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Design in a down economy

May 1, 2010
by Lindsay Barba, Associate Editor
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Experts say “efficient design” will become the new standard for healthcare structures

Last month, three healthcare design experts gathered to address the chal-lenge of creating effective healthcare facilities in an era of economic uncertainty. Though financial troubles have hit every sector of the healthcare industry hard, our experts say that a changing budget picture doesn't mean the standards of good design must change. Rather, our priorities must.

Bill Rostenberg (Principal and Director of Research at Anshen + Allen), Susan Lipka (Associate VP, Capital Planning and Management Services at The University of Texas MD Anderson Cancer Center), and Scot Latimer (Senior Partner and National Director - Healthcare Services at Kurt Salmon Associates) put their respective knowledge and expertise together to present the Healthcare Design magazine and Vendome Group-produced webinar, “Form Follows Finance: Health Facility Development in a Time of Scarce Credit” to guide design project planners through the complex maze of developing a facility.

Challenges and reforms

Latimer asserts that healthcare design is “out of the deep freeze we were in 12 months ago” when it comes to capital funding for design projects. However, thawing from that freeze-which has been in effect since the 1990s-is a slow process, as he points out that “there are still relatively few significant capital projects” underway in the healthcare industry.

The chilly construction climate can be attributed primarily to the economy, and Lipka identifies several challenges that the economic downturn has presented for the healthcare design industry. Among the financial challenges hitting healthcare organizations particularly hard are:

  • Declining investment income;

  • Declining federal research funding;

  • Rising unemployment;

  • Rising bad debt;

  • Increased charity care;

  • Decreasing collectables vs. billings; and

  • The unknowns of healthcare reform.

And, while many may feel that the recent passage of healthcare reform will bring in an influx of new patients and, therefore, new cash for facility design, the experts agree that this just isn't so.

For starters, Latimer says, most of the provisions backed by healthcare reform won't kick in until 2014, making any new cash that may come in a long way away. Secondly, Latimer says that while the expectations of reform-namely, “more coverage, more choice, improved affordability”-were clear, they are also “impossible to achieve.”

“The U.S. is the world's largest company running at a loss,” Latimer says, adding that the “large blocks of money” that our country has tied to inflexible sectors, such as Social Security and Medicare/Medicaid, will “limit continued growth in health spending,” which may keep the healthcare design industry at a standstill.

“More insured doesn't necessarily translate into greater demand,” he says.

The rise of “efficient design”

Faced with such obvious challenges and uncertainties, organizations may be prone to make poor choices for their design projects or to steer clear of designing new facilities at all. But the experts maintain that there is a realistic means of designing an effective facility in a down economy, based on strategies related to “efficient design.”

“There is a logical, but misguided, focus on building smaller and spending less,” Rosternberg says. “But I don't think that reducing square footage is the highest and best approach to reducing cost.”

Rather, he suggests focusing on what technology can do to enhance your facility: “Now is not the time to minimize investments in information technology because usually these investments over time will yield significant operational savings.” The best means for effectively integrating technology into the design process, he says, is to partner design and capital solutions with operational restructuring.

In many cases, cash-strapped organizations considering a new facility or renovation project may fare better by concentrating their funds solely on technology updates, rather than construction. And, according to Latimer, there are many untapped opportunities in IT that the healthcare industry has yet to operationalize.

“Organizations are moving from wire and copper to wireless applications,” he says. “But I still don't think that the healthcare industry has begun to scratch the surface on some of the [technology] that we see elsewhere.”

He cites some examples such as the major airlines' use of print-at-home capabilities and the paperless transactions that take place at an Apple Store as the sort of technology tools that could positively impact the healthcare industry without ramping up its costs.

Lipka agrees that the solution to funding limitations lies in increasing efficiency from the inside out. However, her strategy for achieving design efficiency is based on forging effective relationships between designers and clinicians.

“Design needs to get more inside in working with physicians and how they practice,” she says. “The challenge for [designers] will be understanding the stakeholder's business.” She adds that the best way for organizations to approach this relationship-building strategy is to have a clear set of goals for their design projects, then identify design experts who have experience and knowledge in their specific sectors. “If you don't have somebody who understands your business,” Lipka says, “your interior designs may fail.”

And while organizations often partner designers with just the highest-level clinical staff to brainstorm how to most efficiently design a space, Lipka believes this is a serious mistake. “It's important to understand the business of all the practitioners,” she says. “There are a variety of people you're designing spaces for. If you can't improve their through-put, it affects volume.”