Making the Argument for Asset Management in Healthcare

Examining the Cost-Savings Potential of Implementing a Centralised Asset Management System

Presenter: Michael Kwok, P.Eng. MBAVice President, Professional Services

October 28, 2009

Today’s Agenda

Introductions

Trends and challenges in facility capital planning

What is a Centralised Asset Management System (CAMS)

Benefits of CAMS

Case Studies

Ottawa General Hospital

British Columbia Ministry of Health

Q & A

About VFA Leading provider of software and services for

facilities capital planning and management

Established 1998

Headquartered in Boston, MA, USA Canadian subsidiary HQ in Vancouver United Kingdom subsidiary HQ in Reading

Integrated solution combining Facility assessment services Capital management software products Business consulting services

400+ clients in healthcare, government, education & corporate markets

VFA software used to manage over 400 million square metres

Representative Healthcare Clients

Ontario Ministry of Health & LTC (CDN) British Columbia Ministry of Health (CDN) Saskatchewan Ministry of Health (CDN) Central Health Newfoundland (CDN) Ottawa General Hospital (CDN) Kingston General Hospital (CDN) London Health Science Centre (CDN) U.S. National Institutes of Health (US) U.S. Navy Bureau of Medicine & Surgery

(Global) U.S. Army Medical Command (Global) U.S. Indian Health Services (US) New York-Presbyterian Hospital (US) Kaiser Permanente (US) Sisters of Mercy Health System (US) Tenet Healthcare Corp. (US)

Trends Impacting Healthcare Facility Management

Continued cost pressures

Increased regulatory compliance

Need to support critical operations

Renewed focus on infrastructure and technology investments

Underfunded over last decade

Through 2010, 75% of U.S. hospitals expect to increase capital spending annually by average of 14% [HFMA]

Nearly half of hospital CFOs

surveyed by the HFMA

reported their infrastructures

were deteriorating faster than

they could make capital

improvements.

Capital Asset Management Systems (CAMS)

COLLECT & Maintain Facility Information Condition Functional Adequacy Inventory Renewal

ANALYZE Facility Data Priorities Benchmarks Funding scenarios

DEFINE Capital Projects & Plans Annual and Long-term Renewal,

Maintenance, Construction, etc.

MANAGE Projects Create & manage work orders Real-time project reporting

COLLECT & Maintain Facility Information

Asset Inventory and Condition Evaluation

Compile facility data Include photographs and CAD drawings Create detailed descriptions of

assessment findings

Develop detailed cost estimates

Estimate replacement values, deferred maintenance and lifecycle costs

Industry standard data (e.g., R.S. Means)

Classify data for decision support analysis

Resources

Acc

urac

y

Budgeting

Budgeting +Hot spots

Budgeting +Actionable

Budgeting +Actionable

StatisticalModeling

Facilities Audit

Systems Lifecycle Assessment

Detailed Facility Condition Assessment

Water Conservation

Indoor Air Quality & Environment

Site Sustainability

Materials & Construction

Functionality

Code Compliance

Lifecycle

Condition

Efficiency

Energy Efficiency

COLLECT & Maintain Facility Information

Include Sustainability in Condition Evaluation

COLLECT & Maintain Facility Information

A Centralized Repository of Asset Data

Centralized asset database provides holistic view of the portfolio

Common terminology and platform

Data hierarchy based on organizational hierarchy

COLLECT & Maintain Facility Information

A Centralized Repository of Asset Data

Common database prevents silos of information, and allows the organization to use the same data for both strategic and tactical requirements

.

COLLECT & Maintain Facility Information Building System Data

.

Plan the information you want to collect prior to assessing sites

Consider all required assets - both vertical & utilities

COLLECT & Maintain Facility Information

Asset Requirements.

