/2009_KLMK_Capital_Project_Solutions_Series

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

JANUARY

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – January 2009 Keeping Your Capital Project Vision On Course Are you REALLY Ready to Launch? How Do You Know?

The Benefits of Conducting a Strategic Project Launch Readiness Assessment Curtis M. Skolnick, MHA Principal Consultant Today’s economic realities are hitting everyone. Many seem to believe that healthcare is an insulated industry because everyone needs healthcare.

While there is some truth to that viewpoint, the balance sheets and income statements of healthcare providers are weaker today than ever before due to a variety of factors (unemployment resulting in more uncompensated care, downturn in elective procedures, higher operating costs, payors tightening pre-certification rules, etc.). One cannot ignore the fact that, like the graying of the American public, facilities are aging and in need of repair, replacement, or operational re-tooling. Healthcare owners cannot afford to ignore their physical plants; rather owners need to ensure that every dollar spent on a facility project is well spent. Capital should only be invested when the project achieves one of the following:   

Furthers the strategic goals of the organization Generates a positive return on investment Involves critical infrastructure upgrades

In today’s environment it is more important than ever to ensure that your capital investments are prioritized and well conceived. Now is the best time to conduct a Strategic Project Launch Readiness Assessment (SPLRA) to ensure your project addresses the priorities of the organization and sets-up the enterprise to quickly respond as market conditions improve. Piqued your interest? Read on.

Introduction When you hop in your car to take a road trip, do you know the purpose of your journey? Do you have a map or sufficient directions to get you to your destination? Do you have money in your pocket for food and unexpected items? Do you make sure your family is in the car with you? Do you know how long it is going to take to get where you want to go? Of course you do!

Now, think about embarking on a large-scale construction capital project, such as a replacement hospital or a major tower addition. Do you have a reason for the project (strategy)? How about a "road map" (structured 1

Capital Project Solutions – January 2009 process)? Do you have enough money for expected and unexpected items (budget)? Is your "family" on board (your internal and external project delivery team)? Do you know how long the project will take (schedule)? In short, are you ready to launch? You may have some answers, but likely not all of them. You may have never considered some of these questions and you're not alone! If the thought of addressing each of these areas sends you into a tailspin, don't panic.

The capital delivery process is complex and one that cannot be left to chance. Prior to launching into a major facility project, members of the "Csuite" must ask themselves, "Are we ready?" Poor alignment of expectations and goals at the outset can get a project off on the wrong foot, which can cause delays and cost money down the road – possibly even jeopardizing the project. In order to ensure that a capital project starts off on the right foot, healthcare executives should conduct a strategic project launch readiness assessment (SPLRA) prior to launching a major capital construction project – it is the single most important thing you can do at the start of the project to ensure success.

What is a SPLRA? You may have heard the saying "you don't know what you don't know."

Sure, this seems obvious, but when millions of dollars are on the line, you can't afford NOT to know. In today’s economic environment, projects must be prioritized. Capital should be invested when the project furthers the strategic goals of the organization, generates a positive return on investment, or involves critical infrastructure upgrades. Conducting a SPLRA will ensure that your project addresses the priorities of the organization. Assessing what is currently known and what is unknown, what has been contemplated and what has not is of critical importance. The SPLRA involves data and information gathering, key stakeholder interviews, an intense facilitated one-day work session followed by a series of half-day sessions. The goal is to identify gaps in expectations versus realities, develop a roadmap to follow when bridging these gaps, and to assess a hospital's level of readiness to get a project off the ground.

Throughout a SPLRA, every major issue that might affect the launch will be identified and explored. It is not solely a "visioning" exercise focused on major design and building elements. Instead, the SPLRA is much broader and more encompassing. The major phases of a SPRLA are quite similar to a physician treating a patient. They are:

2

Capital Project Solutions – January 2009 •

• •

Discovery (History and Physical) - What information is currently available relative to the proposed project? This involves initial data gathering and pre-session interviews.

Gap Analysis (Diagnosis) - Where are the gaps in what is known and unknown? What is already done? What still needs to be completed?

Implementation Plan (Treatment Plan) - How can we bridge the gaps to ensure everyone's expectations are aligned and we're headed down the same path together?

The SPLRA will keep you focused on all the elements that impact the “Big 3 of” your project -- scope, schedule, and budget. Much of the time invested in the SPLRA will focus on discovery and gap analysis. The graphic below illustrates the topics addressed during the assessment. Descriptions of each section follow the graphic.

•

• “The SPLRA will keep you focused on all the elements that impact the “Big 3” of your project -- scope, schedule, and budget.”

•

•

•

•

Strategic Plan and Project Scope: The project should be a tactical element of a strategic plan. What strategy and goal is the hospital trying to achieve by embarking on a large-scale facility project? What is the scope of the project and how was it defined?

Strategic Master Facilities Plan: A master facility and site plan should be completed prior to detailed design. This master plan should be rooted in rigorous strategic and financial analyses.

Site Analysis & Land Acquisition: Looking for a “green field” site? Selecting the right site is a crucial early step. "Location, location, location" is vitally important, but not the only site issue to keep in mind. Other aspects of the site to investigate are size, buildable area, conditions, zoning disposition, and (of course) price.

Complete your due diligence before selecting and purchasing a site.

Clinical and Operational Processes: Form Follows Function – the 3F theory. If you are moving from a 50-year-old building, the facility is likely somewhat responsible for inefficient operations or can inhibit improvement implementation. You will want to clearly define how clinical care should be delivered in the future and how the facility can enable it to do so effectively.

Guiding Design Principles: How well do you understand Evidence Based Design and Sustainable Design concepts? What do these concepts mean to your project? What does it mean to be truly flexible? Same-handed vs. mirrored inpatient rooms, what does this all mean to your project?

Space Plan & Program: Hire an expert to help and get ready to take your project scope, master plan, and operational plan and turn 3

Capital Project Solutions – January 2009

•

•

•

•

•

•

•

them into a room-by-room space listing. Again, Form Follows Function is the axiom.

Master Program Schedule: Projects are complex and take time.

What are your schedule goals and deadlines? Are these goals and deadlines realistic?

Master Program Budget and Financial Plan: Do you know how much money you can spend on the project? Is it realistic given the project scope? Do you know from what sources the money is coming? These are basic questions, but getting them answered day one is critical.

Medical Technology & Equipment Strategy: Equipment and technology are major components of total project budget. The vision for the sophistication level of equipment and technology will have a great impact on the project cost.

Regulatory Approval Process: Zoning and Certificate of Need (CON), if applicable, will have an impact on your project and need to be addressed. Do you understand these processes? How will these regulatory hurdles impact your schedule? Your scope? Your Budget? You need to work within these regulatory constraints, but they should not define your project.

Project Delivery Team (PDT) Organization: Is your internal team invested, educated, organized and ready to get busy? Do you have a structured and logical approach to external team member selection?

Contracting Approach: What are the different contracting approaches available and what are the pros and cons of each?

Which is right for this project?

Project Delivery Process and Key Stakeholders Involvement: It begins with SPLRA and ends with occupancy and post-occupancy activities. Do you know all the steps in between?

Now You Are Ready to Launch?

In summary, a SPLRA allows you to align everyone's expectations with project objectives while validating the plan of action to get everyone moving in the same direction. The key deliverable out of the process is a well understood and agreed upon Project Implementation Plan that will be delivered to the Board for approval and the Project Delivery Team for consistent implementation. SPLRA is the number one thing you can do to ensure your project goals are met. If you found yourself scratching your head and thinking "Hmm, I hadn't thought of that" when you read the questions above, your first step should be a SPLRA. 4

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

FEBRUARY

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

Capital Project Solutions – February 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 2 in a 13 Part Series Project Scope: Define, Document & Control for Project Success!

Emily Tafel, MHA Consultant Curtis M. Skolnick, MHA Principal Consultant

Throughout 2009, Capital Project Solutions will be running a series of articles on Project Launch Preparedness. Last month’s issue discussed the overall theme of ensuring that your project is truly ready for launch and highlighted a 12-step process that should be reviewed prior to launch. This month’s article takes an in-depth look at what is required in the first of the twelve steps – Strategic Planning and Project Scope.

As discussed in the January issue of Capital Project Solutions, in order to ensure that a capital project starts off on the right foot, healthcare executives should conduct a Strategic Project Launch Readiness Assessment (SPLRA) prior to launching a major capital construction project – it is the single most important thing you can do at the start of the project to ensure success.

Throughout a SPLRA, every major issue that might affect the launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the “Big 3” of your project -- scope, schedule, and budget. In this issue we will primarily address the first leg of the “Big 3” - Scope.

What exactly is meant by “Scope”? Scope is defined by MerriamWebster’s Dictionary as “intention”, “object”, and “extent of activity”.

It originates from the Italian word scopo, meaning “purpose” or “goal”.

Defining and documenting project scope at the outset and controlling scope throughout the delivery process is essential to ensuring that the

1

Capital Project Solutions – February 2009 project vision becomes reality. Ask yourself, “What strategies and goals are we trying to achieve? What is the scope of the envisioned project and how was it defined?” Clearly defining the project, then articulating the scope and rationale to everyone involved is paramount prior to launch.

According to the FMI/CCMA 6th Annual Survey of Owners (a survey of owner’s in all types of industry who are actively involved in a construction project), two of the top ten project concerns were:  Scope control / communicating clear scope of work; and  Attaining good project definition Why rush head long into design and construction without clearly defining project scope? This can only lead to delay and frustration later down the line. If each member of the team cannot clearly articulate the scope of the project, stop, and get everyone on the same page.

The goals of the project, established early on, should be measureable and should be used as “touch stones” that can be referred back to in order to ensure that the project is meeting its goals and staying on course.

Scope Definition and Documentation A facility project is a tactical element of a strategic plan; a plan that is built on the mission, vision and goals of the organization. An organization’s strategic plan should include:  Mission and vision identification  SWOT (strengths , weaknesses, opportunities, and threats) analysis  Internal and external environmental analysis  Identification of gaps between mission/vision and internal/ external needs  Service needs identification  Market-based needs and capacity analysis  Strategic financial analysis  Measurable strategic goals  Tactics to enable meeting the strategic goals of the organization

2

Capital Project Solutions – February 2009 The needs identified in a strategic plan drive the tactical need for a project, not the other way around. A well conceived scope helps guide facilities master planning and the detailed programming and design phases of a project. The scope of the project also acts as the base to define project cost (budget). Scope and budget, are inextricably linked and need to be constantly checked against each other. It is imperative that the two balance relative to a complete financial analysis of the project. If the project doesn’t “pencil” from a return-on-investment (ROI) perspective, it will be necessary to adjust scope and budget to get the project in line financially. Conduct these analyses early. As you move through the project delivery process, the ability to easily make changes decreases, and the cost of changes increases. Therefore, it is important to ensure scope is appropriately defined, tested against the budget, and communicated and documented at the project outset. As the Master Carpenter saying goes “Measure twice and cut once.”

Scope Control Once scope is defined and clearly communicated to the project delivery team, it must be managed. Use Scope Control tools during each planning and design phase (Master Planning, Space Planning, Schematic Design, Design Development, and Construction Documents) in order for your project to avoid scope creep. Scope creep refers to uncontrolled changes in a project’s defined scope. Typically, scope increases consist of new services, new features, or additional room elements without corresponding demand or strategic justification.

