Facility Planning: Preparing for Population Health Management and the Technological Revolution

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By Dan Scher

In 2017, Sg2 released its Impact of Change forecast, offering the latest healthcare projections for healthcare services and emerging trends. This forecast predicted a two percent decline in adult inpatient discharges and a four percent decline for inpatient surgical admissions over the next 10 years. Two years into the projection and we are already seeing the impact in physical healthcare environments. Despite closings or potentially empty hospital wings at times, they still consume energy and must be maintained, costing the healthcare organization money.

This trend is not one that will be going away anytime soon, and many healthcare organizations need to start planning now to manage this challenge. By examining acute and ambulatory environments and their current state in the U.S., we see that each is facing their own set of challenges, including the steady decline in hospital admissions, hospitals decreasing their bed counts, or facility closures.

Fewer Beds, Fewer Costs?

Acute environments will continue to see a lower rate of hospitalization due to better routine care and the revolution of technology in healthcare, which is making it easier for more inpatients to receive care at home. As it stands today, there are already too many acute beds in the U.S., and there will be even more as technology progresses.

This begs the question: “Should we be planning for higher acuity or obsolescence?” The answer comes from assessing the impact that better routine care and enhanced technology will have on the future of physical space in healthcare.

New ambulatory environments are being built all over the map as healthcare organizations engage in an arms race to make care accessible and grab market share. But with technological advances shifting routine visits to mobile devices, the overall need for physical ambulatory environments decreases. How can you proactively position your ambulatory portfolio which may include new care centers with the inevitability of the telehealth revolution? 

Time tested assumptions for facility planning may not hold up in the future, and the amount of physical space we have today will not be a requirement for care. Indeed, it could already be driving up overall costs.

We know that the majority of surveyed CEOs in the Advisory Board’s Annual Health Care Survey identified “preparing the enterprise for sustainable cost control” as their top priority. If sections of your facility are going unused but still must be maintained and held in compliance with the rest of the facility, you will lose money via staff time devoted to upkeep – even minimal – and HVAC costs. Rather than lose money on an unused space, how can that space be turned into a functional area?

Planning for the Future

Healthcare organizations must recognize how facility planning impacts their organization and plan for creative options to backfill all that space in their acute and ambulatory environments. Creative options refer to thinking about how to convert unused space into something that is functional and revenue generating. For example, we frequently see vacant hospital units utilized for behavioral health, acute rehab, hospice, etc. As the need for acute beds declines, think about what still needs a physical space no matter the circumstances. How can this large square footage be repurposed?

It may not scream “cost savings” to renovate, staff and maintain one of these wings. However, as a functional space, your organization won’t be losing unnecessary funds on preservation. Indeed, if it becomes a well-utilized space, its revenue generation will outweigh the initial investment.

The challenge won’t be building new hospitals and ambulatory centers – it will be addressing how to manage the existing buildings that are no longer being utilized for their original intent. Technology and the improvements in telehealth have just begun to shift the need for physical space. It’s a major win for consumers when patients have easier access to care. Now, it’s time for healthcare organizations and planning, design and construction teams to start planning ahead for the shift that will ensure the healthcare organization can maximize the assets they currently have and continue to generate revenue.

Dan Scher is Vice President of Planning, Design and Environmental Stewardship at Medxcel. Dan successfully established the Planning, Design and Construction function and Environmental Stewardship Program for the largest Catholic health system in the nation and served as a founding and steering committee member of the United States Department of Energy’s 2018 FGI Health Guidelines Revision Committee Outpatient Document Group.

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