ANALYZE Facility Data Establish Priorities

Region: 13Campus: West CampusAsset Name: Timberlake Building

Category-Priority 1 2 3 4 5 Total

Air/Water Quality £0 £0 £0 £6,836 £0 £6,836

Building Code Accessibility £0 £0 £471,020 £0 £118,875 £589,895

Building Code Compliance £46,028 £393,498 £0 £0 £227,534 £667,060

Building Integrity £802,691 £1,219,480 £1,699,412 £4,630 £0 £3,726,213

Energy £0 £0 £0 £43,637 £0 £43,637

Functionality £0 £112,904 £136,187 £161,308 £1,521 £411,920

Hazardous Materials £0 £0 £0 £0 £146,626 £146,626

Life Safety £33,581 £0 £0 £6,364 £3,716 £43,661

Total £882,300 £1,725,882 £2,306,619 £222,755 £498,272 £5,635,848

Crosstabs of Requirements

By Category and Priority/Asset Name

Priority Description

1 Currently Critical

2 Potentially Critical

3 Necessary - Not Yet Critical

4 Recommended

5 Does Not Meet Current Standards

.

ANALYZE Facility Data Understand Impact of Funding Options

.

ANALYZE Facility Data Understand Impact of Funding Options

.

What-if analysis allows various funding scenarios to be evaluated

Industry-standard Facility Condition Index enables benchmarking

Applications

Now That You Have It…

What Can You Do With Your Data?

Site FCI for Asset Use A & B

Asset Information Management

Dashboards provide critical overview of

Portfolio value and conditions

Funding needs Key indicators such as FCI

School F 108,874 7 2 1 3 1

School B 44,395 2 5 6 4 2

School A 24,257 1 4 10 5 3

School G 49,776 8 6 3 6 4

Arena 30,600 10 7 2 6 5

School C 19,797 3 8 8 6 6

School D 83,851 5 1 13 6 7

School H 90,588 9 3 9 7 8

School J 6,600 11 12 4 9 9

School K 5,174 12 10 5 9 10

Garage 929 4 13 11 9 11

School E 5,628 6 11 14 10 12

School L 5,670 13 9 12 11 13

School M 3,377 14 14 7 12 14

Rank By Cost Green Upgrades

Per SF

Average of Rankings

Final Rank

AssetAsset

Size (SF)

Rank By Building

Energy Use Reduction

Rank By Carbon

Emissions Reduction

17

Potential Level for Certification Certified £348,99336

Yes No Yes Maybe Unlikely

Sustainable Sites 1 11 1 6 5 £17,501

Water Efficiency 0 10 0 4 6 £21,902

Energy and Atmosphere 2 28 2 4 24 £62,558

Materials and Resources 1 13 1 9 4 £174,446

Indoor Environmental Quality 1 18 1 7 11 £72,586

Innovation and Upgrade 1 7 0 1 6 £0

Existing/Potential Points Score 5 87 5 31 56

Category of SustainabilityExisting Potential

Cost

Point Levels for:LEED-EB O&M Certification34-42 Certified43-50 Silver51-67 Gold68-92 Platinum

Scorecards: Analyze Against Evaluation System

Portfolio FCI Comparisons

Quickly understand condition ranges

Compare building types across regions / portfolios

Review asset or system condition variations by location

Quickly understand condition ranges

Compare building types across regions / portfolios

Review asset or system condition variations by location

FCI =cost of existing requirements

current systems replacement valueFCI =

cost of existing requirements

current systems replacement value

cost of existing requirements

current systems replacement value2009 Estates Portfolio by Facility Type

Portfolio Average = 11.8%

2.6%

8.7%11.2%

14.8%18.5%

0%

10%

20%

30%

40%

50%

60%

Data Centre /Trading Floor

£21.7M

Metro CityOffice

£18.1M

Front of House(Retail) £31.3M

Secondary /Back Offices

£17.6M

BusinessContinuity Site

£26.5M

3-Year Backlog ShownPortfolio Size: 84 (8, 14, 32, 18, 12)

FC

I Ra

ng

e

2009 Estates Portfolio by Facility TypePortfolio Average = 11.8%

2.6%

8.7%11.2%

14.8%18.5%

0%

10%

20%

30%

40%

50%

60%

Data Centre /Trading Floor

£21.7M

Metro CityOffice

£18.1M

Front of House(Retail) £31.3M

Secondary /Back Offices

£17.6M

BusinessContinuity Site

£26.5M

3-Year Backlog ShownPortfolio Size: 84 (8, 14, 32, 18, 12)