Avoid scope creep early by:  Planning based on defined and justified needs rather than articulated wants.  Encouraging stakeholder participation and planning based on facts and analysis to ensure buy-in from all parties.  Eliminating “pet” projects or elements with no financial or strategic justification.  Clearly communicating scope to all key constituents and members of the project delivery team before embarking on design and construction.  Tracking scope early and continuing to track throughout the life of the project.

3

Capital Project Solutions – February 2009 However, don’t be so rigid as to eliminate scope changes all together.

Sound strategic logic and market dynamics may dictate appropriate (controlled) changes to scope that are justified. Strong scope controls will identify acceptable variances and appropriately jump-start conversations as to the “why” for the changes.

Scope increases may require additional resources (e.g. staffing, space, equipment, capital costs, time, and operational costs) which must be justified or they could potentially put the project at risk. A few thousand square feet of scope creep could add millions to your total project cost, create delays if changed late in the design process, and cause a few headaches along the way. Allowing scope creep without correlating demand and revenue may require additional staffing resources, equipment, and furnishings, and carries the long-term operational cost without the requisite return on investment.

Interestingly scope can shrink too. If a department is downsized to allow another area to grow and still remain within budget, make sure the downsized department is not rendered dysfunctional. If this happens, you will pay the piper once the facility is operational.

It is clear that there is great risk and cost to unfettered scope creep, therefore proper planning and controls must be in place to prevent your project from being derailed.  Thoroughly understand the project vision and involve all stakeholders in defining and documenting the project scope.  Utilize tools to monitor and control scope and track the departmental “units” (e.g. number of rooms) and departmental space.  Expect changes. Develop processes and criteria to evaluate proposed scope changes and to decide which changes are necessary to fulfill the intended vision.

Start strong and finish strong, by doing so your project will be a success. Start with acutely defining and documenting your scope on the front end of the project. Control scope throughout the process to position yourself to control your project, instead of your project controlling you.

4

Capital Project Solutions – February 2009 If you build it, will they come?

In summary, too often healthcare executives employ an “If you build it, they will come” mentality to a project. Sure, a new facility will have a halo effect and activity may spike initially. But if the services aren’t what “they” (patient, caregivers, and physicians) require then “they” will stop coming. The analyses conducted in the planning phase will help you accurately define project scope so you can “Go the distance” and build your Field of Dreams based on facts, market intelligence and strategic needs.

5

MARCH

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – March 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 3 in a 13 Part Series The Best Laid Plans – Facility Master Planning Emily Tafel, MHA Consultant Curtis M. Skolnick, MHA Principal Consultant

Throughout 2009, Capital Project Solutions will be running a series of articles on Project Launch Preparedness. Last month's issue discussed Project Scope and the importance of defining, documenting and controlling scope to ensure success. This month's article explores the second spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Facility Master Planning.

Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure that your project’s success, visit KLMK Group at www.klmkgroup.com.

“The best laid plans of mice and men often go awry”. This statement, adapted from a late 18th Century poem entitled “To a Mouse” by Robert Burns, can often sum up planning efforts. No matter how carefully a project is planned, something is bound to go wrong with it. A defeatist or realist attitude? That all depends on how you use this knowledge and how well you plan for potential problems.

Planning early, with eyes wide open, will set the foundation for project implementation and help mitigate and minimize issues down the road.

As discussed in February’s issue of Capital Solutions, defining and documenting project scope at the outset and controlling project scope throughout the delivery process is the first

1

Capital Project Solutions – March 2009 step of the SPLRA. This step is essential to ensuring that a project vision becomes reality. Scope development arises from strategic planning and market demand; derived from needs, services and capacity analysis. This planning and analysis serves as the foundation to conceive the envelope of development – the physical solution. Strategic Facilities Master Planning is the next critical element of the SPLRA. Master planning is part science and part art. The two must be balanced and have equal billing. Any master plan must be rooted in rigorous strategic and financial analysis. The sizing of the different campus elements, building masses and departmental functions should be based on facts and needs, not feelings and wants. Those facts come from a detailed internal needs assessment and external market analysis that is forward thinking. Those analyses give you an understanding of current deficiencies that need to be addressed - if the master plan involves an existing campus - and defines future workloads and capacities needed to appropriately size facilities.

Other important facts that must be understood are financial, schedule, and regulatory constraints. How much money is available to spend on the project? Any master plan option not fitting within the budget should be rejected. What are the timing objectives and planning horizon for the project? The Facility Master Plan (FMP) will allow for the development of conceptual project schedules and budgets / cost opinions. On the regulatory side, understanding local zoning and landuse issues will drive campus and facility layout. Certificate of Need or reimbursement regulations in certain locales may also play into the master plan.

Critical to any master plan is to define conceptually how the campus and facility will operate in the future. For instance, will patient access be completely automated and occur prior to the patient encounter or will it occur at the patient’s point of care? Will all interventional services be integrated or distributed? Is the hospital part of an integrated system that has certain services, such as materials management, centralized off-site? Answering these questions as well as many others will drive space needs and begin to set operational parameters for future phases of detailed planning.

2

Capital Project Solutions – March 2009 Sample Adjacency and Flow Diagram Art comes into play when visualizing how all of the pieces fit together on the site and within the building.

Appropriately zoning and grouping like services and activities, both internally and externally, to ensure ease of access, efficiencies of space and compartmentalization of function are theories that should be applied. How the site and building “flow� is another aspect of the creative process. There are definitely some key points to keep in mind (e.g. off-stage vs. on-stage functions, departmental adjacencies, defined internal circulation spines to limit cross-traffic, site and building access points, separation of external traffic, etc.), putting them together in an easy-to-understand plan is a particular talent. The master plan solution should focus not only on the immediate needs but also on how changes in care delivery and growth in the market impact facilities in the long-term.

Thorough Facility Master Planning, like each component of SPLRA, is crucial to developing a successful project foundation and road map.

This early step significantly influences the final built environment and therefore it is essential to collaborate with a skilled Strategic and Facility Planner to ensure a comprehensive, systematic and successful process. The planner leads the process and can provide guidance on additional expertise required and engage other experts as needed (e.g. architects, engineers, land use counsel, traffic planners, cost-estimators, etc).

3

Capital Project Solutions – March 2009

The Five Major Phases of FMP Development

Gathering critical information and engaging the appropriate resources early on will result in a more efficient process and an improved final product that meets the strategic direction and needs of the organization. FMP development requires significant due diligence. Like any good planning process, the collection of data and information at the outset is key to success. An assessment of the existing facility coupled with stakeholder input is incorporated with the planning and analysis conducted during the Strategic Planning and Project Scope Development phase to develop the foundation for the FMP.

4

Capital Project Solutions – March 2009 Due Diligence – Review/Assessment and Fact Finding

Existing Information Review New Information Gathering  Review and confirm strategic planning  Interview leadership: goals and volume / workload analyses. o Discuss overall master plan vision and goals.  Review and assess previous FMPs (if o Define expectations, priorities, available). constraints, guidelines and criteria for  Evaluate the existing facilities / site: master plan development. o Assess space quality, quantity (for function), and conditions (physical  Interview key departmental stakeholders and tour departments: aesthetics, MEP, structural, o Discuss qualitative and quantitative infrastructure, etc.). aspects of current and future space / o Review organization of space (good program. zoning vs. fragmentation). o Explore issues, adjacencies, growth plans, o Evaluate site organization / use. operational goals / improvement o Assess parking and traffic / access initiative. issues. o Define what works well vs. deficiencies in o Consider zoning and regulatory space / operations. compliance. o Note: Solution to a particular problem may not be solely facilities base. It could be a functional or operational issue.  Conduct a financial assessment to determine the amount of capital available for facility development.

Confirm Information with Steering Committee and Begin FMP Option Development So, how well defined are your plans? Set the course with a well conceived Facilities Master Plan based on strategic facts and the needs of the organization and communities it serves. Balance the science of the plan with art and creativity, and you will be well on your way to ultimately defining the facility solution to your project vision.

5

APRIL

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – April 2009

A Site for Sore Eyes - Considerations Every Healthcare Executive Should Know During the Site Selection Process Brad Durham Senior Consultant Throughout 2009, Capital Project Solutions will be running a series of articles on Project Launch Preparedness. Last month's issue discussed the Facility Master Planning Process. This month's article explores the third spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Site Analysis and Land Acquisition.

Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure that your project’s success, visit KLMK Group at www.klmkgroup.com.

We’ve all heard, and at some point have used, the expression “don’t put the cart before the horse,” suggesting that most things have a logical order that’s meant to be followed. Similarly, modern architecture subscribes to the principle that “form follows function,” meaning the shape of a building should be predicated on its intended purpose.

The same is true when it comes to acquiring land for healthcare facilities, which not only has substantial cost, but can also significantly impact the design (or “shape”) of a building. Instead of being developed on land that offers appropriate space to support a functional, expandable development, many times healthcare facilities are designed to fit a specific parcel of real estate.

Because new facilities such as replacement hospitals, ambulatory surgery centers, cancer treatment centers and medical office buildings all represent a major investment, it’s important that they become an asset, not a liability, to the organization. By conducting a Strategic Project Launch Readiness Assessment (SPLRA) prior to launching a project a

Capital Project Solutions – April 2009

healthcare organization will validate strategic objectives, confirm strategic priorities, and determine if it is really ready to launch a major project. The end result is that all stakeholders are on the same page and everyone agrees on an Implementation Plan moving forward. One major element of the SPLRA that needs to be investigated is the selection and suitability of a new site. By giving careful consideration to four key areas during the site selection process, healthcare executives can avoid allowing the land to drive the design of their facility and plans for future expansion.

Functional Site Capacity One of the most critical site selection factors is ensuring that the design is not dictated by the size and shape of the site. Ideally, the right site will reinforce the clinical service plan, allowing for the optimum configuration of the buildings. So, the first step is to define the approximate size of the facility based on strategic goals and operational needs. Then, the organization can seek real estate that will accommodate the design solution. A few guidelines to consider include: 







Size: New “green field” replacement hospital sites typically require a minimum of 40 usable acres to adequately accommodate a moderately-sized hospital, outbuildings and parking; 80 acres or more is preferred.

Usable Acreage: Take into account water, wetlands or other zones that may not be suitable for development. An 80-acre site with a 10-acre lake or wetland meandering through the site could substantially impact the location and design of buildings.

Shape: Square or rectangular sites generally yield the highest usable acreage and greatest flexibility. Oddly shaped sites with narrow areas or aspect ratios will likely include acreage that’s unsuitable for a building or parking footprint.

Topography: Flat or gently sloping sites are easier to site-plan and less costly to develop.

Current Planned Use and Future Expansion The importance of planning for future expansion cannot be overemphasized. Savvy healthcare architects often design buildings with expansion in mind by including “soft” space around “hard” areas that are difficult to relocate such as surgery, emergency departments, diagnostic imaging and radiation therapy. This same concept must be applied during

Capital Project Solutions – April 2009

the site and facility master planning effort to ensure that growth can occur throughout the site. Particularly when vertical expansion is limited, the site must allow for horizontal expansion of initial buildings along with the logical placement of future buildings. When planning for future expansion, it’s helpful to: 



Seek a site that can accommodate approximately 1.5 to 2 times the current planned bed count (for replacement hospitals) and space to allow for future expansion.

Develop a conceptual site master plan that tests both current planning assumptions and potential future growth. Placing footprints of core buildings, parking, roads, etc. on a site plan will help illustrate how the campus will (or will not) meet the envisioned development.

