Rural hospital and CAH project team steps
Many health facilities professionals at small, rural hospitals and critical access hospitals (CAHs) have not undertaken a major construction project in their careers. However, as many small, rural and CAH facilities now approach obsolescence, an increasing number are being forced into managing major construction projects with capital budgets in the multiple millions of dollars. For those with little experience in managing major construction projects, the task can be both daunting and confusing.
The following is a look at the key phases of the project development process, including special ramifications for small, rural hospitals and CAHs.
It has been empirically proven that new facilities, especially replacement facilities, have a positive impact on market share, revenue and staffing expense. However, it shouldn’t be assumed too quickly that organizational issues or challenges can only be resolved with a costly new construction project. For example, one small, rural hospital was struggling with stagnant market share and volumes. To address these concerns, the hospital closed its underutilized obstetrics unit, converting the vacated space into a clinic for visiting specialty physicians. This relatively modest solution required only minimal facility renovations and enabled the hospital to grow its inpatient market share by 4 percent in a single year.
Strategic planning should precede all building projects and should begin with a comprehensive market analysis. The market analysis serves to quantify the service area needs and appropriately plan the facility around these needs. As an example, small, rural hospitals and CAHs typically serve areas with a disproportionately larger percentage of patients 65 years old and older. Facilities must consider the higher utilization rates, more acute concerns, longer stays and service-line needs of their aging patients when planning facilities.
Another important consideration for small, rural hospitals and CAHs is the flat-to-declining overall population rate in many rural service areas. Most small, rural hospitals and CAHs do not have the luxury of volume growth driven by population growth alone. When estimating future volumes, these hospitals should anticipate that they will be operating in a take/retain market. In other words, the volume growth that these hospitals experience is more likely to come from taking it from their competitors and/or retaining volume that is currently leaving the service area.
One of the most common mistakes related to new facility development is to inadequately integrate financial considerations and debt capacity with facility planning. Because small, rural hospitals and CAHs have a smaller margin of error when performing major construction and replacement projects, it is imperative that they fully explore and understand the financial implications and affordability of their projects.
As an example, many CAHs whose high-touch public areas are out of date are attempting to remodel or replace their facilities. These hospitals want their patients to feel they are receiving contemporary, state-of-the-art health care. While public confidence can be courted through public areas, this square footage is not directly associated with patient care, and is thus not reimbursed well under the CAH cost-based reimbursement program. In contrast, inpatient and clinical areas are reimbursed at a much higher level.
For a smaller facility, a development project’s impact on square footage distribution can have a significant impact on the bottom line. This impact must be thoroughly understood before embarking on a major development project.
For instance, “space shifting” created by new additions and/or renovations can impact the ratio of patient care to non-patient care square footage of a CAH. Examples of nondirect clinical care space, which can reduce Medicare cost reimbursement, include facility hallways and stairwells
Likewise, “for-profit” space—which can include gift shops or coffee bars—not only have implications for Medicare reimbursement but also for tax-exempt financing eligibility. Thus, all proposed renovations/additions should be run through the CAH’s Medicare cost report to determine the impact on reimbursement for the organization.
Once it is concluded that a new facility expansion or replacement project is needed, the first step is to make an assessment of the location or site, the projected cost of the construction and overall project, and anticipated schedule.
The project team can make a quick assessment by taking the projected needs, identifying the square footage required to meet those needs, creating a preliminary campus concept plan and developing some preliminary cost estimates and project schedules. This will help determine whether it is reasonable to move into the project implementation phase.
The resources at small, rural hospitals are especially stretched and already overcommitted, so selecting the right team of internal and external staffers to work on the project is a critical step (see sidebars Internal Project Team Staffing and External Project Team staffing).
Before planning begins, health facilities professionals should go through the proper steps to select the right project team. This includes identifying the core project team, including executive decision-making authority. Involvement of key medical personnel from the beginning will help build broader support among the medical staff. The team may expand or contract during various phases, but participant consistency and consensus will be important success factors.
Given limited available in-house staff with project experience, a small hospital CEO needs a comprehensive team of people with the expertise and experience in financing, planning, designing, constructing and equipping a new facility. The CEO should identify the team members and their roles, understand when they are needed and use the proper selection procedures. The core team members usually are a project manager, design consultants, specialty consultants and a construction manager.
Prior to the bidding phase, the project team must determine which delivery process is most appropriate. Delivery methods vary from the conventional design-bid-build process to a negotiated construction management process to a design-build process. There are also many customized or modified approaches that can be used to meet the needs of a small, rural hospital. The traditional design-bid-build approach is the delivery method utilized by many small, rural hospitals due to legal and/or public considerations.
Because construction can typically range from 50 percent to 60 percent of the total project cost, selecting and hiring the best contractor and/or construction manager is imperative to the project’s success. The hospital can either bring a contractor and/or construction manager on board during the design phases to address estimating, scheduling and constructability issues or wait until all bid documents are completed and a hard-bid approach can be implemented. There are pros and cons to either approach.
The selected delivery model can influence the schedule, how the design and bid documents are prepared and the format of contractual arrangements between parties. Because health care construction is specialized, the general contractor and/or construction managers and the key subcontractors (e.g., mechanical, plumbing and electrical) should be prequalified regardless of delivery method selected.
