Beyond Capital Solutions

How health care organisations can meet today’s needs
Capital projects, including major refurbishments, new builds and redevelopments commonly emerge as solutions when health care organisations respond to pressure points such as increased services demand, deteriorating asset condition or want to enhance their operations. However, these options are expensive and can take years to complete – providing little relief to today’s issues.

While capital projects will continue to play their role, health care organisations also need ways to sustain their businesses until a capital project comes to fruition. In some cases, the project may never materialise – so what can they do to improve operations? In an environment of increasing fiscal restraint and limited access to project financing, organisations must become more innovative and investigate localised solutions that maximise the effectiveness and efficiency of their organisations without compromising patient care and staff well-being.

Before investing in a capital project, decision makers should strategically consider the benefits and costs associated with a project, including the assessment of project alternatives and non-capital solutions.

Here are eight questions to ask:

1. Does the project align with the strategic objectives of the organisation?

Capital projects are driven for a number of reasons including services demand, changes in technology and asset condition. But first organisations should ask whether the proposed project aligns with the strategic intent and broader operational objectives of the organisation. Is the purpose of the project aligned with the core functions of your business.

The first step is having clearly defined objectives and strategic directions for the organisation. These should determine which fields the organisation operates in, what drives the organisation, what services the organisation should deliver and why services are being delivered as they currently are.

If you can answer key questions about how the proposed project fits the organisational objectives, it may be identified as a proposed project does not align with the broader strategic directions of the organisation – so why invest in that project? Instead, organisations could look at options that better address core business needs and are vital to the core of the business.

2. Is there an existing mature market to deliver this service?

Financing projects is costly and resource-intensive. Organisations should think about whether there is an existing market with sufficient capacity and capability to deliver the service – especially if it’s not a core activity for the organisation or an area the organisation in unable to compete in effectively.

A cost benefit analysis and market sounding exercise should be undertaken to determine the advantage of investing in the project, or having the operations supported by an external provider. The key question to ask yourself is, what is the opportunity cost of investing in this project? By doing so the organisation may determine other priorities to invest.

3. What is the risk of deferring this project?

Organisations should ask “what is the consequence of not delivering this project for a period of time” and assess the cost associated risk of deferral to see whether it makes sense to wait a few years before embarking on a particular project.

Evaluate whether your organisation can get another five years out of your current facilities and resources.

Is it a low risk, medium risk, high risk or extreme risk to your operations if you defer? Is the risk centred on patient care, or are there other risks which may not be considered as critical currently driving the need for the project. These insights will help you prioritise investments and optimise timing for embarking on developments or additions.

4. Have we looked at the efficiency and effectiveness of our service delivery?

By reviewing existing models of care and service delivery, organisations can usually identify alternatives to capital projects that will enhance their operations without requiring a large-scale investment.

Rather than adding a new unit, could the organisation remodel the workforce to streamline their activities? Does the patient journey from point of entry to exit follow the most efficient course? Even seemingly minor things, such as managing medical consumables and electricity in the most strategic, economical manner can make a significant difference over time.

In most cases, small changes can help you optimise your operations.

 5. Are we utilising our assets effectively?

Often, there’s greater potential in your existing assets than you might realise.

For example, you could optimise the layout of your departments to make your space more useful. Offices could be used for more than one purpose – meeting and conference rooms can be shared – to meet needs without building extensions. In some cases, optimising space allocation and resource use could reduce pressure points without the high cost of a capital project.

A key component of optimising assets is investing a rigorous preventative maintenance regime for high end medical equipment and services. Downtime on major pieces of medical equipment, such as a CT scanner or MRI can have a massive impact on lost revenue for the organisation. Prevention, particularly maintaining services and equipment, is usually always cheaper than the cure.

6. Have we considered phasing or staging the project?

If the organisation stages the process over a longer period of time, you might be able to start getting some of the benefit immediately and then gradually work your way up to achieve the full results.

It is important to prioritise the proposed works and what organisations can and can’t live with. For instance, while a whole of emergency department upgrade is required, has the organisation identified particular bottlenecks with triage that can be resolved in the short term? Staging projects also makes sense if funding is limited and there’s no guarantee a project will be fully supported across all stages.

Of course, you have to do this strategically. Enduring a lengthy construction period can have significant and adverse impacts on the workforce, so you’ll need to evaluate the appropriateness of staging a project and delivering projects in the least intrusive manner.

7. Have we engaged the workforce?

Organisations have hundreds, sometimes thousands, of valuable professionals who have key insights from working in the operations. They know the needs and challenges from the front line and may be able to identify solutions.

A collaborative approach between management and the workforce can get everyone on board in striving toward goals and overcoming obstacles.

Leveraging staff members’ insights often alleviates pressure in the short term as the leaders look to long-term solutions. Plus, employees want to be involved and valued in their workplace, so greater engagement is an excellent strategy to engage with the workforce.

8. Is the project supported by sufficient planning?

It’s exciting to announce a new capital project however, these decisions too frequently come without sufficiently exploring project alternatives, benefits and the total cost of the project over asset lifecycle.

Stakeholders should invest sufficient time in detailed planning including health service planning, business case analysis and investment management before progressing and announcing projects. From there, organisations can analyse the cost benefit of the project and assess the alternatives and commit to projects with a level of certainty.

This process can help you determine which options provide the most benefits and value for money and identify which projects present the most risk given uncertainty and externalities.

Health care organisations have many options to improve their services and make their operations more efficient. Navigating these questions can be complicated, but there are consultants out there with experience and expertise who can assist you. To identify the most effective approach for your organisation, speak to people who can help. That way, you can ensure you have the best resources and strategies for short-term and long-term success.