Parking Avoid treating parking as an afterthought or necessary evil; doing so could potentially result in a smaller facility if the site won’t yield adequate parking. The site selection process must involve an analysis of the appropriate mix of surface and structured parking to serve the planned facility. As with core facilities and associated buildings, future parking needs should also be accounted for during site selection. Some general guidelines you can use for planning purposes include: 

 

One acre yields approximately 100 to 110 surface parking spaces.  For a suburban hospital site, plan for 4.75 to 5.25 parking spaces per bed.

For a typical medical office building, plan for 5 parking spaces per usable square foot.

In general, surface parking is more desirable. Structured parking is not only expensive, but it also limits potential revenuegenerating real estate for the future.

Accessibility Similar to parking requirements, the site selection process should include a thorough assessment of accessibility. We all know that when it comes to real estate, “location is everything” so healthcare institutions must

Capital Project Solutions – April 2009

evaluate how accessible its campus is to the surrounding community and major thoroughfares. Equally important is providing adequate separation of traffic onsite. When thinking about accessibility, ask yourself: 

  

Does the site provide adequate space to provide efficient vehicular circulation and separate public, staff, service and ambulance traffic, both now and in the future?

Does the site have good visibility and/or frontage along major roads?

Can the site be serviced by existing public transportation?

Does the site provide the ability to develop a patient-friendly experience with regard to the combination of site access, availability of parking and building access?

Additional Considerations To ensure a thorough analysis of a site during the due diligence inspection period and prior to final acquisition, an owner should also request a technical evaluation that includes: Preliminary Civil Engineering and Surveying  Site boundaries and topography survey  Design development and conceptual planning  Review of zoning codes to verify compliance and use  Research existing water and sanitary sewer capacity to include necessary requirements and improvements  Utilities Capacity Study – determine electrical, telecommunications and natural gas capacity in the immediate area and potential access to the site  Detailed listing of all permits required, agencies needed in coordination of these and potential costs based on the scope of the anticipated project Geotechnical and Environmental Inspections – A thorough inspection of the site is critical for limiting exposure to extraordinary conditions that could exist under the surface. Inspections should include but not necessarily be limited to:  Preliminary Geotechnical Exploration  Phase I & II Environmental Site Assessments  Wetlands delineation and jurisdictional determinations (US Army Corps of Engineers)

Capital Project Solutions – April 2009

 

Evaluation of site relative to critical habitat locations of any endangered or protected species Determination of any cultural resource areas and whether further study is required

Conceptual Architectural Services  Conceptual site analysis  Master site plan  Parking lot/deck sizes and locations  Future building expansion zones  Site traffic patterns  Conceptual traffic impact study review and assessment  Assessment of costs for improvement of site based on outlined findings and analyses Don’t Put the Cart Before the Horse; Form Follows Function Following these guidelines during the site selection and due diligence period will accomplish two things. First, it will ensure that the site does not limit the design team’s ability to produce the appropriate long-term solution for the facility. Secondly, it will help uncover any unsuitable conditions that could potentially increase the true cost of developing the land.

Furthermore, during the SPLRA process, confirm facility scope, size, and master plan direction. Validating these elements in concert with performing the necessary due diligence on site selection and investigation will ensure that your long-range facility and land development needs will be met.

As time passes and the availability of large, well-located and perfectlyrectangular sites diminishes, the site selection and due diligence process will become even more crucial to the ultimate success of new healthcare projects. Just remember that when it comes to land acquisition, don’t put the cart before the horse. Form should follow function. Never allow land to dictate the design of facilities.

MAY

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – May 2009

The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 5 in a 13 Part Series Form Follows Function – The Importance of Addressing Clinical & Operational Processes Shaila Toro, MHS Consultant Throughout 2009, Capital Project Solutions will be running a series of articles on Project Launch Preparedness. Last month's issue discussed Site Analysis and Land Acquisition. This month's article explores the fourth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Clinical & Operational Processes. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

Form Follows Function – the 3F theory. It rolls easily off the tongues of many healthcare planners and architects. But why is it that applying this simple rule is so elusive? Often because the traditional approach to space programming and design is based on siloed user groups determining the space needs for the facility. This segregated decision making can lead to “Form Follows Familiarity” instead of “Form Follows Function.”

These user groups generally meet over the course of weeks and months to discuss operations and necessary room elements for their specific departments. While this activity ensures user input and ultimately yields a room-by-room space listing based on operations, the isolated nature of this approach does not typically stimulate process improvement discussions on a multidisciplinary level. Instead these groups tend to design space around the current departmental processes with which they are familiar, rather than at a more appropriate crossfunctional level.

This traditional model of engaging separate, non-related parties needs to change. A new paradigm is evolving in which a team is developed to tackle process flow, space programming, and schematic design at the same time. These processes are

Capital Project Solutions – May 2009

inextricably linked and a team approach ensures that all parties are working toward achieving a common goal.

Value Stream Map Courtesy of HGA Architects

It is imperative that the right resources are dedicated to this design process during the Launch Phase. Whether it is through Lean Processing, Six Sigma, or other similar approaches, the best method to space programming and design is to first value stream the processes, get rid of the waste and then program and design the facility based on the developed strategic scope and operational redesign. This requires participation from all users including clinical, administrative, support and ancillary services departments. The project delivery team must collaborate with and creatively challenge the internal users to define a program that is designed around needs and improved functions, not wants and outdated delivery models.

As stated above, the user group teams developed during the Launch Phase will be involved in process improvement, space programming, and design. The suggested organization for these teams is as follows:  Each functional department in the hospital should have a team dedicated to designing the necessary space for this function in the new facility. This will be their Core Group.  Each of these Core Groups should include members from the designated functional area (e.g., Inpatient nurses should be in the Inpatient Med/Surg Core Group).  Each of these Core Groups should also include members from each of the relevant ancillary and support services areas (e.g., The Inpatient Med/Surg Core Group should also have Case Management, Materials Management, Environmental Services, etc.).

This team organization will ensure that the issues and concerns with current process come to the surface as part of the design discussion and are addressed collaboratively in the Core Group meetings.

St. Agnes Hospital Lean Process Design Event

When designing a new facility there are many Clinical and Operational Processes that should be considered by the Core Groups. Taking these process considerations into account at an early stage during the Launch Phase will help ensure that the facility is designed in the most effective way to enable growth, flexibility and productivity.

Many key considerations are noted below with details about their affect on operational and clinical process.

Capital Project Solutions – May 2009

Patient Access: New models are being developed for registration, scheduling and checkout. Determine the operational implications of the Patient Access model so that this is considered as part of the design.  Determine if registration, check-in, insurance verification, payment and check-out functions will be centralized or decentralized.

Wayfinding and Entry Points: With a new facility come new opportunities for wayfinding and entry points. However, these entry points should not be determined in a vacuum based on opinions of the users. Instead, the functions of the hospital should be mapped and then the form by which the entry points are needed should follow.  Plan for the operational flow of patients and staff from the portals of entry to the patient care areas.  Design entry points in a way that reduces wasted steps and redundancy.  Evaluate current scheduling processes and the ability to centralize these functions to decrease redundancy.

Utilization Efficiencies: It is imperative that the correct number of beds, procedure rooms, and diagnostic spaces be planned for relative to expected volumes.  Gather data related to current and expected volumes.  Assess all processes and interdependent practices (e.g., scheduling, results turnaround, patient transport, etc.) and their affect on room utilization.

Bed Allocation and Aggregation: Eliminating unnecessary patient transfers from one bed to another enables the hospital to decrease redundant documentation, hand-offs and room turns.  Design nursing unit bed needs, staffing patterns, and layouts in line with expected patient types and volumes.

Care Models: Address any shift in the model of care at the onset of design in order to appropriately plan for culture and operational process change. For instance,  Determine if the care model will be centralized or decentralized.  Plan for staff training and process redesign in relation to the care model.  Include staff and physicians in the discussions about the model for delivery of care.

Adjacencies: Identification of value added operational and physical adjacencies is a critical part of the design process.

Capital Project Solutions – May 2009

  

Use value stream maps to understand current patient flow through the facility in order to identify adjacencies that decrease wasted patient movement.

Avoid unnecessary collocation of services.

Recognize vertical adjacencies and flow patterns.

Supply Chain Management: To stay in line with the theory of Form Follows Function, the management of supplies should be based on how, why and where they are used.  Identify major shifts in the way that supplies, medications and equipment will be managed so that the form by which the storage and stocking space is designed matches the need for these materials.  Plan for the operational process changes necessary to accommodate new supply chain technology and asset tracking tools.

Utilization of Tools and Technology: Technology allows for great advancements but also requires significant process change.  Plan for the training required for each new tool or piece of technology.  Outline the process redesign required to support the functionality of the new tools.  Begin implementing new technology prior to the transition to the new facility to ensure that the functions provided by this technology are operationally developed and successfully integrated with current processes.

Summary If the key Operational and Clinical Process considerations are part of the Launch Phase this will lead to a better user group team design and will ultimately lead to a stronger space plan and program. These considerations should be carried throughout the entire facility project and included in the final phase, Transition Planning. In order for the Form to truly follow the Function, the facility must be transitioned with the operational and design components in mind.

As you will continue to learn about in this 13 part series, launching a new facility project is more than just the decision to create a new space for delivering care. It is a commitment to create a design that will support the long term strategic and operational needs of the organization. In order to accomplish this goal, the Operational and Clinical goals should be developed as part of the initial readiness phase so that they can be effectively implemented throughout the project.

JUNE

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – June 2009

The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 6 in a 13 Part Series Guiding Design Principles – Your Vision Coming into View David Carter, AIA Consultant Throughout 2009, Capital Project Solutions will be running a series of articles on Project Launch Preparedness. Last month's issue discussed Clinical and Operational Processes. This month's article explores the fifth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Guiding Design Principles. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget.

If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

Along with the master plan and operational plan, understanding overall guiding design principles will further guide the space programming and design process for a new healthcare capital project. This issue of Capital Project Solutions will focus on a few of these principles. Major items that should be contemplated and need to be understood include: • Is there a desire to implement the principles of Evidence Based Design and Sustainable Design?

• Is there a level of LEED certification that is desired or is required?

• What “feel” or “identity” is the Hospital trying to achieve?

• What is the expectation relative to major internal and external design elements (e.g. the patient room or exterior icons)?

• What is the plan for future flexibility and expansion?

Establishing these overarching principles early: • Allows the project team to operate within an agreed upon set of guidelines.

• Adds further direction to the upcoming programming and design efforts.

• Helps establish the framework for budgeting, target costs, and benchmarks 1

Capital Project Solutions – June 2009

Since the patient and his or her well being are the primary function of the hospital, it seems logical to discuss the elements of Evidence Based Design. Evaluation of room occupancy, noise levels, patient/visitor views, ventilation, lighting and proximity of services should all drive the early development of the guiding design principles as they relate to patient-centric services.

While using these elements to help drive the principles it is likely that other ideas will surface relating to sustainability and quality of the fit, finish, and exterior of the facility.

Evidence Based Design: The Roots of Evidence Based Design: In 1984, a study was conducted by Dr. Roger Ulrich (an environmental psychologist who conducted research that evaluated the impact of people's experiences with the environment on their psychological wellbeing, physiological systems, and health outcomes). The study stimulated the development of Evidence Based Design (EBD).

