By Jeff Wardon, Jr., Assistant Editor

Healthcare systems nationwide are confronting challenging financial realities as care delivery costs continue to climb while reimbursements are increasingly delayed. This cash flow uncertainty shapes the way healthcare executives prioritize capital budgets for aging infrastructure and growth-oriented projects. 

Maintenance tends to be deferred to prioritize investments with more obvious returns, such as ambulatory surgery centers, specialty clinics and outpatient suites. The projects that are mobilized are often pinched by ever-thinner margins. On a healthcare campus that is delaying non-critical upgrades on a building-by-building basis, the available campus real estate for new revenue-generating services might be entirely unfeasible for future use. 

In this landscape, the role of the owner’s representative has evolved beyond just project advocacy. An effective owner’s rep acts as a strategic campus planning consultant, providing guidance on which projects to prioritize, how they interrelate and how to phase them in accordance with institutional financial, operational, reputational and relational interests. 

Leveraging oversight and foresight 

For many healthcare organizations, capital planning and construction oversight falls on in-house facilities teams. Typically, these teams manage multiple campus projects simultaneously and do not have the capacity to dedicate focus to any one initiative. This limited bandwidth also makes it difficult to consider long-term and big-picture decisions while facilitating their execution, even on smaller projects. Institutional leaders better understand the value that a third-party project manager or owner’s representative can provide. 

An effective owner’s rep can connect all of these dots, vetting each project investment against its business case and construction feasibility within a hospital’s existing facilities and resources, while also looking for unchecked risks and opportunities. Leadership’s so-called moonshot vision might itself be excellent, but when plugged into a specific site on campus without running through the technical and contextual factors up front, it can quickly surpass beneficial returns. 

An owner’s rep with an architecture, engineering or construction background can bring invaluable oversight on management of the project while leveraging their experience to offer foresight on the best ways to balance the vision with the budget early in the project. 

For example, simulation labs have become important differentiators for a growing number of institutions. These high-tech, low-risk environments for training on new procedures and testing cutting-edge treatments have a real impact on patient outcomes and, ultimately, hospital reputations. Simulation labs also come with substantial connectivity, mechanical and structural requirements, which might be impractical or impossible to deliver in an older building. 

Without an owner’s rep asking the right questions and studying the possibilities, projects like this commonly move deep into design before anyone realizes the moonshot is cost prohibitive to build, at which point, redesigning, rightsizing or relocating the lab are likely over-budget options. 

Achieving the vision 

Rather than turning leadership's moonshot into no shot, an effective owner’s rep can provide guidance on the kind of project team and skill sets necessary for making it reality, which might be a larger or more technical crew than the institution otherwise would have hired. This is particularly important for healthcare groups that already engage a construction manager at-risk or have strong design-build contractual oversight and are concerned the addition of an owner’s rep would be redundant. Based on the complexity and scale of the project, the owner’s rep can assess which delivery method is appropriate and ensure clarity across scopes. 

In the case that a specific building just will not work despite the technical skill of the design team, an owner’s rep also can explore other locations on and around campus that might better facilitate the intended program. Alternatives might include using another available building, acquiring a nearby property or revisiting the institution’s broader capital plan to evaluate other use cases for the building in question. By approaching the vision holistically, the opportunities might even be obvious, such as siting outpatient suites closest to the campus entrance to manage the flow of patient traffic and avoid congestion on ambulance routes. 

Vision versus budget 

Once the project finally kicks off, the owner’s rep will zero in on its success, liaising on behalf of the institution, stakeholders, partners and large, diverse project teams, keeping sight of big-picture goals while tracking hundreds of small decisions and responding to financial pressures. Value engineering is inevitable, especially when cash flow is uncertain, but short-sighted cuts can snowball into expensive operational issues. 

Generally, anything not tied to the floor is the first to go in a value-engineering exercise including finishes, furniture, equipment, lighting, and millwork. Sticker shock over the price of higher quality, more durable materials often leads to reactive decisions without considering long-term operational offset. 

For example, in high-traffic areas, cheaper paint might mean the maintenance team must constantly patch and repaint. Over a few years, this repeated work will dwarf any savings from the initial downgrade. 

Lighting affects the way patients and families perceive the quality and experience of care, but its impact can be difficult to visualize when it is still just a number on a spreadsheet. Without the advocacy of an owner’s rep, it’s not uncommon for lighting to be value engineered so aggressively that the finished rooms feel dim, dingy and unwelcoming and require even more rework to correct once construction is over. 

Again, the job of an owner’s rep is not to say, “No shot” to any level of value engineering. It is to distinguish between nice-to-haves and must-haves while recognizing that everyone on the project — from the laborer on site to the person in accounts receivable — has differing incentives with varying overlap. 

A skilled owner’s rep holds court for that whole ecosystem, understanding varied motives and constraints and finding alignment to best benefit the institution. When that happens, stakeholders at every level walk away feeling heard, respected and proud of the finished project. 

Designing for an unseen future 

Technology is moving faster than most capital planning cycles. From moonshot vision to ribbon cutting, there often is a five-year gap. The space conceived in 2023 might open in 2028 in a very different landscape of tools and expectations. Healthcare delivery is also changing, becoming more distributed and focused on outpatient services and telehealth care. These shifts require foresight and flexibility, not just at the project level but campuswide. 

When an owner’s rep serves as a strategic campus planning consultant, every project becomes an opportunity to evolve the institution into a hyper-efficient, revenue-generating, agile organization. Whether the issue is location, scale, finishes or phasing, having a partner that understands mission and margin is an essential asset and, increasingly, a prerequisite for building healthcare environments that will still make sense 5, 10 or 15 years from now. 

Danei Wallen, AIA, RIBA, is senior project manager at Group PMX, a construction project management firm.