A large academic medical center in the Midwest was struggling with their ballooning capital renewal and deferred maintenance backlogs. Limited funds along with poor financial performance were creating greater focus on expanding revenue resources rather than service capital renewal and deferred maintenance backlogs.
More than 20 percent of the institution was over 65 years of age, and another 28 percent was entering the last quartile of their life cycles. The institution had added 1.24 million square feet to the campus in the past 15 years to replace the hospital, add a cancer center, expand vision and aging programs, and replace aging academic facilities for housing and a bookstore.
The institution had over $350 million in debt but a very favorable debt-to-income ratio. One financial concern was that, during the past 15 years, they experienced almost 100 percent growth but also greater growth of expenses more than new revenue. Hospital leadership was interested in capital renewal projects within the aging spaces but were not excited about deferred maintenance projects that would add additional pressure on revenues without reducing their costs.
The facilities team had a strong history of delivering on energy-efficiency projects and had successes of more than $7 million in savings for the district system they operated. They had evaluated several funding solutions to resolve expanding backlogs and were ready to align with these solutions to improve their outcomes for funding approval. The team agreed to join a pilot group with Sightlines, a Gordian Company, to evaluate facility analytics within the health care vertical market.
Along with a few other academic medical centers and a
children’s hospital in north Texas, they worked with solutions teams to review important quality indicators for facility management. The result was a recommendation of a more than $150 million deferred maintenance project for 2019 that will reduce critical backlogs in both energy consuming and other critical support equipment through a strategic partnership with a local energy service company.