Dr. Ulrich evaluated surgical patients who were randomly assigned to rooms on the same corridor that were identical except for the window view: half the patients overlooked trees; the other half viewed a brick wall. Patients with views of nature went home three-quarters of a day sooner, had $500 lower cost per case, used fewer heavy medications, had fewer minor complications, and exhibited better emotional well being (Ulrich 1984).

Since this early study, hundreds of studies and articles have been conducted and written on EBD. Some of the research findings are common sense items (e.g. reduction in noise has a positive influence on patient outcomes) and some require more empirical evidence (e.g. the impact of lighting levels on NICU babies).

Evidence Based Design is not about hospitals simply being “nicer” or “fancier”, but rather the focus is to create hospitals that actually help patients recover quicker, be safer, and help staff perform better.

The goal The Center for Health Design defines EBD as “…the process of basing decisions about the built environment on credible research to achieve the best possible outcomes.”

There is still much debate about the value of EBD, but let the debate continue for the benefit of better designed facilities.

2

Capital Project Solutions – June 2009

Some of the more common design principles that are being applied to new healthcare facilities today are as follows: • Develop a safe environment for patients, staff and visitors.

• Build a facility that is attractive to healthcare professionals to help recruit new physicians / staff and retain current employees.

• Ensure the new hospital is patient friendly, family centered, and easy to navigate.

• Design an interior that allows for efficient staff and patient flow.

• Plan for space that accommodates advanced technology now and into the future.

• Construct an economically feasible design.

• Create an environment that is supportive of higher education and allows on-site learning.

• Build a flexible, adaptable and visually appealing facility that allows for future expansion and brings pride to the community.

A few of the major elements of EBD are discussed below.

The Inpatient Room The inpatient room remains a primary building block of the hospital facility and the overall functional organization of the room should be discussed prior to detailed designed. Private rooms are the design standard in today’s environment. Single occupancy rooms provide a higher level of patient satisfaction and result in: • • • • • • • • •

Lower nosocomial infection rates Fewer patient transfers and associated medical errors Less noise Increased privacy and confidentiality Better communication between staff and patients Better family accommodations Lower transfer costs Higher overall occupancy rates Increased market demand

Additional major decisions surrounding room layout include: • Toilet/shower room design: inboard, outboard, or stacked • Acuity based designed: will the room be acuity adaptable / universal in nature with the ability to care for both critical and non-critical care patients • Handedness of the rooms: same-handed or mirrored • Family zone: How will the family be intergraded into the design of the room 3

Capital Project Solutions – June 2009

All of these decisions have direct impact to overall square footage, project budget, medical equipment, and furniture requirements. By establishing patient room design criteria early the team can focus on developing a room that meets both the client’s needs and budget.

Noise Levels Noise producing sources run rampant on inpatient floors and throughout most hospitals. Culprits include overhead paging, clinical equipment, EVS equipment, personnel, visitors, telephones, televisions, etc. Although it is virtually impossible to eliminate all noise it can be mitigated, ultimately, increasing patient satisfaction and improving the working environment for staff. Discussing these concepts early with hospital leadership will ensure that the design team clearly understands the priorities that are critical to the care delivery model.

Views of Nature It is disappointing to walk into an area of the hospital that could have easily been provided a pleasant view to the outside only to have that view obstructed by mechanical spaces, exhaust vents, an adjacent wall or some other unsightly building element. Providing pleasant views for the patient (and staff) does not have to be a cost burden if thought about early and maintained as a driver for the design. The additional cost of providing desirable views may be off-set through operational savings such as decreased length of stay and nursing satisfaction. It seems so elementary that such a simple gesture can afford both patients, visitors and staff so much benefit but often times is so easily overlooked.

Hospital leaders should proceed cautiously and plan prudently with common sense and with the proper research and debate at hand when incorporating EBD. (For additional information on EBD, access the Center for Health Design’s website: http://www.healthdesign.org)

4

Capital Project Solutions – June 2009

Sustainable Design – LEED: Most facilities seek to incorporate Sustainable Design elements into their project and may seek LEED certification. What is LEED? Leadership in Energy and Environmental Design is a voluntary program created by the U.S. Green Building Council to establish standards for defining buildings as “green”.

Buildings can be rated as Certified, Silver, Gold and Platinum depending upon the number of submitted credits accepted by USGBC. Certified is the least rigorous (and least costly) level to achieve with Platinum being the most rigorous (and most costly).

There are five areas of credit: • Sustainable Sites • Water Efficiency • Energy and Atmosphere • Material & Resources • Indoor Environmental Quality A point is awarded for achieving 120+ credits within each area.

Hospital Executives should convene a “LEED workgroup” of experts to discuss the costs and benefits to achieving a level of LEED certification.

Interior and Exterior Vision Discussion around the vision and “feel” of the interior and exterior elements requires debate and discussion. Will the facility: • Look and feel like a luxury hotel?

• Convey an institutional medical presence?

• Integrate elements of the local community?

• Impart a health system “brand”?

• Be easy to navigate both inside and out?

Addressing these vision elements will establish a set of standards that will directly impact patient, staff, and visitor perception of the facility and help communicate the visual message the hospital wants to provide to patients, community and staff.

Establishing the guiding principles early opens communication between the design team, planners, programmers, hospital executives and hospital staff thus enabling the design team to truly understand where priorities lie. This type of communication and early decision making will help prevent 5

Capital Project Solutions – June 2009

hours of re-work and re-design that can occur when such principles are not defined and left to chance. Following and implementing a sound set of guiding design principles during the capital improvement process will help to enhance patient care outcomes, satisfaction, and safety; staff satisfaction; and market position.

Below is a Case Study from an actual client highlighting the use of Guiding Design Principles in their new facility.

Case Study – Southern General Hospital (pseudonym) Southern General Hospital (SGH), a community hospital located in the Southeast, is in the process of designing a replacement facility on a green-field campus. SGH is a member of Southern Health System (SHS) and is located approximately 40 miles from SHS’s flagship tertiary care facility. In designing the new facility, many guiding design principles have been discussed. A few highlights include: General Medical / Surgical Inpatient Room Layout: SGH decided on private same-handed rooms (all rooms have the patient headwall and other elements in the same location) with an inboard toilet room (toilet room on the interior / corridor wall). The rationale for the toilet location was to: • Create more privacy (visual and auditory) for the patient • Increase window size • Increase flow of natural light • Maximize the family zone • Place family zone out of the general flow of the patient care and staff areas The “same-handed” layout was viewed as a safer design that could limit medical errors and increase standardization. Cost was considered, and yet while the room may prove to be slightly more expensive to build, the benefits to patient privacy, family comfort / involvement, noise reduction, staff flow, and potential positive impact to safety outweighed the potential cost.

Sustainability - Level of LEED to be Achieved. It was recommended by the SGH LEED Task Force and has been agreed upon by the Facility Planning Committee of SGH that the hospital will incorporate Sustainable Design elements into the project and will seek LEED Certification for the replacement campus. While LEED Silver was desired, given the challenges to 6

Capital Project Solutions – June 2009

achieve this level and the potential initial costs associated, LEED Certification was chosen to implement.

Building Exterior Concepts: Discussion around major external design elements has focused on site layout, building relationships, campus feel, and façade / external design.

Exterior concepts have gone through several edits and refinements and are being finalized. Balance is sought between designing a unique facility with character befitting the local community and a facility that is branded as a part of the Southern Hospital System, all the while taking cost into consideration.

There are many guiding design principles and each facility / team must identify the principles that are appropriate for their project. It is important to explore options and establish these principles early in the process as they will serve as a cornerstone for decision making.

7

JULY

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – July 2009

The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 7 in a 13 Part Series Laying the Foundation – Space Planning & Programming

Emily Tafel, MHA Consultant Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed Guiding Design Principles. This month's article explores the sixth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Space Planning & Programming.

Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget.

If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

As discussed in the May issue of Capital Project Solutions, the 3F theory, Form Follows Function, recurs as it applies to space planning and programming. Significant effort has been exerted to develop the project scope, master plan and operational plan.

It is now time to translate these into a detailed space program.

Once a consensus has been reached on the facility development strategy, a thorough analysis of the project scope, master plan, and operational plan is conducted, and in collaboration with a space planning expert, a room-by-room space listing or program is developed. A space program reflects the new organizational vision, scope and promotes the operational processes that have been identified during the planning process. In developing the space program, it is important to prevent reversions back to current processes and existing facility limitations. In addition, scope must be managed in order to avoid unnecessary additions and revisions.

An integrated planning process must be maintained.

1

Capital Project Solutions – July 2009 A room-specific space program is developed in net square feet and includes:      

Service description, Operational summary, Basis for planning (e.g. staffing, workloads, capacity projections, etc.), Unique design considerations, Room-by-room space listing, and Identification of persons involved in the process.

The program is generally organized by functional category of space (e.g. Diagnostic & Treatment, Administrative, Public, Ancillary, Support, Inpatient/Nursing Units). It incorporates previous strategies and processes and provides a detailed roomby-room listing, which serves as the launching off point for facility drawings.

Well-laid Foundation While the space program is the next step in the design process, it builds upon foundation established by the team in the form of the project scope, master facility plan, and clinical and operational processes.

These elements account for the strategic objectives, needs, financial parameters, and future functionality of the organization, and ensure they are reflected in the space program. The project scope is defined and documented at the project outset. The scope reflects the strategies and goals of the project and serves as a “touch stone” while developing the space program. It will guide the process, and ensure the program meets the project goals and remains on course. The master facility plan is rooted in strategic and financial analysis, and ensures that design is based around needs and facts vs. wants. It involves significant due diligence to identify immediate and long-term needs, to ensure that plans allow for future flexibility and growth that can meet the needs of patients, clinicians and payers. The clinical and operational processes are further explored and defined with an interdisciplinary team.

Decisions are made about these processes as they relate to patient access, wayfinding and entry points, utilization efficiencies, bed allocation and aggregation, care models, adjacencies, supply chain management and utilization of tools and technology. Incorporating these well thought-out processes into the space program is critical to ensuring their implementation and success. It is clear that well2

Capital Project Solutions – July 2009 conceived project scope, master facility plan, and clinical and operational processes are critical to providing the foundation for a space program that is designed around needs and improved function.

Avoiding Form Follows Familiarity and Maintaining Scope Control The strategic direction has been defined and new processes have been outlined, providing a firm foundation to develop the space program. As the program develops, it is important to refer back to the established scope, plan and processes, to prevent reversion to past processes based on existing work flow and facilities. It is often challenging for team members to conceptualize how re-designed processes will operate in a new facility and to translate their existing work flow into this new space. As you begin to discuss the space program, participants may indicate the need for an additional office, nursing area, supply closet, adjacency, etc. Referring back to the redesigned process of integrated offices, decentralized nursing, distributed supply chain management, or other identified process, will ensure that the space program reflects the carefully laid foundation that the team has established.

While based on well-established plans, the space program is the first detailed planning component where each room and space is defined. Often times, as the details are developed, additional spaces are identified. Additional resources and costs will accompany additional space, therefore it is critical to ensure that any scope increases identified during space programming are justified, so that they do not put the project at risk. If additional space identified is not justified, it should not be added to the program.

Ensuring an Integrated Planning Process – A New Approach Focus on an integrated team.

