Hospital Trends and Program Management · hospital owner study FMI Corp was engaged by a hospital...

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Hospital Trends and

Program Management

Jay Snyder, MBA, CHC

FMI Corporation Copyrights 2016

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Background on our

hospital owner study

FMI Corp was engaged by a hospital client to develop processes and an

operating plan to support cost control and project risk management

throughout budgeting/planning, design and construction. FMI’s

management consulting team assessed the clients current state, interviewed

internal and external sources, brought forth industry best practices from past

research and conducted a detailed hospital owner study in order to deliver

evidence based solutions and program improvements.


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The Project Team

Scott Humrickhouse – Managing Principal

Jay Snyder – Senior Consultant, Strategy & Operations

Kevin Haynes – Senior Consultant, Research

Stahler McKinney – Analyst, Research


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The Case for Knowledge Shar ing

• Shared Interest among hospital PDC programs to adopt owner best practices.

• Establish Staffing Models that are based on owner industry productivity data and standard work.

• Adoption of technology is lagging the rest of the industry despite similar needs to be more efficient and precise in how we manage project financials and execute work.

• Trends indicate a desire to understand the most effective/evidence based project delivery and contracting methods.

• The risks and impact that a bad project has on a hospital are universally the same.


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Hospital Program Management Best Practices (self-reported)

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Our Roadmap


01 03 Staffing Insight

Use of Technology in PDC Programs

Project Delivery & Contracting Methods

Owner Financial Controls

Key Takeaways

6

In i t ia l Observat ions

Our Framework For Today

Key Takeaways

Your To Do L i st

VFMI Corporation Copyrights 2016

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The Study Participants


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Study Participants

Demographics

Our hospital owner study gathered data from 78 hospitals across OH, VA, NC, SC

which represents 19% of all hospitals in those states. It includes hospitals that are

considered rural and urban, acute care and trauma centers, public and private,

local and regional.


78

HospitalsRural &

Urban

Acute Care &

Trauma

Centers

Public &

Private

Local &

Regional

19% of

HospitalsOH, VA, NC, SC

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Program Management

Best Practices


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• The study revealed that hospital owners are not aligned or similar in their perceived best practices.

• A few respondents noted standards and protocol as a best practice, however later many others cited a lack of structure and standards as a significant weakness.

• Although change order management and audit compliance were not ranked by many as a best practice, some identified project accounting and capital panning as a best practice.


Program Management Best Practices

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10%

10%

13%

13%

13%

16%

Project closeout

Prequalification process

Project accounting

Capital budget planning

A/E/C selection process

Standardized project managementprotocol/processes

Self-reported best practices within the organization



“Lack of Consistent perceived Best Practices indicates a lack of shared learning and knowledge sharing”

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Key Takeaways

• There is a lack of industry peer collaboration in owner program/project management. Potentially, NCHEA Districts could encourage/facilitate communities of practice among the members.

• Of the choices available in the study, there was no sizeable representation for best practices in core project management functions such as Vendor management, RFI or Change Order management or project auditing. Hospitals must consider developing industry expertise in these critical functions.



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Your To Do L i st

• Network with your fellow owners. Plan to tour each other's facilities and share your processes and procedures. Today, to meet two of your hospital peers at their office to discuss each other's program.

• Over the next month, search available resources to develop your team’s capabilities in Vendor management, RFI or Change Order management or project auditing. Consider:

• Online continuing education

• Talking to one of your preferred GC’s to offer a shadow program

• Face-to-face training programs (PMI, FMI, AGC, etc.)



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Staffing Insights


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• Hospitals are feeling the “War for Talent” with their staffing needs and when sourcing design, engineering and construction services.

• Changes in the workforce including the abilities and desires of Millennials are impacting hospitals just as it is impacting A/E/C’s.

• Analysis suggests that the use of technology can mitigate low staffing.


Staffing Insights

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Number of staff within PDC departments


Staffing Insights

----

------------ ------0

5

10

15

20

25

30

PM staff Admin staff Accounting staff Purchasing staff

“Respondents with more than $25 million

in capital construction projects per year

have an average projects to project

manager ratio of 28:1.

Respondents with $25 million or less in

capital construction projects per year

have an average projects to project

manager ratio of 8:1. “

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How do we address the ta lent shortage?

How do we make the job more att ract ive?

How do we bui ld the bench with Mi l lennia ls?


Staffing Insights

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Staffing Insights

We need to tell them how they are relevant!


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Staffing Insights

We need to change the way we give feedback!


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Staffing Insights

We need to care about their career!


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Key Takeaways

• Owners must consider making changes that attract the best and brightest not only to their organization, but to the construction industry.

• The talent shortage is likely to continue while the current workforce continues to build tenure and retire.