FC

I Ra

ng

e

19

Capital Budgets Ranking

Prioritize all needs based on organizational objectives

Produce multi-year budgets

20

Project Planning

Assemble capital improvements into efficient projects

Combine individual projects into multi-year capital plans

Interface with Facility Management systems

22

Advanced Portals

Increased Flexibility to Respond to Change

Reduced Waste in Capital Projects

Reduction in Annual Material Costs

Reduction in Emergency Repair Premiums

Reduction in Overall Project Costs

Avoided Costs of Relocation

Avoided Costs of Shutdowns

Avoid/Targeted New Construction Build

Resource/Usage Optimization

VFA Enables a Compelling ROI

Case Studies

The Ottawa Hospital

Profile Overview

Academic Health Sciences Center – University of Ottawa

Partner in healthcare delivery in the Champlain Local Health Integration Network (LHIN)

Serves more than 1.5 million people in Ottawa and Eastern Ontario

1100+ Acute Care Beds

130,000+ Emergency Visits

51 Operating Rooms

12,000 staff, 2000 physicians and 1200 Volunteers

Budget of approximately £600 M

Physical Infrastructure

Three Campuses Civic Campus

2.0 M square feet 18 buildings developed from 1920

-1980’s

General Campus 1.7 M Square Feet One integrated building developed

in 1980’s.

Riverside Campus 300 K Square Feet One integrated building developed

in 1980’s.

Facility Management Overview Aging Infrastructure

Many buildings over 60 years old

Facility condition varies across campuses

No consistent documentation/updates

Past assessments were focused

No overall view into all infrastructure

No analysis tools to understand data or proactively plan where investments should be made.

Lacked fully integrated plan

Capital and associated operating plans were not fully integrated

Difficult to prioritize and develop long-term plan

Master Plan Development – no quantifiable data to develop business plans/cases to renovate or replace infrastructure.

“New Approach”

Comprehensive Facility Management Tools Facility Condition Assessment Tool (VFA)

Detailed assessment of all infrastructure - 5 categories. Quantifies investment required in each category and

provides Facility Condition Index. Development of 10 year plan.

Work Order Management System (TMA) Ongoing preventative maintenance of assets linked to

VFA/Capital Plan. Allows for integration with labor/operating plan

management.

Space management tools Link assets to locations in space management module.

As Built Documentation Essential link to VFA and TMA tools when implementing

capital development projects and renovation projects.

Benefits and Challenges

1. Benefits Complete infrastructure “picture” and “planning”

Good reporting functionality. Prioritization of investments - impact of

deferred maintenance. Integrates well with other facility management

tools. Master Planning

Internal 25 year capital plan Business case assessments - Ministry

Submissions.

The Future

Standardized provincial Facility Condition Assessment Tool

Facility Blue-Print

Benchmark comparisons (FCI Indicator)

Prioritization of investments within organization/region

Operational benchmarks and planning linked to Facility Condition Assessment tool

Systems integration – one integrated platform

Sample Clients

The British Columbia Ministry of Health Services

British Columbia Ministry of Health Profile

30 million square feet

500 sites

Complex, mixed portfolio

Project started with one region (pilot) and scaled to six regions in a 4 month period

Health care special requirements (e.g. infection control)

British Columbia Ministry of Health Approach

Multi-stakeholder steering committee

Legacy data

Multiple team deployment

Use of local partners

Visual inspections & modeled assets

Scheduling flexibility required Type and ownership of data

• Proactive project management

British Columbia Ministry of Health Results

Support capital renewal needs

Standardized assessment methodology and centralised database

Track changing condition of facility elements

Benchmark, forecast and track hospital conditions and expenditures

Accurate, consistent, actionable, secure and conflict-free data

Performance standards and targets for facilities conditions

Secure access to assessment data and reports for users

Questions?

Michael Kwok, P.Eng. MBA

VFA, Inc.phone: (617) 772-8170email: mkwok@vfa.com