Working with teams of disciplined project advisors, planners and architects will drive the process flows, program, and design all in an inter-related coordinated effort that avoids the handoffs and miscommunication often found with disassociated programmers and design teams. This approach is the most effective and avoids scope and budget “creep” during the programming, 3

Capital Project Solutions – July 2009 schematic and design development phases of the project.

Because the team owns the design, the design will support the re-designed processes. The paradigm shift is occurring. By integrating the “form” experts with the “function” experts, the risks associated with handoffs and poor coordination are greatly minimized. Consider this approach vs. the traditional approach to programming.

Traditional space programming results in a detailed room-byroom listing which the design team utilizes to begin schematic renderings. Scope has been defined and a master plan is used as the guide for detailed planning. Needs are differentiated from wants and the program itself flows from operational functions as defined by different “user groups.” User group meetings are held approximately every three weeks over a period of several months. These meetings focus on validating scope, discussing operations, identifying room elements and finalizing room-byroom programs. Unless the architect is also the programmer, s/he will not have been involved in the programming process.

What works in the Traditional process?  It focuses on operational intent.  It involves user group input.  Expert input is gathered.  Design team maybe involved.  Room-by-room space listing is the output.

What doesn’t work in the Traditional process?  There is limited operational improvement depth and typically programs are “siloed” and do not look at all interrelated processes.  Scope creep from program to design is a typical byproduct.  A single solution is often developed with limited or no design and budget testing.  It often evolves into an expression of wants that is user driven, not expert driven.  The design team may not be engaged until “hand-off”.  Hand-offs are awkward and increase risk of misinterpretation.  If the design team has not been involved from the beginning, time is wasted and momentum is comprised.

The design team will inevitable play catch up and may even rehash or reevaluate processes resulting in frustration, loss of time, and risk of function following form.  Short, infrequent user meetings with long lag times and inconsistent attendance result in confusion. Individuals “forget” what was discussed or agreed to in previous meetings.  Meetings tend to be reactive rather that proactive.

Negative iteration is the result.

4

Capital Project Solutions – July 2009 Conclusion In summary, space programming and planning begin the detailed process of identifying the spaces that will make up your new facility. It is imperative that the program is based on the previously developed plans and processes, and that this planning serves as a foundation and “touch stone” to avoid reversion to past practices and scope creep. Engaging a project advisor, facility planner, and architect, who understand the links between scope, process, and design, to assist in leading the process flows, program, controlling scope, and design in an inter-related coordinated effort avoids handoffs and miscommunication often found with disassociated programmers / planners. The space program will be the launching off point for laying out your facility and is a critical step in the project launch process. An integrated team approach is the most effective and avoids scope and budget creep during the next phases of the project schematic and design development.

Finally, remember the 3F theory – form follows function – and let that be your mantra. Diligently work on the functions and how those functions support the strategic mission of the organization and the vision of the replacement facility. By applying operational redesign principles, accurately documenting the future operational state, and integrating process design, space programming and schematic design you will make large strides towards ensuring the success of your capital project.

5

AUGUST

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

Capital Project Solutions – August 2009

The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 8 in a 13 Part Series Plan Your Work & Work Your Plan – Establishing the Master Program Schedule

Gary Wilkinson, Senior Consultant Ray Walker, Principal Consultant Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed Space Planning & Programming. This month's article explores the seventh spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Master Program Schedule. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

Perhaps no other document will be used more throughout the course of a major capital project than the Master Program Schedule. Think about it? It’s the one document that is used by every member of a Project Delivery Team. From the CEO to the Field Superintendent, the Master Schedule is THE document that holds everyone accountable and ensures that all stakeholders know what is expected and when. Suffice it to say that thorough input from every team member is paramount to making the Master Program Schedule a useful and reliable tool.

Begin with the “Big Picture” in mind: One of the first tasks on any project, regardless of size, is to determine the schedule, or simply put - “how long will this take”. Often times, the first mistake is generating the Master Program Schedule (MPS) with no input from the Project Delivery Team. The Project Delivery Team includes anyone directly involved with the Project.

In 1

Capital Project Solutions – August 2009 order to make the MPS a reliable, functioning document, input on milestones and durations must come from all Team Members. If this is done correctly, implementation expectations should be realistic and achievable.

While developing the schedule early in the Project Launch Phase, it is crucial to develop Major Milestones (Design Phases, Construction, and Occupancy) and then identify the different components that tie these tasks together. A key factor in constructing the MPS is to avoid getting bogged down in details at the beginning. Remember, this is a working document that can be modified to include additional tasks later. By keeping the “Big Picture” in mind early in the process, the Project Delivery Team will identify the major milestones and begin to develop the critical paths that will tie these activities together to serve as a road map for the project.

The “Fab Five”: While scope, schedule and budget are typically known as “The Big Three”, a MPS has its own “Fab Five”. These five phases are the basis for any MPS:  Strategic Planning - The logical assumption is that the first activity of the MPS is started with the Schematic Design Phase. However, before actual design activities occur, it is crucial to allocate time to accurately define the scope of the project and to ensure there is a strategic need for it.  Project Launch – Ensure you are getting the project off on the right foot and are well organized prior to design. This is the phase where the “Big Three” come to life. The Project Delivery Team is selected and the facility master plan and space program are developed. At this point, the strategically defined project begins to take shape. The preliminary MPS is developed and durations are set to ensure that everyone’s expectations and goals are clearly defined.  Design - A major key in developing a realistic MPS is confirming with all members of the Project Delivery Team that adequate design durations are in place. Allow for appropriate pricing of the documents as well as adequate review and approval from the owner. Approval is often required prior to proceeding to the next design phase and if there is not enough review time 2

Capital Project Solutions – August 2009 built into the schedule, the project will fall behind even before ground is broken. Outside influences also come into play during this phase of the project. Make sure that all zoning approvals, permits, and any other Authorities Having Jurisdiction (AHJ) requirements are identified.

Sample of a Master Program Schedule

 Construction - More than likely, this will be the most comprehensive portion of the MPS. However, in order to make the MPS a useful tool for all members of the Project Delivery Team, only major construction activities should be identified as to not make the MPS too detailed and cumbersome; keep it simple.

It is suggested that during the Owner, Architect, Contractor (OAC) meetings and schedule review meetings, the Construction Manager or General Contractor, provide a near term or “look ahead” schedule so that the minutia of the construction schedule can be overlaid with the MPS to see how activities are coinciding with the “Big Picture”. Owner activities, such as Mechanical, Electrical and Plumbing (MEP) “tie ins”, shut downs, and operational disruptions should be included within this portion of the MPS. This will ensure that the owner can properly plan and notify the hospital as to when these activities will occur.

3

Capital Project Solutions – August 2009  Transition & Occupancy- Perhaps the most overlooked phase of the MPS is the Transition and Occupancy portion of the schedule. This phase involves the operational transition and the physical move into the building. Significant coordination and planning must take place to ensure the successful delivery of the new facility. It is crucial to identify these planning efforts in the construction phase of the project. It is suggested that not only a dedicated Transition Advisor lead this effort, but that it start 18 to 24 months prior to Certificate of Occupancy. One common mistake to avoid is setting the “Go Live” date too soon following the Certificate of Occupancy. Be sure to identify the time and tasks required for equipment installation and staff training. Establishing an occupancy date that is too early may set unrealistic expectations and cause a weak transition. A move is a monumental event for staff, patients, family and the community.

Lessons Learned in Developing a Master Program Schedule: Develop the MPS early in the Project Launch Phase with input from all members of the Project Delivery Team. This will ensure “buy in” as well as familiarity with the MPS throughout the project. As you are creating the MPS, consider the impact Project Financing has on the schedule.

In many cases, there are scheduling constraints in terms of project funding (i.e. bond issuances, available cash on hand, etc.).

It is crucial that these financial aspects be defined and accounted for as the MPS is being assembled. In keeping with the theme of identifying financial implications, it is just as important to allocate sufficient time for owner review of major budget updates. By identifying periodic budget updates in the MPS, this allows the owner to be informed of all costs so that timely decisions can be made that will not adversely affect the MPS. And most importantly, don’t set the Occupancy Date too early.

There are many key activities that must take place after construction has been completed. Careful planning is necessary to ensure that this phase is properly accounted for and sufficient time is allotted to ensure a smooth transition. Arbitrarily picking a “Go Live” date at the beginning of the project could have a severe negative impact on the MPS. Be sure to leave a lasting impression, by being prepared to open the doors and finish strong.

4

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

SEPTEMBER

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

Capital Project Solutions – September 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 9 in a 13 Part Series Confronting the Gorilla Establishing the Master Program Budget

Scott Nolin, Principal Consultant Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed the Master Program Schedule. This month's article explores the eighth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Master Program Budget.

Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

You are making excellent progress in preparing for your launch and have worked through the first seven steps of the Strategic Project Launch Readiness Assessment. The strategy is sound and your business plan is solid. A killer master plan is neatly bound and sitting on your desk. And now, you have visions of programming, design and ribbon cuttings. The perfect site has fallen into your lap at just the right asking price. But… As you sit in the boardroom congratulating yourself on how well things are going, you notice movement out of the corner of your eye. Looking around, you observe something that resembles an 800 pound gorilla sitting quietly and staring at you with his arm raised, as if it has a question. Remarkably, the gorilla begins to speak. “My name is Budget” he says, “and I have two simple questions for you.” “How much is this plan going to cost and can you afford it?” You begin to feel dizzy, you close your eyes and wish that you could wake up…and you do. It was a dream. But, while the gorilla was not real, you realize his questions were dead on.

1

Capital Project Solutions – September 2009 A plan that you cannot afford, is quite simply, the wrong plan.

Before you launch your project you must first know your financial parameters and how much each option will cost. Do not progress to the next step without knowing the answer to these questions.

Failure to do so will consume vast amounts of time, will frustrate everyone involved, and may even kill your project.

Where to Begin Preparing a complete and well thought out capital project budget may seem like a daunting task. However, taken in pieces and updated along the way, your financial plan will come together the same way construction plans come together. To begin, your first questions should revolve around what you can afford as opposed to what things will cost. These are two distinct questions - if you can afford $100M but are only willing to spend $50M – then your budget is the lesser amount. Determining what you can afford is the job of the CFO and an organization’s key financial advisors.

Balance sheets must be studied, rating agencies must be consulted and the overall financial health of the organization must be understood as well as projected out over the life of the project and beyond. Having completed a thorough analysis, the senior financial team can advise the chief executive on their findings and recommendations. It is at this point that an organization should settle on how much you are willing to spend and thus you will define your overall budget.

It is recommended that you begin financial planning very early in the SPLRA process, preferably at the point where strategy and business plans are being developed and reviewed and a project scope is starting to form. Having a clear understanding of your finances early on is of enormous benefit as you enter master planning and begin to look for land. Knowing your financial parameters will allow your project team to design a plan that fits your budget instead of a budget that fits your plan. This is one of the first and most crucial project controls to put in place. Your team must fear the Gorilla! Begin by getting everyone on the same page right up front and your odds of success will increase significantly.

2

Capital Project Solutions – September 2009 Putting Meat on the Bones The first project cost estimate with any real detail is likely to come with your master plan. Master planning involves looking at various options, typically combining the best of those and finalizing a plan. Cost estimates can and should be developed for each option and for the resulting approved plan. At this point, your master plan cost estimate will be very conceptual. These estimates do not attempt to account for whether you want terrazzo or VCT (vinyl composition tile) flooring. They do account for whether you are building big buildings or small ones; clinical or office spaces; developed sites or green fields with no existing utilities or road network. Even at this conceptual stage, however, the one budget constant remains – construction is the single biggest component of a capital project cost and construction cost is highly correlated with gross square footage.