Staffing Insights


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Your To Do L i st

• Do the following:

• Develop Career Path Models

• Establish a regular cadence for feedback

• Display an active interest in their career progression

• Adopt technology and work smarter not harder


Staffing Insights

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Use of Technology

in PDC Programs


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• Hospitals have a general lack of awareness of available technologies, how they are relevant to their work and how to adopt them.

• Hospitals may be able to envision the widespread advantage to their program for incorporating technology into their PDC processes, particularly 3D modeling.

• Data suggests that a lack of internal capability to utilize technology is holding hospitals back from considering technology solutions and understanding value/ROI.


Use of Technology

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The degree which PDC departments use technology for….


Use of Technology

All respondents

> $25 million annual capital

construction spending

≤ $25 million annual capital

construction spending

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Key Takeaways

• Technology is moving faster than contractor adoption but MUCH faster than owner adoption (e.g. Use of Drones Policy/Insurance liability, Augmented Reality, new materials, LiDAR, etc.).

• The benefits of 3D Modeling are tremendous and reach far beyond the construction planning and execution. Hospitals need to catch up.

• The lack of IT solutions to assist owners with project management is also a detractor for recruiting and retaining PM professionals.


Use of Technology

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Your To Do L i st

• Reach out to an industry software provider and ask for presentation on industry emerging technology. Suggested sources for this presentation are:

• E-Builder

• JB Knowledge Inc.

• RPA Pulse

• Conduct a simple technology assessment to find low risk opportunities to adopt IT solutions. Get the ball rolling and start thinking about it as an enabler rather than a nuisance.


Use of Technology

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Project Delivery &

Contracting Methods


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• Qualitative aspects of a contractor matter most in the selection process (staff experience, previous relationship between contractor and owner, etc.).

• Design-Bid-Build delivers the worst performance in budget and schedule, but it is used the most.

• Evidence shows that hospitals are most comfortable and experience better performance using lump sum contracts.



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Number of firms on preferred vendor list / Typical number of firms invited to bid on a project



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The most important criteria for organizations when selecting a contractor


15%

15%

15%

19%

23%

An existing or prior relationship (i.e., previous projects)

The most competitive price

The breadth of assets, resources and services at the contractor's disposal

The reputation of the contractor

The specific individuals assigned to the project


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Percent of the organizations’ capital construction projects

delivered via the following methods



------------

------ ------

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CMAR DBB DB IPD

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Percent of the organizations’ capital construction projects

contracted via the following methods



--------

--------

--------

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GMP Lump-sum Time and materials

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Rating of the following project delivery methods in terms of the price paid and the quality received



CM-at-risk

Design-bid-

build

Design-build

Integrated

project

delivery

Guaranteed

max price

Lump sum

Time and

materials

Qu

ali

ty

Price

Poor

Excelle

nt

Significant cost overruns Significant cost savings

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Rating of the following contracting methods in terms of the price paid and the quality received



CM-at-risk

Design-bid-

build

Design-build

Integrated

project

delivery

Guaranteed

max price

Lump sum

Time and

materials

Qu

ali

ty

Price

Poor

Excelle

nt

Significant cost overruns Significant cost savings

36FMI Corporation Copyrights 2016


1, 50%

2, 40%

3, 50%

4, 40% 5, 20%

Respondents with ≥ 50% DBB project delivery

Respondents with < 50% DBB project delivery

1, 50% 3, 25%

3, 60%

4, 25%

4, 20% 5, 20%

Respondents with ≥ 50% DBB project delivery

Respondents with < 50% DBB project delivery

Preliminary budget and final project costs are the same.

Preliminary schedule and actual schedule are the same.

Shared savings programs are used on GMP contracts.

1, 33% 2, 44% 3, 11% 4, 11% All respondents

AlwaysAlmost AlwaysAlmost Never

AlwaysAlmost AlwaysSometimes

Almost Never Sometimes

Never Sometimes Almost Always

Never Almost Never

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Key Takeaways

• Professional certifications aren’t important, but completing some sort of structured healthcare training is.

• DBB is not delivering acceptable budget and scheduling outcomes. DBB is likely implemented because of board or C-suite pressure. Educate your leadership on the organizations historical performance with DBB.

• In general, hospital owners are most comfortable and find better value with lump sum contracts regardless of the project delivery method.



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Your To Do L i st

• Conduct an assessment of completed projects over the last 5 years. Assess the following to determine your organizations performance by delivery method, contract method, project type, project location etc.:• Assess contract value savings/creep.• Objectively compare the results of project delivery methods using data, not

your guy, as your guide.• Evaluate and compare the project performance of your PM staff and

identify opportunities to improve their success.

• Schedule a presentation for your C-suite/Board to learn about industry trends and pressures.



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Owner Financial

Controls


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• Change Order and RFI management are significant challenges for hospitals.

• Department executives are empowered with substantial financial authority and accountability.

• Project budget reconciliation relies heavily on the project manager.



