Health Care Construction. Moving Your Project From Concept to Reality

Transcription

1 Health Care Construction Moving Your Project From Concept to Reality

2 Health Care Construction There are 1,283 CAH s s in 48 States In 2005, the Flex Monitoring Team estimated CAH s s would need almost $1.6 Billion in capital for construction projects (expansion, renovation, replacement and mandatory code upgrades).

3 Health Care Construction Two thirds of Minnesota s s rural hospitals were built in the 1960 s s or earlier. These same hospitals are being used to accommodate a much different health care delivery system with a limited workforce and immense changes in technology

4 Challenges Financial Performance-Key to long-term survival. Rising construction costs. Up 8-10% 8 on the materials side in past three years. Aging infrastructures and functional obsolescence dictate something has to be done to remain competitive in the current market.

5 Good News Interest Rates are remaining low. There are more and better financing options available to CAH s. Overall slow-down of construction is creating a good, competitive bid market on the labor side.

6 So.. Why Why is it so many major renovation, expansions or hospital replacement projects start with big dreams and end up a set of drawings in a closet?

7 We couldn t t afford it! Or Politics got in the way!

8 How you approach a major renovation or replacement project can make or break the project and in some cases define your career.

9 What is the key to seeing a project through from Start to Finish?

10 FIRST Work on the project starts long before the architectural drawings begin!

11 False Assumptions Hire an architect first.-false You and/or your Environmental Services staff can manage the project.-false It really doesn t t matter if the architect, contractor or other project consultants have health care experience-false Community Support for the project is not very important.-false You can short-cut the pre-project project planning and preparation-false The State does not need to be involved in the project until the end when they make the final determination

12 Get er Done Pre-Planning Planning Improve Improve Financial Outlook Key Key Financial Indicators (Days Operating Cash on Hand and Total Cash on Hand, Current Ratio, Gross Days In AR, Average Payment Period, Operating Margin, Net Margin, Debt Service Coverage) Charge Charge and Revenue Capture Charge Charge Master Review Assuring Assuring CAH Reimbursement Benefit Debt Debt Capacity Financial Financial Feasibility/Explore Financing Options Project Project Proforma (5-8 8 year) Key Key Objectives

13 Architect Vs. Project Management Which comes first chicken or the egg? Project Management/Owner Representation should be brought on board early in the planning process. Project Management will: Help navigate the complex project planning, design and construction phases of the project. Perform project programming and cost estimate. Assist in the selection of location, architect and construction management. Keep the project moving forward.

14 Do it yourself? How many hospitals have you built? How current are you on all of the hospital construction regulations? Do you have the time to devote to the project? Can you keep the project on time and on budget? Time is money. Do not allow the mismanagement of the project to define your career.

15 Experience You wouldn t t hire someone without experience to build your home- so why would you hire someone without hospital experience to design and construct your hospital? Local politics can get in the way of hiring an experienced firm but inexperience can cost the project.

16 Community Support The importance of engaging community support cannot be underestimated. Lack of community support can have a negative impact on the project and can at a minimum slow the project down.

17 Project Programming No shortcuts Project programming/staff involvement Time spent involving the staff will pay off in the end, in terms of a decrease in change orders. Predetermine service lines, estimate service volumes, peak staffing, equipment, and development of new programs or service lines.

18 New CAH Relocation Guidelines If a necessary provider CAH relocates its facility and begins providing services in a new location, the CAH can continue to meet the location requirement based on the necessary provider designation only if the CAH in its new location: Serves at least 75% of the same service area that it served prior to its relocation Provides at least 75% of the same services that it provided prior to the relocation Is staffed by 75% of the same staff (inc. Medical Staff, contracted staff & employees) that were on staff at the original location.

19 New CAH Relocation Guidelines If a CAH that has been designated as a necessary provider by the State begins providing services at another location after January 1, 2006, and does not meet the requirements, the action will be considered a cessation of business as a CAH. Involve the State Survey Agency early in the process.

20 LEED Decide early if you want a LEED Certified building Hire project team with experience in green building or LEED construction Do your homework Identify your green goals Align incentives so LEED Certification is everyone s s responsibility Contracts and construction documents should clearly define responsibility in green building construction.

21 Costs for LEED Construction $0-$20/ $20/ SF Hard costs for technology $1-$2/ $2/ SF Additional design effort for A/E Team $1-$3/ $3/ SF Cost for commissioning $1-$4/ $4/ SF Contractor s s charge Special means & methods Tracking & collecting info $0-$.35/ $.35/ SF USGBC Fees for certification Total $3-$29.35/ $29.35/ SF

22 Conclusion Get Hospital s s Finances in order Financial feasibility Debt capacity Project Management Community Support Engage State Survey Agency early Make decision on LEED early in process

23 Questions Colleen A. Spike St. Peter Community Hospital