Managing size is vital to controlling the overall cost. If early plans correctly capture the size of the project then you are in a good position to develop a comprehensive cost estimate and a detailed budget. There are numerous experienced advisors who can assist with construction cost estimating even at the conceptual level. Having a construction cost, or more likely a range of construction costs, allows you to initially use simple “rules of thumb” to sketch out the rest of the project costs.

These non-construction costs are not insignificant but once you understand the size, the construction cost, and your guiding design principles you can begin to put meat on the bones of your overall budget.

3

Capital Project Solutions – September 2009 Master Program Budget Summary

CODE 1000 2000 3000 4000

5000 6000 7000

o

1000 Site Assessment Costs – Includes items like survey, environmental assessment, geotechnical evaluation, etc. The costs of the land will be included in this model.

o

2000 Design and Consultants –Includes items like architect fee, technology planner, medical equipment planner, legal fees, etc.

BUDGET ITEM SITE ASSESSMENT COSTS DESIGN AND CONSULTANTS CONSTRUCTION EQUIPMENT & FURNISHINGS Medical Equipment Technology Equipment/Systems Foodservice Equipment Furniture/Artwork Signage/Graphics/Wayfinding FEES, TESTING, INSPECTIONS & ADMIN. FINANCING COSTS CONTINGENCY

o 3000 Construction –Includes items like temporary utilities, shell/core, building construction, special construction, etc. Includes the costs of remediating the existing site. o 4000 Equipment & Furnishings –Includes primary items like medical equipment, technology equipment/systems, foodservice, and furniture/artwork and signage/graphics wayfinding. o 5000 Fees, Testing, Inspections & Admin – Includes items like impact fees, materials testing, training costs, etc. o 6000 Financing Costs – Includes items like interest expenses, counsel costs for preparation of financing package, overdraft fees, etc. No financing costs have been included in this model. o 7000 Contingency – Includes cost to adequately manage the inherent risks on the project. Depending on the stage of the project, this amount should vary between 5-15%.

Do Not Pass Go It is probably intuitive that if at any point in your process the estimated cost of any option exceeds the overall project budget, you must stop and deal with that issue. It is futile to continue to 4

Capital Project Solutions – September 2009 plan for something if it exceeds the budget. The longer you go without making adjustments to align budgets with estimated costs, the more time consuming and painful the process will become. Gorillas are big and strong and they do not just go away. Do not proceed without knowing your costs do not exceed your budget.

Try Try Again The overall budget will be refined a number of times as you move from master planning through programming and into the early design phase. You will eventually reach the point where you begin to break down your costs into discrete project budget line items. This is an iterative process and, depending on your philosophy, may stop at a given point in time such as during the board meeting that approves the project to proceed.

Alternatively, it may continue throughout the project. As time goes on, you gain clarity concerning the scope of every aspect of your project. As you begin to translate this information into defined quotes, you will be able to further refine each and every line item of your budget. However your organization ultimately decides to handle this reality, there are two important points to consider. First, you cannot and will not be able to anticipate all project needs early in the project budget modeling phase. More than likely, you will not accurately forecast the multitude of events and decisions that will transpire over the course of your project nor will you accurately forecast the precise cost of those events and decisions. The take away message is that contingency funds should not be considered a “nice to have” element of a project budget. Rather, they should be considered as a necessity and as important as “solid” line items like construction or equipment. Initially, you may not be able to accurately define how you will spend contingency funds but rest assured that you will spend them. If you neglect to line item for these funds or if you “skimp” on them in order to make a budget look better, you are placing a significant risk on your project. This risk will only be realized when it is too late to do much about it.

The second point is that although construction is a major portion of your budget, there are still other costs to consider. Project costs for consultants, furniture, equipment, communications technology, art, signage etc. will likely range between 40% and 5

Capital Project Solutions – September 2009 80% of your construction costs depending on a number of factors. A comprehensive project budget will consist of dozens of line items and each one of them will require your time, effort and ultimately your money. A number of specialty advisors should be consulted to help in defining each of these line items.

Failure to fully delineate a complete and comprehensive budget is one of the quickest ways to sabotage a project.

In the End In the end, there are three key budgeting success factors: 1) Know what you can afford, 2) Start your cost modeling early and update models often, 3) If costs exceed the budget – refer back to number one.

That’s it. It is a lot of work and it doesn’t happen overnight, but conceptually it’s not that difficult. Tackle your budget a small bit at a time and have good advisors to help you through the process. Whatever you do – do not ignore that Gorilla. He is watching you and he will not just go away. If you ignore him for too long he is going to raise his hand and tell you that he has two simple questions for you. What will your answers be?

6

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

OCTOBER

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

Capital Project Solutions – October 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 10 in a 13 Part Series The Leading Edge Medical Technology & Medical Equipment Strategy

Steve Higgs, Senior Vice President, KLMK Todd Hollowell, Partner, Impact Advisors Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed the Master Program Budget. This month's article explores the ninth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Medical Technology and Medical Equipment Strategy. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

One of the most critical actions completed during the planning phase of your project will be to determine your Medical Technology and Equipment Strategy. Similar to the other steps in the Strategic Project Launch Readiness Assessment (SPLRA), the Medical Technology and Equipment plan cannot be developed in a silo. In fact, it is required that your Master Program Budgeting effort be based on the appropriate medical technology and equipment strategy. Because this line item can consist of up to 30% of your total budget, it demands early attention. Equally, this strategy and the implementation of the medical technology and medical equipment plan will have lasting effects on your future operating capital commitments and operating model. Ultimately, your ability to deliver your desired clinical outcome will be heavily impacted by this initial planning effort.

Developing your Medical Technology and Equipment Strategy should begin with the following discernable and measurable plan objectives: 1

Capital Project Solutions – October 2009 This technology and equipment vision and roadmap should define the solutions (not necessarily vendors), interdependencies, and key assumptions that will better enable the organization to develop more detailed equipment and technology designs. Todd Hollowell, Impact Advisors

Develop an Actionable Roadmap  Create and / or confirm the foundation for your organization’s medical technology and medical equipment.  Support information sharing and information management capabilities within the current facilities as well as in any new facility (when applicable).  Ensure the appropriate intersection of the technology plan with the facility / construction plan.

Confirm Capital and Operating Cost Models  Assist the organization in appropriately allocating funding with respect to facility related capital, other capital, and operating dollars.  Meet the current requirements and future needs.

Assess the organizational readiness to adopt new technologies  Capitalize on opportunities to improve efficiencies.  Identify potential barriers to acceptance.  Plan for implementation challenges.

While linked in a variety of ways, developing a Medical Equipment Plan and Medical Technology Plan are different. Let’s begin by looking at each individually.

What is Medical Equipment Planning?

Medical equipment planning is the process of integrating the assessment, selection and procurement of medical equipment into the overall project delivery process. With the increased sophistication and the reliance on equipment to improve efficiency and patient “through put,” there’s no doubt that it plays an important role in the use of the facility. However, this step often becomes an afterthought in the design and construction process because owners (and teams) are so heavily focused on the bricks and mortar.

What is Technology Planning?

Technology planning is the process of assessing current systems, identifying technological needs, creating specifications and design for major systems, and developing an accurate budget. Traditional technology consultants typically address the following system categories: 2

Capital Project Solutions – October 2009 • • • • •

Communications Infrastructure Telephony Nurse Call Intercom Public Address

• • • •

Security Television Wireless Video

In addition, many organizations have begun to address key applications and / or integration needs related to: • Clinical systems, including Electronic Medical Record (EMR), lab system, radiology, clinical documentation, dictation, etc.

• Business systems, including patient accounting and registration, supply chain, general ledger / HR / payroll, etc.

Why is Equipment and Technology Planning so important?

Medical equipment and technology are two of the many variables impacting the budget, schedule and overall success of a healthcare capital project. In fact, next to the building itself, they are the largest investments in a construction project. That’s why it’s so important to have the expertise of specialty consultants to walk you through the crucial decisions that need to be made along the way. Those who fail to recognize the importance of this process may find themselves making costly corrections during construction or even after occupancy. Engaging a medical equipment planner and medical technology planner in the project delivery process is key to a successful outcome. While many hospitals maintain extensive biomedical engineering, purchasing and information technology departments, owners are well advised to consider involving outside consultants. Successful projects frequently support the knowledge and availability of their own staff with the broader knowledge of outside subject matter experts. There are four important reasons to supplement inhouse expertise with outside consultants: 1. Knowledge of industry trends and extensive experience gained from projects of varying size and complexity; 2. An understanding of the entire design and construction process; 3. Assurance of sufficient resources to address time-critical project issues without sacrificing current hospital equipment and technology initiatives and;

3

Capital Project Solutions – October 2009 4. Impartial analysis of vendor options and the opportunity to negotiate cost savings.

DEVELOP AND CONFIRM GUIDING DESIGN PRINCIPLES A key activity, early in the process, involves working with the organization to confirm and develop the medical technology and medical equipment Guiding Design Principles and Planning Assumptions. Ultimately, these principles and assumptions will be used as questions arise related to the specific types of solutions being considered, as well as which vendors should be considered.

To begin planning, a cross-discipline team should be created.

Included in this team should be the following:  Various Information Services (IS) staff, including the Chief Information Officer  Chief Medical Officer and / or the Chief Medical Information Officer  Chief Nursing Officer / Director of Nursing  Chief Financial Officer  Facilities Vice President, Director and / or Manager  Biomedical Engineering  Other key operational areas including the ED, OR, Lab, Pharmacy, Radiology, Cardiology, and Medical Imaging When developing the principles, the team should follow a methodical approach. The accompanying flow chart highlights a proven new facility technology planning process.

4

Capital Project Solutions – October 2009 Be aware that this process will take a large commitment of both time and effort. Again, the planning and integration of the medical equipment and technology should be facilitated by an outside expert.

Below is a sample subset of Guiding Principles and Planning Assumptions developed for a replacement hospital within a health system.

Sample Guiding Principles  All decisions for information system, telecommunications and biomedical solutions must have a direct contribution to organizational strategies and objectives.  An organization-focused (not department or individualfocused) vision must drive technology solution decisions.  Centralized technology and medical equipment must play a lead role in enhancing the patient experience.  Clinical information must be gathered as much as possible at the point-of-care and this data will be shared throughout the organization to support clinical needs, enhance patient care, and increase patient safety.  Clinicians will have access to all information, real time, anywhere.

Sample Planning Assumptions. Solutions must:  Support interdisciplinary care and ensure a patient centered approach.  Enhance functionality that currently exists across the organization.  Identify opportunities in both the clinical and business areas where solutions / applications can be leveraged and/or integrated with the Health System.  Utilize existing facilities to pilot technologies for the new facility.  Incorporate emerging technology and equipment trends and the flexibility required for easy incorporation of future changes in technology.  Retain and leverage existing systems and vendor relationships.  Maximize value; both capital and operating.  Optimize opportunity for successes.

