the status quo, and ensure that market share does not erode and that key staff do not leave, money will need to be spent to maintain critical building systems and to upgrade furnishings and finishes to uphold a clean and professional image.
Once consensus has been reached on future strategies and correspon- ding actions, future department location drawings will need to be prepared that show the future size and location of all departments at the conclusion of the proposed renovation or reconfiguration, new construc- tion, or demolition. They may be highlighted graphically to illustrate phasing stages over time as appropriate. A site plan may also be required that illustrates proposed changes to site access, circulation, building entry points, designated parking areas, and new additions or replace- ment facilities. Supplemental diagrams and graphics are frequently used as communication tools, such as the building section, or stacking, diagrams described in Chapter 2. An example of a typical future department location drawing is illustrated in Figure 6.4.
Depending on the abilities of your inhouse resources, such as your in-house architect, and whether you are using outside assistance from a predesign planning consultant, you may need to involve a design consultant at this point to perform a feasibility study, particularly if major facility expansion is anticipated. This study may include an analysis of alternative siting options, horizontal or vertical expansion trade-offs, and facility reuse issues. However, most predesign planning consultants, who specialize in facility master planning, will have licensed architects on their staff to routinely assist with the translation of your facility development strategies into facility reconfiguration actions (or options as applicable) in conjunction with strategy development.”
 (Hayward 115-130)

Hayward, Cynthia. Healthcare Facility Planning: Thinking Strategically. ACHE Management Series Book, 20051101. VitalBook file.

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