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Weekly, 29%

Weekly, 13%

Weekly, 17%

Weekly, 30% Biweekly, 30%

Monthly, 13%

Monthly, 43%

Monthly, 50%

Monthly, 50%

Monthly, 30%

Quarterly, 29%

Quarterly, 14%

Quarterly, 13%

Quarterly, 17%

Quarterly,10%

Semi-annually,13%

Annually, 29%

Annually, 14%

Annually, 17%

Never, 29%

Never, 13%

Board of directors

PDC director

Corporate accountant

PDC department accountant

Project manager

Frequency that some sort of formal project budget reconciliation performed at various levels



We also found that the lower the ratio of Projects to PM, the more often budget reconciliation is done.

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Key Takeaways

• Of PDC departments which indicate having substantial project budget authority, only 20% identified change order management as a best practice. There is work to be done to align effective change order management with the financial responsibility given to the department.

• Over ¼ of the study indicate department directors reviewing project financials at a frequency of quarterly or longer. This highlights the possibility for significant financial risk and exposure that can develop from poor reporting and analysis.



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Your To Do L i st

• Meet with your team and discuss the effectiveness of your team review contract scope, change orders, use of contingency. Identiy where/how you can improve.

• Ensure that your PM staff reviews project budgets and schedule of values monthly and ensure that a second level of review happens at least quarterly (by department director for example).



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Greatest Strengths &

Weaknesses


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Self-Reported Greatest Strengths


Greatest Strengths & Weaknesses

• Pre-qualification process of general contractors

• Our in-house construction team. They can present us with a cheaper option

for construction and eases schedule

• Small group to work with

• Lean. We accomplish many projects on time and on budget

• Contract management, Project Management Procedures, Design and

Construction Standards, BIM, relationship management with A/E/C

• Integrity, aggressiveness towards process improvement, engagement with

senior leadership, and customer service

• Our versatility

46FMI Corporation Copyrights 2016


Self-Reported Greatest Weaknesses

• Lack of architectural and engineering firms that specialize in healthcare

• Getting a project finally approved

• No internal department structure

• Setting internal priorities

• Number of projects per project manager exceeds 30 per PM, labor shortage of

qualified A/E/C

• Standards development and weakness associated with master planning

• Material handling/ ordering

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F ina l Thoughts and Observat ions

• There is considerable variability among hospital programs; even those that have organizational and construction volume similarities.

• The healthcare sector as a whole and especially owners want more collaboration on program best practices and benchmarking.

• The strategic objectives and varying degrees of involvement of hospital executive leadership will impact opportunities for standardization and benchmarking.

• Opportunities to share knowledge and standardize processes within PDC programs will depend on internal advocacy by PDC leaders.



Now, go handle that To Do List!

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Thank you for your t ime th is a f ternoon


Questions

?

49© 2016 FMI Corporation

JAY SNYDER | SENIOR CONSULTANT

Jay has been working in the engineering and construction industry throughout his career. He has

industry experience as a construction project manager, project sponsor and senior executive as both a

commercial general contractor and within an owner organization.

Jay has an extensive background in operational logistics, strategic sourcing and healthcare

construction. Clients gain an advantage from Jay’s expertise in strategic planning, leadership training,

technology implementation, financial restructuring and market strategy. He has provided services to

commercial developers, general contractors & construction managers, specialty subcontractors,

hospital systems & healthcare providers, government agencies and others.

As a speaker, Jay presents on business best practices, critical facilities, owner-client relationships and

emerging technology. Through his speaking engagements, Jay delivers information and case studies

that allow his audience to understand how they may adopt insight and industry capabilities into their

businesses. He has been a speaker to professional associations and conferences such as the

Associated Builders and Contractors, Associated General Contractors of America, American

Subcontractors Association, American College of Healthcare Executives and the Critical Facilities

Summit.

Jay earned a bachelor’s degree in construction management from SUNY ESF at Syracuse University

and a Master of Business Administration from Emory University. Jay is credentialed by the American

Hospital Association as a Certified Healthcare Constructor. Jay also holds a seat on a Planning &

Zoning committee and is a member of the Board of Adjustments in his local municipality.

Jay Snyder, MBA

Senior Consultant, Management

Consulting

5171 Glenwood Avenue

Suite 200

Raleigh, NC 27612

[email protected]

919.785.9221

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www.fminet.com

Denver

210 University Boulevard

Suite 800

Denver, CO 80206

T 303.377.4740

Houston

9303 New Trails Drive

Suite 350

The Woodlands, TX 77381

T 713.936.5400

Phoenix

7639 E Pinnacle Peak Road

Suite 100

Scottsdale, AZ 85255

T 602.381.8108

Raleigh (headquarters)

5171 Glenwood Avenue

Suite 200

Raleigh, NC 27612

T 919.787.8400

Tampa

308 South Boulevard

Tampa, FL 33606

T 813.636.1364

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