5

Capital Project Solutions – October 2009 REVIEW KEY TOPICS AND SYSTEMS Key Topics/Systems Undergirded by your Guiding Design Principles and Planning Assumptions, you should begin to identify and evaluate each key solution proposed for your new facility. Examples include, but are not limited to:  Multiple and integrated channels (on-line, phone, etc.) for patient and clinician data input  The Electronic Medical Record (EMR)  Computerized Physician Order Entry (CPOE)  Comprehensive digital imaging and PACS (radiology, cardiology and pathology)  Electronic availability of patient results and reports to all appropriate providers along the care continuum  Direct integration of physiological monitoring and other point-of-care data to EMR to minimize data entry and potential for errors  Hybrid and integrated Operating Room suites  Entertainment / Education / Conferencing in Patient Rooms and Exam Rooms

DEVELOP TACTICAL NEEDS AND INFRASTRUCTURE EVALUATION Tactical Technology Needs – Goals and Technology Directions Each service related goal drives a specific set of technology directions. These goals drive and define both processes and the technological and equipment directions to support these processes.

Tactical Technology Needs – Key Infrastructure Several infrastructure technologies play a significant role in supporting direct care delivery quality and efficiency. Each drives a specific set of infrastructure requirements. The effect each proposed technology has on both operations and infrastructure should be developed as a part of this plan.

6

Capital Project Solutions – October 2009 FINALIZE TACTICAL NEEDS SUMMARY, BUDGET & TIMELINE After completing the early planning, you will be able to develop your tactical plan. Elements of the tactical plan could include:  Identification of the equipment or technology solution  Timing and timeline to implement (e.g. pre-move, post-move)  Resources required to implement  Identification of criticality  Projected costs to project  Status of implementation  Integration with overall project schedule and budget

CRITICAL SUCCESS FACTORS To ensure success, several factors must be considered.

Obviously, communication and “buy-in” is critical across all operational areas, but the ability to work with internal and external parties is vital. Some key success factors are highlighted below:  Get started early in the planning and pre-design phases of the project.  Spend time inventorying current technology and medical equipment to fully understand potential re-use opportunities.  Rely on your subject matter experts while staying actively engaged in the process.  Set realistic expectations based on facts, needs, and budget limits.  Strong Senior Management and Physician sponsorship.  Full transparency and constant information sharing throughout the lifecycle.  Appropriate participants and stakeholders engaged early and often.  Leverage existing organization structures, processes and procedures wherever possible.

7

Capital Project Solutions – October 2009 

 



Maintaining overall, management structures (i.e. managers, directors) from Design Development through Transition Planning is critical.

Early integration of Medical Technology and Equipment Planning teams is necessary.

Piloting of new solutions in a legacy / existing environment if possible to confirm workflow impacts, user training needs, etc.

Integration of Transition Planning early into design, facility planning, and readiness efforts to ensure conceptual plans (and assumptions) are fully realized and schedules are coordinated.

With all of the advances we have seen in technology and equipment over the past ten years, it is easy to get distracted and confused. By planning early, engaging a multidisciplinary team, following a methodical process and setting a realistic budget, the Medical Equipment and Technology Plan for your new facility should fulfill all of your team’s and patient’s expectations.

8

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

NOVEMBER

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

Capital Project Solutions – November 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 11 in a 13 Part Series Navigating the Regulatory Approval Process

David Vollmer, Senior Consultant, KLMK Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed Medical Equipment and Technology. This month's article explores the tenth spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Regulatory Approval Process. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

Regulations, permits, inspections, licenses – the approval process to build a healthcare facility can seem a bit daunting.

When an organization makes the decision to embark on a major capital construction project, be it replacement, reorganization, renovation or expansion, it will be met with numerous requirements from regulatory bodies and jurisdictional authorities. Too often, the development of a construction project moves forward with zeal and optimism without being thoughtful of external factors that may impact the scope and shape of the work. While these processes cannot be circumvented entirely, they can be managed in tandem with project development so as not to lose time or passion, but in such a way as to ensure the project is in compliance. In order to coordinate the project with the various authorizations, appropriate consideration must be given to each individual process immediately following the project’s inception. This issue of Capital Project Solutions will discuss some of the various regulations and permits that may be required and identify the process for incorporating approvals into the project.

What Is Required?

Depending on your local and state authorities, requirements will vary.

The best move that you can make when starting a new project is to secure the services of experts. These resources should be familiar 1

Capital Project Solutions – November 2009 with all of the politics and players in your community and will be worth their weight in gold. Navigating these waters may sometimes be treacherous. Experts will ensure that you are prepared to handle whatever may be thrown your way.

Contacts

Comments (include any meeting or hearing dates)

Responsibility

Required Documents (list)

Prerequisites (as applicable)

Actual Completion Date

Required Completion Date

Time Frame (for approval)

Fee

Item

Time Frame (for additional doc. prep)

A Regulatory Approval Tracking Log should be developed to assist in managing all of the various approvals. Some of the requirements that may be included on your Tracking Log are:

Certificate of Need (CON) Floodplain Encroachment FEMA Review/Approval Wetland Encroachment EPA Review/Approval Stream Buffer Encroachment Local, State, USACE Permit Cultural Resource Study Development of Regional Impact Overlay District Review/Approval Department of Transportation (DOT) Driveway Curb cut Approvals Zoning Annexation Helicopter Pad Permit Easements, Right of Way, Rezoning PMUD Variance & Special Exception Subdivision Drawing Approval State Architect State Fire Marshal Local Plan Review, Planning & Zoning Department of Health Landscape Local Fire Marshal Interim Life Safety Storm Water & Sewer Erosion Control Engineering Tree Save Delineation Lead Shielding Design Construction Permits Land Disturbance Permit (LDP) Timber Clearing & Grubbing Demolition Hazardous Materials Survey Building, Foundations Mechanical, Electrical, Plumbing

2

Capital Project Solutions – November 2009 Of all of the regulations and requirements, land use zoning may be the greatest challenge. If your project requires a new or replacement site, the first objective is to locate a desirable piece of property. Sounds easy enough, right? For healthcare owners, this may be particularly tricky especially in urban or more developed areas. In these instances, options for land may be rather limited due to encroachments on neighboring sites and access issues. Your real estate attorney and / or civil engineer should check land records, review environmental surveys and conduct site analysis. This is likely to be required and is important for future approvals and project budget creation. Beyond these basics, the zoning attorney will be able to provide the necessary information to finalize the land purchase which may additionally include the use of traffic / parking engineering studies, further environmental studies / verification, and geotechnical analysis.

Provided the study findings yield acceptable results, the land purchase will be within grasp. Yet, while steering through these variables, there are other issues to consider pertinent to the land use. The zoning / real estate consulting members of the team should identify any supplementary conditions that may require re-zoning of the land to be purchased. This is typically very manageable but may involve a completely volatile and dramatically variant review: the Community Approval Process. The advice here is to seek out the leader(s) in the community and garner their input on the project and any concerns they may have. Typical concerns revolve around additional traffic, construction noise, loss of existing green space and other items which may require mediation or recreation. For instance, if your land development is replacing an existing park or playground, you may be required to recreate the park or incorporate one into the new property. Also note that land use zoning and community involvement are necessary in the case of an existing facility expansion as well.

However, in regard to expansion, much of the basic information is known and more readily integrated into the project development.

Nevertheless, if the expansion is large or invasive, the zoning / rezoning process may be just as time consuming and tedious, if not more so.

3

Capital Project Solutions – November 2009 A popular method by which to comprehensively zone and expedite regulatory approvals is the Planned Unit Development (PUD). A PUD is a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained development or subdivision. If a hospital were to include medical office buildings, parking structures, a day care and separate administrative facilities on the same campus, a PUD would allow for all to be zoned together within the bounds of the development agreement. Often times, a PUD can also aid in project phasing and may facilitate future zoning and approval processes.

Architectural and site plan reviews can be incorporated in the overall PUD process to further advance the site development. The PUD process may also require support from the community and local government. Finally, you should be prepared to incorporate nonproject related additions such as afforestation if required.

In conjunction with the site development, your state may require Certificate of Need (CON) approval. The CON process is cumbersome and requires a great deal of attention.

CON programs are aimed at restraining health care facility costs and allowing coordinated planning of new services and construction. The program, volume and financial support required for the CON will drive the size and scope of the project. Furthermore, while the architectural and engineering 4

Capital Project Solutions – November 2009 components of the CON process may not present a great deal of aesthetic components, the potential architectural and site plan reviews mandated as part of a PUD process will. This will in turn supplement the material available to prepare the CON budget and schedule.

Once zoning and CON approval have been received, or are at least well in-hand, the project management team should have developed a strategy by which the project will be constructed. This strategy should include drawing package phasing and / or early release of work. The permitting process and timing vary greatly by area and may require a third party expeditor to get the drawings returned in a manageable amount of time. The majority of the permitting process should be pretty straightforward but needs to be reviewed early and often so that any environmental impact studies and supporting geotechnical information will be in place to support site work, sediment and erosion control approvals.

The Approval Process While it may seem like an obvious first step, the project definition is integral to outlining the timeframe and approvals necessary to begin construction. Recognizing that we live in a regulatory environment, it is mandatory to understand the impact that regulation approvals may have on project schedule. In addition, the current state of the economy has made financing and project approvals increasingly volatile. The baseline timeframe will assist the project manager in forecasting a realistic cash flow, developing the completion schedule, and identifying when to select key project team members.

Planning and management is critical at this phase of the project. The project manager should convene a “Regulatory Summit� to identify all of the laws and regulations governing the project. During the summit, the team should address individual roles and responsibilities, regulatory impact, scheduling, and compliance. The basic steps required for regulatory approval are as follows: 1. Obtain a Certificate of Need, if required 2. Obtain drawings and specifications of your facility 3. Plan approval by Department of Health and Environmental Control (DHEC) 4. Construction Progress Inspections 5. Final Construction Inspection 6. Documentation Required at the Final Construction Inspection 5

Capital Project Solutions – November 2009 7. Licensing Inspection 8. Certification Inspection (if required) Conclusion As with any sort of large capital project the early consolidation of information and consensus on scope and funding are critical in allowing for an unfettered development process. While this article focuses primarily on regulations during the inception and design phase of a project, it should not be perceived as being the decoder ring to every possible approval. Plenty more approvals may be required as you move toward the Occupancy phase of the project – such as:      

Licensing for pharmacy Physicist testing Approval for equipment locations Compliance with Centers for Medicare & Medicaid Services (CMS) Updates to the Statement of Conditions for the Joint Commission Occupancy and operational approval by the Department of Health

Although the amount of information to be compiled and the number of approvals may sometimes seem infinite the best advice is to plan early and consult parties who have navigated these waters before.

Local experience and camaraderie with authorities is invaluable. Firms that possess these capabilities should be solicited for advice immediately. Do your homework and begin project dialogue as soon as the idea has a spark. You will soon notice that there are many extraordinary factors that perhaps were never considered. By having the proper tools and appropriate team foundation, you will be able to manage through this process and, at times, even use it to your advantage.

6

I N N O VA T I V E H E A L T H C A R E F A C I L I T Y S O L U T I O N S

DECEMBER

2009 CAPITAL PROJECT SOLUTIONS Strategic Project Launch Readiness Assessment Series

Capital Project Solutions – December 2009 The Benefits of Conducting a Strategic Project Launch Readiness Assessment – Part 12 in a 13 Part Series

Project Delivery Team Organization: A Collaborative Approach

Steve Higgs, Senior Vice-President, KLMK Throughout 2009, Capital Project Solutions is running a series of articles on Project Launch Preparedness. Last month's issue discussed the Regulatory Approval Process. This month's article explores the eleventh spoke of the Strategic Project Launch Readiness Assessment (SPLRA) – Project Delivery Team Organization and Approach. Throughout a SPLRA, every major issue that could potentially impact your launch will be identified and explored. The SPLRA will keep you focused on all the elements that impact the "Big 3" of your project -- scope, schedule, and budget. If you should miss any of the 13 articles in the series or to learn more about other strategies to ensure your project’s success, visit KLMK Group at www.klmkgroup.com.

