September 2024

📊 Cost Management for Healthcare Facility Project Success

Laying a solid financial foundation early in the planning process is critical to the success of any new facility development. It sets the stage for effective cost management, ensuring that all aspects of the project are financially viable and well-coordinated from the outset. By establishing a comprehensive budget early on, project leaders can accurately estimate costs, allocate resources efficiently, and anticipate potential financial challenges.

In this series, we have provided insights into capacity planning, site selection, sizing facilities and below we are delving into the crucial role of planning for cost management to ensure a project’s success.

Key Components of Planning and Cost Management

💰 Budget Control – Cost estimation and early budgeting allows for a more accurate estimation of the overall project costs and cash flow, including construction, materials, labor, and potential contingencies, as well as when funds will be required. We consider each phase of the process as an opportunity to manage, refine, and reduce upfront project costs and ultimately long-term operating costs, while maintaining quality and performance.

🕒 Time Management – Establishing a detailed timeline and critical path schedule serves as a foundation to any project. It also ensures transparency and consensus on key-milestones – allowing for actively managing the schedule and budget versus being reactive.

🛡️ Quality Assurance – Maintaining quality standards and conducting consistent reviews throughout helps maintain a high quality and the ability to address issues promptly.

🔄 Flexibility and Adaptability – A well-planned project with a clear scope can adapt more easily to changes or unforeseen circumstances without significant disruptions and can flex in size based on project needs or external factors.

🧩 Improved Decision-Making – Engaging key stakeholders in the decision-making process to ensure an informed, data-driven, and transparent process. This early alignment also allows for strategic adjustments throughout the course of a project.

⚙️ Enhanced Performance and Efficiency – Streamlining processes with clear planning and cost management reduces waste, optimizes operations, maximizes productivity, and drives positive results.

We cannot underscore enough the importance of having an established budget and timeline early in the process. Having these key considerations as the foundation of every project helps mitigate unforeseen challenges. By investing time and effort in these foundational steps, you’re paving the way for a successful project execution and achievement of desired outcomes.

Contact us to learn how our team can help you with your next project mcmarketing@medcraft.com

🏗️ Redevelopment of Existing Retail and Office Buildings 🏥
As healthcare organizations evaluate potential locations for a new ambulatory care facility, the redevelopment of existing office and retail buildings can provide a viable option with several potential benefits:

• lower overall development costs than a ground-up development
• speed to market by leveraging existing building and site infrastructure
• buildings located in attractive areas with high traffic, visibility, and abundant parking
• community support to redevelop vacant or underutilized buildings

To fully realize these benefits, we recommend a thorough evaluation that involves the following key areas of focus.

🔑 Key Considerations for Repurposing Retail Space
1. Due Diligence and Testing: It is essential to learn about the building’s current state and historical uses. Obtain as-built plans, conduct environmental assessments, site surveys, title searches and investigate asbestos, lead paint, mold, and indoor air quality issues to determine the costs, timing, and impact of any required environmental remediation.

2. Program Functionality: Since retail and office locations are not typically designed for healthcare, it is important to determine how well the healthcare programs fit within the existing building configuration. Develop programmatic fit plans that help to determine whether the building supports optimal operational efficiency and functionality for the specific program uses.

3. Building Structure: Retail and office structures are often designed to lower structural loading criteria. Additional structural steel modifications may be required to support additional loads required for major medical equipment, operating rooms, and higher intensity uses. Evaluate the roof and walls for load capacities, insulation, and structural integrity. And finally, consider if energy efficiency upgrades and necessary modifications for floor-to-roof heights and new windows can be implemented cost-effectively.

4. Building Systems: Commercial buildings typically have basic plumbing and HVAC systems that require significant enhancements to meet the requirements of healthcare uses such as exam room pluming, sterilization needs, and more stringent HVAC ventilation for infection control. Healthcare facilities also require an intricate lighting plan, a robust low voltage system, and abundant power to support specialty equipment. Assess the existing electrical system for capacity and safety and plan for necessary upgrades to support healthcare operations and back-up power needs.

5. City Approvals: Investigate zoning requirements and engage with city stakeholders early in the process to assess their level of support for a new healthcare use and potential economic incentives. Engage a civil engineer familiar with local regulations to provide a clear understanding of the challenges, approval timeframes, and issues that will have to be addressed in the redevelopment.

🔍 Informed Decision-Making: As described, a thorough analysis will help determine if a redevelopment is cost-effective, achieves speed to market, and effectively positions healthcare providers in a target market. To assist with evaluating a redevelopment opportunity, we have a multi-disciplinary team of experts that can guide you through the process.
📄 Learn how we partnered with Yale New Haven Health on acquisition and redevelopment considerations for a vacant Macy’s in Connecticut. [Link to article here]

🏥 Strategic Site Selection: The Importance of Timeliness and Market Awareness in Healthcare Expansion

As ambulatory services and community outreach grow, healthcare providers are increasingly seeking convenient locations, whether in emerging greenfield communities or infill sites in urban and suburban markets. Providers are adopting a strategic approach similar to traditional retailers, prioritizing prime locations.

⏳Timeliness in Planning

A key but often overlooked aspect of strategic planning is the timeliness of implementation. Retailers typically identify target markets years in advance, allowing flexibility to adjust based on changing business and market conditions. However, many healthcare organizations rush into execution without fully considering local market dynamics or the value of patience in acquiring new sites.

📊 Market Awareness

By carefully tracking market conditions, organizations can secure prime locations at reduced costs or uncover opportunities requiring a longer timeline, such as property aggregation. For example, on behalf of a health system client, we recently facilitated the strategic acquisition of 110 acres of greenfield land, comprising 19 parcels, over 2.5 years for a future hospital campus relocation. Careful considerations in the negotiation process ensured the parcels were acquired for less than their aggregated value, providing both savings and greater flexibility in expanding services at the site.

🛠️ Recommendations Site Planning New Facilities:

1. Implement multi-year planning: Forecast potential needs and continuously monitor the local market conditions. Whether planning for one or multiple locations, the principal remains the same – exercise patience and remain flexible, as the right location may emerge at any time. Being willing to “swap” locations may be financially and operationally advantageous.

2. Create and Align Your Team: Engage experts early to identify the process, costs, and timeline of any potential real estate transaction. Early involvement allows them to anticipate and navigate potential roadblocks, ensuring they’re ready to execute as priorities shift.

3. Control your message: When communicating long-term intentions, maintain flexibility in location priorities. The ability to adjust the order of site implementation ensures the acquisition of the best sites at the best price.

Let us help you navigate the complexities of finding the ideal site for your future development project. Leverage our team of experts, exclusively committed to healthcare, backed by decades of  experience. Contact us for an informal conversation about how we can partner to meet your needs and make your life easier, reach us at mcmarketing@medcraft.com