Changing healthcare dynamics demand a new approach to facility planning that takes multiple dimensions of care, research and education into account. A successful master planning strategy will be grounded in the organization's larger strategic direction, revenue and financial performance potential. This change requires organizations to "look beyond the buildings" and fully integrate business planning with capital facility investments.
Even if all the changes associated with reform are not carried out, a transition from volume- to value-based reimbursement is expected, creating new directions and relationships to consider when planning healthcare facilities.
While hospital, outpatient and clinic buildings will continue to be central to healthcare delivery under any reform scenario, effective performance necessitates managing patients through the full continuum of care. Ensuring patients receive quality care requires including elements not usually considered in the master planning process, beginning with preventive health and primary care and incorporating effective post-acute care either at home or in nursing or rehabilitation centers.
This patient care continuum, as shown in Exhibit 1, will help ensure quality, provide the right care in the right setting at the right time, enhance overall value and maximize reimbursement. Educational programs will in many ways mirror this continuum so that new health professionals are taught the principles of value-based care. Organizations today are substantially lowering readmission rates by training and partnering with sub-acute providers. This is just one example of the type of relationship that is anticipated and incorporated into a successful master planning strategy.
Implications for healthcare planning
Facilities will continue to represent major capital investments which need careful analysis and cannot be ignored pending reform changes. It is not necessary to own all aspects of the care continuum, but it is important to have productive partnerships and interrelated operational goals. This will drive subsequent impacts on the level of demand for physical spaces and support structure throughout the care continuum, including buildings, real estate, operations, IT, communication and management structure.
More than ever, hospital executives are challenged with balancing preparation for the potential implications of healthcare reform while addressing near-term needs. Expecting a future of shrinking payments, leaders of all provider organizations are navigating some or all aspects of the performance-improvement readiness dynamic. Managing how major capital will or will not be spent is a part of this dynamic and will therefore also be addressed differently going forward.
As healthcare transitions from payment based on growth of assets to growth in the value of services performed, it is important that capital growth be considered from new perspectives regarding how new facility operations and technology will support this transition. Anticipating demands in capital infrastructure will be critical to tightly managing those outlays.
Master planning serves as the basis for making major capital investment decisions. Successful investment decisions will be viewed through the same lens as any business decision — will the investment perform as intended? Consider the following elements as part of the investment decision:
A successful approach to master planning will enhance the value of the overall enterprise predicated upon the major elements of value: quality, patient satisfaction, institutional efficiency and cost. Experience has taught us that buildings, like people, go through lifecycles, and that leading organizations optimize a building’s performance throughout its life and across its many uses.
Harvey J. Makadon, MD, and Larry Sterle have more than 30 years of experience working with and advising the leaders of health systems and hospitals. They can be reached at harvey.makadon@kurtsalmon.com and larry.sterle@kurtsalmon.com. Learn more about Kurt Salmon.
Even if all the changes associated with reform are not carried out, a transition from volume- to value-based reimbursement is expected, creating new directions and relationships to consider when planning healthcare facilities.
While hospital, outpatient and clinic buildings will continue to be central to healthcare delivery under any reform scenario, effective performance necessitates managing patients through the full continuum of care. Ensuring patients receive quality care requires including elements not usually considered in the master planning process, beginning with preventive health and primary care and incorporating effective post-acute care either at home or in nursing or rehabilitation centers.
This patient care continuum, as shown in Exhibit 1, will help ensure quality, provide the right care in the right setting at the right time, enhance overall value and maximize reimbursement. Educational programs will in many ways mirror this continuum so that new health professionals are taught the principles of value-based care. Organizations today are substantially lowering readmission rates by training and partnering with sub-acute providers. This is just one example of the type of relationship that is anticipated and incorporated into a successful master planning strategy.
Implications for healthcare planning
Facilities will continue to represent major capital investments which need careful analysis and cannot be ignored pending reform changes. It is not necessary to own all aspects of the care continuum, but it is important to have productive partnerships and interrelated operational goals. This will drive subsequent impacts on the level of demand for physical spaces and support structure throughout the care continuum, including buildings, real estate, operations, IT, communication and management structure.
More than ever, hospital executives are challenged with balancing preparation for the potential implications of healthcare reform while addressing near-term needs. Expecting a future of shrinking payments, leaders of all provider organizations are navigating some or all aspects of the performance-improvement readiness dynamic. Managing how major capital will or will not be spent is a part of this dynamic and will therefore also be addressed differently going forward.
As healthcare transitions from payment based on growth of assets to growth in the value of services performed, it is important that capital growth be considered from new perspectives regarding how new facility operations and technology will support this transition. Anticipating demands in capital infrastructure will be critical to tightly managing those outlays.
Master planning serves as the basis for making major capital investment decisions. Successful investment decisions will be viewed through the same lens as any business decision — will the investment perform as intended? Consider the following elements as part of the investment decision:
- Strategic thinking — not reinventing the organization's strategic plan, but having the ability to interpret critical points that impact facility decisions. Beyond how much space is needed, what are the investment's implications for physicians and service lines, market reach and opportunity, competitive positioning, prioritization of mission and medical staff development?
- Operational integrity — how care is arranged, delivered and supported underlies quality, safety, satisfaction and cost of care. Anticipating efficient (or Lean) operations is a basic tenet for assessment and planning. Understanding organizational structures that deliver superior functionality and envisioning how those structures fit your programmatic goals is critically important when considering future care delivery models.
- Information technology integration — communications across the care continuum, quality and safety of care are all premised on seamless IT services. Like facilities, these systems require significant capital investment, so it is critical to have a firm grasp on the status of the IT systems' capabilities to balance the overall demand for capital and ensure that future facility investments are capable of handling future system advancements.
- Campus evolution framework — near-term projects are valuable only if they integrate with the long-term direction. Saving money on projects in the short run could cost a lot more in the long run if it leads to future workarounds in terms of capital expenditures and operating costs.
- Financial performance — capital capacity and ROI don't represent the full measure of analysis upon which to base a fully informed investment decision. The implications of any capital investment plan on future activity volume, reimbursement expectations, enterprise-wide capital and operating costs, philanthropy and other sources and uses of capital must be understood and evaluated. A longitudinally modeled implementation plan will enable an organization to achieve "managed continuity," through the evolution of its investments, to achieve its goals and vision with a high level of confidence.
A successful approach to master planning will enhance the value of the overall enterprise predicated upon the major elements of value: quality, patient satisfaction, institutional efficiency and cost. Experience has taught us that buildings, like people, go through lifecycles, and that leading organizations optimize a building’s performance throughout its life and across its many uses.
Harvey J. Makadon, MD, and Larry Sterle have more than 30 years of experience working with and advising the leaders of health systems and hospitals. They can be reached at harvey.makadon@kurtsalmon.com and larry.sterle@kurtsalmon.com. Learn more about Kurt Salmon.