The process of Project Delivery Team Organization begins prior to project launch and ends with occupancy and post-occupancy activities. Do you know all the steps in between? Internally, do you have the right players involved so decisions can be made along the way? Is your internal team invested, educated, organized and ready to get to work? Do you have a structured and logical approach to external team member selection? The answers to these questions are critical to the success of your project and you will need to be sure your process answers these correctly in order to maximize your chances of success.

The Project Team Organization As with most major undertakings, a successful outcome to a healthcare capital project depends on a successful beginning. Once the strategic and facility master plans have been completed and a thorough financial analysis has been conducted, building and organizing your project delivery team is one of the most important steps in the capital project delivery process. While it is true that good projects follow good teams, it is also true that bad projects follow bad teams. Selecting and organizing the right team for your 1

Capital Project Solutions – December 2009 project will go a long way toward making your project a success for your organization.

Major healthcare capital projects require large, talented and diverse teams of people but the good news is the major team selections are relatively few in number. However, the timing of these selections is almost as important as the selections themselves and should therefore be largely completed early in the project. The organization chart below provides an example of the major players on the project team and their relationship to one other.

SAMPLE PROJECT DELIVERY TEAM

First, Get Organized Internally. A critical first step is to organize and align your internal Facilities Planning Committee (FPC) to ensure that everyone is on the same page. This group may already exist in your organization, but the participants and their roles must be clearly defined at the onset of the project.

Facilities Planning Committee (FPC) - This committee should be the first piece to be put in place as it is arguably the most important part of the team. The FPC provides overall leadership for the duration of 2

Capital Project Solutions – December 2009 the project. They make the critical decisions regarding project scope and budget and they set the direction and vision for the entire project. All members of the FPC should have a shared understanding of key project elements, goals, schedule, budget, scope and external team members required. This step is easily the most critical and must include the appropriate stakeholders with clearly defined responsibilities. The general responsibilities of the FPC are as follows:

          

Create a strategic plan Establish the project's financial goals and objectives Develop the project's vision, scope and implementation plan Make site-evaluation and land-purchase recommendations Develop the criteria for hiring each external team member Prequalify and select all external members of the delivery team Set and approve the project budget and schedule Develop a project (strategic) financial plan Establish guiding design principles Review and approve planning and design concepts Oversee the approval of all contracts

The FPC should be multidiscipline and have enough authority to effectively represent the executive management of the organization but should also be nimble enough to be able to make decisions in a rapid fashion. Our experience is that smaller FPCs are often the most effective. FPC members come from the "C" level of the organization and can also involve senior medical staff, board members or other senior advisors. The leader of this group is typically the CEO and the COO of the organization. The group should meet on a monthly basis, at a minimum, and exist throughout the duration of the project.

It is critical to the project success that these individuals place a high priority on this responsibility and allow ample time for participation.

A project without an effective FPC is essentially a ship without a rudder.

Project Advisor - The Facilities Planning Committee needs a Project Advisor who can represent them in the day-to-day activities of the project, ensuring their decisions and requests are carried out and that the organization's best interests are being maintained. The Project Advisor is responsible for developing and managing the master program budget and schedule and is considered the overall day-to-day project team leader. This person or firm can be internal 3

Capital Project Solutions – December 2009 or external to the organization. If the decision is made to use an internal staff member to fill this role, considerable thought should be given to other responsibilities and obligations which may affect their availability. Large healthcare projects consume a significant amount of a project manager's time and should be viewed as a full time position.

In our experience, healthcare organizations tend to underestimate the time commitment this position requires. We recommend that internal employees receive new job descriptions, shifting some of their other duties elsewhere. Caution: This position should not become an additional duty for executives or facilities managers. If the position is filled externally, either by a firm or an individual, focus your search on Project Advisors with significant healthcare experience and a depth of resources to meet the needs of your project.

Ultimately your Facility Planning Committee, lead by your dedicated Project Advisor, will need to "check the boxes" in the sample Project Delivery Team Organization Tracking Matrix below. Once your internal team is united, it will be much easier to communicate a common vision to the external team members. Also note that the makeup of your FPC will grow over time and should include representatives from the external team members that you will select.

PROJECT DELIVERY TEAM ORGANIZATION TRACKING MATRIX

4

Capital Project Solutions – December 2009 Select External "Partners". Begin by aligning incentives, expectations and outcomes at the beginning of the project. By doing this, your project delivery team will be able "to hit the ground running" while giving the project the best opportunity to succeed.

Furthermore, this first step will create the right "dynamic tension" that can result in an environment that allows the team members to challenge each other equally for the common good of the project. To successfully launch a project, you need experts to implement the project, including, but not limited to the following; architect/engineering team, construction manager, medical equipment planners and a host of other consultants. The selection of these team members will make or break the outcome of the project, so you must choose wisely.

A/E Design Team - With the FPC and Project Advisor in place it is time to select your design team. As with the Project Advisor, healthcare experience and depth of available resources are the most critical issues for you to consider during the selection process. KLMK recommends that the FPC develop a fairly short list of qualified firms and that each be invited to submit their project team and qualifications for the project. While fees are often the most visible part of any proposal, we recommend that your selection criteria be more focused on team qualifications and your ability to work with the team being presented. Low fees cannot make up for unqualified or overstretched team members and will be little consolation when you determine you have difficulty working with them on a daily basis.

The Architect will serve as the leader of the overall design team and should have all of the key engineers directly under their umbrella.

The Architect may also retain consultants such as an Interior Designer, a Landscape Architect or a Signage & Graphics consultant.

The latter structure will vary by project and we have found that placing key players under the Architect's scope will improve document coordination and save money and time in the long run.

The Architect must be hired no later than the start of schematic design and often will either develop the Operational and Space Program or at least be involved in the project during its development.

Construction Manager - We recommend that our clients follow a Construction Management approach to capital project delivery. This method entails selecting a Construction Manager very early in the process and allowing them to bring their considerable expertise to the table early in the design and estimating phases. The Construction Manager should be selected and actively involved prior to the start of 5

Capital Project Solutions – December 2009 Schematic Design so that comprehensive budgets, schedules and constructability reviews can be performed. As with the Project Advisor and the A/E Design Team, selection of the Construction Manager should be primarily based on their healthcare qualifications and depth of resources. This team member will ultimately hold all subcontracts and provide the professional construction management personnel to supervise and manage the building trades for the duration of the project's construction phase.

Specialty Consultants - Although each project is different, there are many commonalities between major healthcare projects. We recommend that every major project involve the services of a professional Medical Equipment Planner as well as a Technology Planning firm. At the latest, these firms should be hired early in the Schematic Design phase. The budgets for medical equipment and technology systems such as nurse call, security, audiovisual etc. will run in the millions and often tens of millions of dollars. These firms are typically contracted directly to the owner but must be contractually required to coordinate extensively with the primary design team. It is critical that team members be retained early in the process to focus on these areas. If your project involves a significant dietary component, you will possibly need to retain a Food Service Consultant to design this space. Most architects don't have the internal expertise to design and specify the specialty equipment that populates these areas.

The team members listed above are the primary players on most major healthcare projects. If you have unique circumstances or specialized needs there may be others who you will bring in early in the project. Towards the end of the project other firms will come into play such as Relocation Specialists, Furniture Installers, Art Consultants and others. Your Project Advisor must anticipate all of the need for these services so that they are hired in a timely manner.

In our view the most important qualifications you should consider for any of the team member are their level of health-care experience and their depth of available resources. Like most large tasks in a major project, the team selection and organization process is best handled in an organized and methodical way. Allow yourself sufficient time to go through a thorough selection process for each member and perform reference checks. Most of all remember that no project has ever failed for having too many talented people involved!

Organize a Project Launch Kick-off Summit. Once team members are selected, assemble all the players - both internal and external - for a Project Launch Summit. The focus of this meeting is 6

Capital Project Solutions – December 2009 to ensure everyone understands his/her role and that they also understand each others' role. Discuss all major project elements, especially the "Big Three" - scope, schedule and budget. Make sure everyone understands the best way to communicate with each other.

In addition to the business at hand, this is an opportunity for the team members to get to know one another. Incorporate a team building exercise or a social activity that will make the meeting more fun. It's a good idea to schedule additional summit meetings at critical milestones throughout the project.

Fostering Collaborative Teams Keep Lines of Communication Open. A successful team is a team that communicates effectively. One of the best ways to establish open communication is to make sure everyone knows how to get in touch with all the other team members. Something as simple as distributing a project team directory, that includes all team members' contact information, will encourage individuals to contact others on the team as necessary. In face-to-face meetings, foster an environment where people can challenge each other creatively, and discuss issues and different points of views. Sometimes the best ideas are suppressed out of an individual's fear of stepping out of line. Embrace innovation and creative thought. Don't discount or summarily dismiss ideas that are new and different. Positive, forward motion is the goal of each meeting; avoid negative iteration which will only cause frustration and discontent. Each person should have a role and a voice. When people feel they are making a contribution, they not only have more skin in the game, they also become more vested and committed to the project's success.

Address Potential Conflicts Before the Red Flag is Raised. At the first sign of negative iteration, as TV Deputy Barney Fife would say, "Nip it; nip it in the bud." Address those involved directly, but in private. Arrange a meeting with the team members at conflict to discuss the issue and set a plan for resolution. Don't berate or chide them openly in front of a large group. Public thrashings are typically embarrassing, counterproductive and can destroy any positive dynamic tension established. On the other hand, avoiding issues and doing nothing will only suppress the matter until a major disagreement breaks out.

Share, Praise and Promote Successes. Formal and informal recognition for a job well done is a sure-fire way to encourage similar behavior in the future, and can be done in a number of ways.

Consider having the team contractually share risk through an integrated project delivery approach where major team members 7

Capital Project Solutions – December 2009 and the owner agree to a common contract. This will set the stage for shared incentives and successes. Recognize outstanding performance during meetings and summits by specifically acknowledging the team member(s) and the contribution made.

While the overall process of organizing and assembling a multidisciplinary team for a major capital project may seem daunting, breaking this down into measureable steps can remove most of the anxiety. By getting organized early and hiring the right external players you will begin to move in the right direction. By clearly communicating the roles and expectations of each team member and fostering an atmosphere of collaboration throughout the life of the project, your team has a great chance for success!

8

CORPORATE OFFICE 100 W. Franklin Street, Suite 200, Richmond, VA 23220 • 804.343.0161 • fax 804.343.0170

REGIONAL OFFICES 2090 Columbiana Road, Suite 3500, Birmingham, AL 35216 • 205.259.1940 • fax 205.259.1941 8117 Preston Road, Suite 300, Dallas, TX 75225 • 214.706.9339 • fax 214.706.9341 401 Westpark Court, Suite 200, Peachtree City, GA 30269 • 678.783.1077 • fax 678.783.0120

www.klmkgroup.com

1400 Broadfield Blvd, Suite 200, Houston, Texas 77084 • 281.994.7822 • fax 281.994.7801