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How to manage facilities for strategic value

By Jeff O'Connor / Special to Healthcare Facilities Today
March 12, 2014

It is crucial for hospitals and healthcare systems to ensure that their facilities optimally support their strategic business objectives, such as employee retention and patient satisfaction. Most facility managers take a tactical approach, due primarily to a lack of resources, time and information that keeps them in a reactive, short-term mode.

The planning time frame is no more than the next 12 months, decisions are made on an ad hoc basis with criteria based on opinion, and there's no visibility into the relative condition of facility assets across the portfolio or which assets may present a risk to hospital operations. Requests for funding are ignored or denied because they are not seen as credible or in line with the hospital's mission.

What does it mean to manage strategically? Managing facilities for strategic value means taking the long view with a planning time frame of five, 10, 20, even 30 years out. It is a data-driven approach where decisions are programmatic and linked to organizational objectives. It requires moving from ad hoc responses to an ongoing, cyclical approach to facilities capital planning and management. There's an understanding of which facility assets are critical to the organizational mission, and the ability to prioritize projects to reduce risk. Funding requests are treated as credible. Facility management success and business success are in alignment.

Facility managers in healthcare today should ask themselves these questions:

• Are facilities priorities aligned with the business objectives?

• How are decisions made? Is there defined criteria?

• How engaged are stakeholders?

• Are metrics in place to track performance and report?

Strategic facility managers can draw a straight line from facilities objectives to organizational objectives, and ties actions to business metrics, using data to make financial decisions. They get a seat at the executive table – and are not there just to get more funding for facilities, but to participate in decisions and to bring insight to the decision-making process.

How can facilities managers gauge where they are in terms of strategic capabilities? One important factor is the time frame for planning. If an FM is only able to plan 12 months ahead, and has no visibility beyond that, that person cannot be strategic. A strategic facility manager focuses on the short-term for budgeting purposes but has a window into the future that spans from five to 10 to 20 and even 30 years ahead. That view into when system renewals are due and when potential spikes in spending will occur enables intelligent decisions today, such as deciding to spread project costs out over several years to avoid individual years with enormous spending needs.

Another measure of strategic capability is the alignment of facilities plans and objectives with that of the overall organization. In a tactical mode, FMs are able to align their plans only on an ad hoc basis.  Because their plans do not necessarily support the organization’s goals, their requests for funding are less likely to be seen as credible and are less likely to be approved.

For example, if the FM team proposes to replace an HVAC system in an office building, as opposed to putting funds into a roofing project to address leaks in the main hospital building, their priorities will be questioned, especially if the hospital’s overarching objective that year is to improve patient outcomes.  A strategic approach will feature strong, programmatic, sustainable alignment of facilities plans and budgets with organizational objectives, and appropriate, mission-aligned deployment of capital funding.

How are decisions made about what projects to do first? Tactical FM teams make decision autonomously and on an ad hoc basis, while strategic teams, as mentioned above, align the prioritization process with the organization’s goals, and have the absolutely vital involvement of key stakeholders. Effective engagement with organizational leadership is extremely important.

Another important factor in the move to a strategic approach is the basis for funding requests – not only the alignment with organizational goals, but more fundamentally, how do the FM teams identify deferred maintenance and other projects that need to be addressed? If these decisions are based solely on opinions, if there’s a lack of reliable and relevant data, if the focus is only on facility/system condition, or if the decisions are reactive, then they will not be seen as credible and it will be difficult to obtain funding.

If, however, decisions are based on current, accurate data, prioritized by organizational goals; have a broad focus, taking into account additional concerns such as risk reduction, energy efficiency, and functional adequacy alongside condition; and are part of an ongoing, proactive planning cycle, they will be much more credible and it will be possible to obtain the needed funding to address the right projects.

How is performance measured? Facility managers are often solely measured relative to the budget at individual locations/facilities. If they stay at or below budget, that is considered a success. Facility management metrics and success should be aligned with organizational priorities and should be looked at both at the central management level and at individual locations.

The measure of success for a facility manager should be not only how well he or she spent the budget allocated to them, but also how well that facility supported the organization’s mission and goals.

Finally, what tools does the facility manager use to manage facilities capital planning? If an FM team is stuck in a tactical mode, they probably rely on work order data as the sole source of insight, and are most likely struggling with numerous spreadsheets or at the most an Access-type database. The ideal tools to support strategic decision-making provide robust, dynamic analytics that support evidence-based “what-if” analysis, prioritization and budget planning. Armed with crucial information, a facility manager has the ability to take their team and their role in the organization to another level, gaining credibility, achieving goals, and supporting the healthcare mission.

When facilities are managed strategically, the benefits include a significant reduction in risk to business continuity, health and safety, legal and regulatory issues, and organizational reputation. Costs are lowered due to proactive repairs and renewals, avoiding the high cost of emergencies which can include rushing parts and paying for overtime labor. Money is also saved due to smarter buying – an understanding of what projects need to be addressed across the portfolio brings to light opportunities for bulk purchasing.

Another benefit is the improvement in customer satisfaction – customers in this case being not only the hospital’s executives but also, crucially, patients and staff, from whom positive feedback can be attained. Targeted investments are aligned with priorities, and facility managers can verify that spending is effective. Facility managers can also reap the rewards of being strategic when they are recognized for facilities excellence, having delivered a better – data driven, transparent, defensible, proactive process – while able to respond rapidly to changes and emergencies.

For facility managers in healthcare today, a framework for moving facilities capital planning from a tactical exercise to a strategic approach can make all the difference in the world. The benefits to both an FM team and the hospital/healthcare system as a whole are substantial.

Jeff O’Connor is healthcare business director at VFA, Inc., a provider of end-to-end solutions for facilities capital planning and management.

 

 

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