'Talk about costs very early in hospital projects'

August 11, 2010

John E. Kemper, chairman and CEO of KLMK Group, Richmond, Va., has provided project management and advisory administration services to hospital systems for more than 35 years. A member of the American College of Healthcare Executives and an affiliate member of the Center for Health Design, Kemper is the author of Launching a Healthcare Capital Project (2004). Current projects:Duke University Medical Center, Durham, N.C.; Children’s National Medical Center, Washington, D.C.; and All Children’s Hospital, St. Petersburg, Fla. He holds a BSCE from Virginia Military Institute.

BD+C: How important is strategic planning in healthcare projects?
John E. Kemper: It’s the most important thing, and hospitals need to spend sufficient time on it because it will greatly increase their success. Even on big jobs, we see a lack of real good upfront planning.
We strongly recommend what we call a Strategic Project Launch Readiness Assessment, which we describe in medical terms: 1) “Discovery”—what strategic planning has been done? Usually they’ve just done pieces of a plan. 2) “Diagnosis”—what’s missing? Land? Medical equipment? Technology? What can they afford? 3) “Treatment plan”—that’s the project implementation plan.
In healthcare projects, there are many stakeholders: patients, the board, the administration, medical staff, the nursing department, the facilities staff, etc. In our best projects, the whole C suite has been actively involved. When they’re not committed, the projects are a lot harder to do. They all have to be on the same sheet of music.
BD+C: Why don’t hospitals do this routinely?
JEK: They usually just want to see a rendering and get going with the design. They skip the project launch phase. Patients should be the number one priority, but are the dollars being spent on the patient’s experience? Or is the priority on the way the building looks?
BD+C: Why do healthcare systems have such difficulty with cost projections?
JEK: The biggest problem is the gap between expectations and reality. We educate our clients about contingency and escalation—you’re projecting out five years, with big numbers, hundreds of millions of dollars. The other confusion is between construction cost and overall program cost. Program cost can be a 1.5-1.7 multiplier over construction cost, mostly for equipment and design/consultant costs.
They think the project’s going to cost $300 million, when it’s really more like $510 million. This happens all the time, and it’s even more prevalent now with the projects being even bigger.
You’ve got to talk about costs very early in the project. If there’s any hiccup in the healthcare construction market, it’s that.
BD+C: Explain what you mean by “Operational Process Redesign”?
JEK: With OPR, we encourage hospitals to look at their current processes—how they operate today—and think how they could improve their operations, especially when they’re renovating or building a new facility. We ask them to map the whole patient experience, from pre-registration through the procedure and treatment—for the emergency department, for surgery, and so on. When they do this early in the project launch phase, they begin to see inefficiencies in their current operations and how good design can improve operations in a new or renovated facility.
BD+C: It sounds like OPR folds right into integrated project delivery.
JEK: Yes, it’s getting all the team members to remember who the real client is—the patient—and to focus on the interior workings rather than just the exterior aesthetic. That’s where OPR fits in. And with IPD, all the team members have to sign an agreement to work together; they’re at the table on every key issue, setting the targets for the project, including the budget, and establishing incentives based on the goals for the project. One of the biggest mistakes is not having shared goals for a project.
With IPD, you’re putting those people together early on, the whole Building Team. As a result, you will see much better cooperation. You have to tear down the walls between the team members. Until you make it a collaborative process, you’ll just have paranoia and finger pointing.
BD+C: You’ve become an advocate of commissioning, haven’t you?
JEK: I’ve turned totally around on that from where I was three years ago. The MEP systems in healthcare projects are very complicated, and they can represent 40-45% of the construction cost of your project. With the size and complexity of these projects, the commissioning agent must be a key member of the project delivery team. They should be participating in the design process, almost in a peer review manner.
BD+C: What’s the buzz in healthcare?
JEK: Renovations. A lot of replace-in-place projects. Large cancer centers. Mission-critical data centers, to protect hospital and patient records. Technology—an awful lot of money is going to be spent on that. And children’s hospitals—we’re doing three right now. In the past, pediatrics was just done within a hospital; now they’re doing huge standalone children’s facilities.
Learn about the “Design + Construction of Hospital Additions + Renovations” from John Kemper, Mark Howell of Skanska USA Building, and Mark Bultman of HGA Architects (1.0 AIA/CES HSW learning units) with BD+C’s webcast. Register here: www.BDCnetwork.com/university/community/934/webcasts/45912.html. BD+C

         
 

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