Creating ‘Systemness’ in Facility Operations

Strategy can reduce maintenance, sourcing and utilities expenses by 12 to 18 percent

By Richard Taylor
October 29, 2021

The COVID-19 pandemic put the healthcare industry under unprecedented strain, and it continues to do so with the Delta variant spreading throughout the United States. With demand on healthcare systems once again reaching all-time highs, healthcare leaders are looking for every opportunity to deliver greater patient access and care without getting swept up in the rising tide of healthcare costs.

Forward-looking healthcare systems are increasingly exploring a holistic approach to healthcare: systemness. This strategy leverages service lines, facilities, regional divisions and stakeholder groups to optimize the performance of the organization. By operating as a unified system rather than as an assemblage of siloed functions and facilities, a healthcare organization can provide better care to more people at lower cost.

From silos to systemness

Corporations across industries have long embraced a systemness approach, but healthcare is in the early days of its journey. Many healthcare systems have centralized some administrative functions, such as revenue cycle management, but most systems historically have preferred to make facility operations decisions at the hospital level.

Still, there is nothing like a global pandemic to illuminate how important a truly integrated healthcare system can be for improving the patient experience, managing costs, and supporting employee well-being.

Before the pandemic, most healthcare leaders identified systemness as a top priority, though only 5 percent claimed to have achieved full systemness. One-half of leaders said they were somewhere in the middle of their journey, according to JLL research, which means many are still in the early days of this operational overhaul.

Real estate — the physical spaces in which patients interact with the operational realities of healthcare systems — is inherently at the center of systemness. Real estate is the physical manifestation of a health system’s integrated delivery network.

As most health systems continue to fall short of fully realizing their systemness goals, the question becomes: How can healthcare organizations use real estate as a lever to increase patient access and satisfaction, reduce costs, and build a stronger culture that permeates an entire integrated healthcare delivery system?

Focus on facilities

One great place to start is to look at facilities operations as a key element of and opportunity for systemness

The COVID-19 pandemic sent economic shockwaves through every industry, and healthcare revenues and expenditures are no exception. At the peak of the pandemic, already constrained operating revenues were halved on average.

Many healthcare systems trimmed their facilities management teams to reduce maintenance and other facilities expenses. But cutting facilities costs at the site level can cause long-term issues, including accumulated deferred maintenance and loss of efficiency due to outmoded facilities management systems.

A systemness approach to real estate operations can help reduce overall costs at scale, preventing a pattern of deferred maintenance and supporting asset value in the long run. Systemness in facilities management also can enhance the patient experience and the brand image of the system.

For example, the reality is that aging buildings are costly in terms of energy inefficiency and the ongoing capital investment required to maintain regulatory compliance. An older building also might have facilities issues that cause high employee turnover or are off-putting to patients, who might prefer more modern options for their medical care. Looking at the total cost and revenue opportunity for a facility is imperative for deciding where to invest facilities dollars.

Integration insights

Through an integrated model, healthcare systems see increased agility across service lines, an uptick in internal and patient satisfaction, cost savings, continuous improvement in innovation and an increased ability to identify gaps not evident through a siloed approach. By creating systemness in facility operations, healthcare systems can reduce overall maintenance, sourcing and utilities expenses by 12-18 percent.

Integrated facilities management programs ensure consistent and reliable outcomes. Ideally, systemness-driven real estate facilities management pools the risk while aligning resources, mitigating overlap and silos. Benefits include: improved regulatory compliance; reduced energy use; increased equipment reliability; longer equipment life cycles; and increased patient satisfaction. Organizations can achieve any of these goals through improved internal processes and the incorporation of facilities management software and analysis tools.

For example, increasing preventive maintenance work orders by 17 percent can reduce reactive work order requests by 25 percent and lower capital expenditures by extending the useful life of the equipment. An integrated approach to facilities also can improve patient satisfaction scores regarding the environment of care. Integrated healthcare systems are seeing Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores in the low 80s, compared with typical scores closer to the mid-70s.

While systemness in facilities can achieve these results, healthcare organizations also need to honestly examine their ability to manage the change needed to create systemness. The greatest challenges typically include: a lack of vision for the future and making the essential investments and integrating technologies; inadequate leadership support; a lack of personnel with the appropriate experience to manage the new initiative; and weak change-management communications. An experienced advisor can help healthcare leaders determine the best way to implement an integrated model.

Enhanced facilities and systemness

Healthcare organizations face a host of challenges in addition to — and often in tandem with — the impacts of the COVID-19 pandemic on the healthcare industry, including shifting U.S. demographics, industry consolidation and patients’ growing expectations. As a result, they are motivated to consider the best way to deliver high-quality care to an evolving population. As health systems have grown in new markets to meet patients where they are located, they have acquired a collection of care facilities that are challenging to integrate into a strategic network.

With the revenue challenges created by the pandemic, healthcare systems have an urgent need to implement new cost-saving measures. New efficiencies often can be found within a healthcare system’s real estate management strategy.

For starters, simply having aggregated data about facility utilization rates, energy usage and maintenance schedules can point to efficiency improvements. Data also can provide insights about patient volume and revenue potential while highlighting potential problems and inefficiencies before they become costlier issues.

As healthcare delivery becomes more complex, the benefits of facilities systemness become clear. Reduced operating costs, new efficiencies and, most important, a better patient experience are outcomes that speak for themselves.

Richard Taylor is president of healthcare solutions with JLL.

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