Once the project has been given proper definition during the implementation phase, hospital leadership should commit the resources to create an effective communications plan. Many small, rural hospitals fail to take advantage of this fundamental opportunity or postpone it until it is too late to get the full value of the plan. A communications plan should be prepared by the hospital’s public relations staff with the collaboration of senior leadership, departmental managers and medical staff. The communications plan should define what drives consumer choice and delineate the steps on how to influence that choice. It is important that small, rural hospitals do not use the crutch of the building design to create a vision, but rather use the building design to reinforce the hospital’s vision.
Design & Construction
The first step in the design process is the creation of a campus master plan, which will identify the current and future development of the campus. The most successful campus master plans are developed in an environment of visionary and futuristic thinking.
The next step in the process is to begin the facility design, which takes place in two phases. The first phase focuses on the broader design and not on specific details. A great way to initiate the design process is to tour other new facilities in the area or region to see how they work and feel. Operational flow and changes should drive a big part of the design process.
The second phase of the design process focuses on the details of each individual room and department, including the equipment and fixtures to be included. It is important in this phase that decisions are finalized as soon as possible. The longer issues linger, the greater chance of costly changes in the documentation and construction phase.
In small, rural hospitals and CAHs, the time spent in the planning and design phase uncovers many opportunities for flexibility and shared services within the facilities. Planning for this flexibility is critical because things will change during the process. Don’t underestimate the value of good planning and inspiring design. It may be difficult to quantify but the users will notice.
At this point, the planning is complete. The details, medical equipment and technology have also been finalized. The project now moves into the construction document phase, which is the development of the information into a set of documents that are used for bidding negotiation and construction.
Because this phase of the project can take anywhere between two and five months, there can be a natural tendency for staff, providers and administrators to request changes throughout the process. This can be counterproductive in terms of the development of the documents but also can undo a series of decisions made by the core project team in the development of the design.
At the completion of the construction document phase, project documents are issued to prequalified bidders or bidders who are interested in the project. This is generally a highly interactive period of time where information is flying back and forth between the design team, contractors and subcontractors, looking for clarification or suggesting possible modifications.
The construction process is usually initiated with a kickoff meeting for all of the parties participating in the project to meet and talk about process, policies, procedures and schedules. Most health care buildings have a custom design and are one of a kind. In the process of designing this unique building, there will be discussion related to different approaches and better ways of obtaining the desired result. Expect and encourage those changes for a better outcome.
The entire team needs to continue working as a collaborative entity to achieve a positive outcome. Not everything will go perfectly and there will be many issues to resolve along the way.
Move In and Start Up
For small, rural hospitals, moving into a new facility requires considerable staffing resources during the transition period, which might last from two to four weeks. This process should be managed through a committee or task force and planning should begin three to six months before the construction is completed. It is useful to prepare a 90- to 180-day schedule for establishing goals for the move planning team. If operational procedures will change in the new hospital, health facilities professionals should establish an operational plan on how existing operations will transfer to the new facility.
Through a detailed inventory of equipment and furniture, facilities professionals should plan well in advance which items should be relocated. It is important that the time and coordination required for owner-provided items such as furniture, equipment, signage, artwork and supplies is not underestimated. It is also useful for the hospital to establish a policy restricting physical changes to the new facility for a fixed period of time, such as one year.
Prior to the actual “go-live” date, it is usually useful to have a mock go-live event several weeks earlier. It is also important to properly plan the grand opening events for hospital personnel and medical staff as well as for the general community.
Investing the time and energy in developing a structured approach to planning a small, rural hospital will provide long-term benefits to patients, staff and the community.
Project team members should follow a disciplined process and be prepared to collaboratively solve problems.
Ultimately, the project development process is rewarding and exhilarating, so health facilities professionals should have fun and enjoy it.
Brian B. Buchholz, AIA, ACHA, CID, is a director and principal at BWBR Architects, St. Paul, Minn. He has been practicing in both urban and rural environments. He can be reached at email@example.com. John Dao, MHA, is a director at Wipfli Healthcare Consulting LLP, Minneapolis. His most recent projects have focused on small, rural hospitals and CAHs. He can be reached at firstname.lastname@example.org. Robert P. Walker, AIA, ACHA, is the president of Walker & Associates, Minneapolis. His firm specializes in project management with small, rural hospital and CAH project experience. He can be contacted at email@example.com.
About this Series …
“Architecture+Design” is a tutorial published quarterly by Health Facilities Management magazine (www.hfmmagazine.com ) in partnership with the American College of Healthcare Architects (www.healtharchitects.org).
|Sidebar - Internal Project Team Staffing|
Important characteristics that small, rural hospitals and critical access hospitals should consider when selecting internal project team members include the following:
|Sidebar - A Comprehensive Project Team Organizational Chart|
Chart by Robert P. Walker
|Sidebar - External Project Team Staffing|
Important characteristics that small, rural hospitals or critical access hospitals should consider when selecting external design team members include the following:
This article first appeared in the June 2008 issue of HFM magazine.
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