The future of health care delivery
At Glumac, a discussion was opened on how the AEC industry must adapt to deliver projects that work within the new model of health care business plans.
Since its launch in 2010, more than 20 million people have signed up for the Affordable Care Act. More than 6 million were previously uninsured. These numbers bear out a change in approach to the fundamentals of health care delivery and the need for a shift in what's required of a health care facility.
At Glumac, a discussion was opened on how the architecture, engineering, construction (AEC) industry must adapt to deliver projects that work within the new model of health care business plans. In November, Glumac was joined at the City Club of San Francisco by Jeff Fyffe of Jones Lang LaSalle; Stuart Eckblad, University of California San Francisco Medical Center; Karen H. Vegas, El Camino Hospital; and Bill Whipple, Sutter Health. Glumac Principal and health-care leader David Summers moderated the discussion.
Q: Everyone has a unique way of delivering an optimum project. Describe yours.
Stuart Eckblad: We're a public entity. We don't have the flexibility for what people call "pure IPD (integrated project design)." We do IPD-light. The key for health care is that people really need to recognize the delivery model needs to be flexible enough to accommodate change.
For example, a medical office building (MOB) takes 3 to 4 years to complete; a good facility takes 8. In that period of time, health care laws and practices may have changed two to three times. All delivery methods have issues, but the idea of collaborating gives us tremendous flexibility. That allows us in the middle of the project to make a major change to a building and allow the team to treat that change as a separate project. That delivery model is the most receptive to the amount of change we see in the health care industry. We've saved millions.
The public system is different than the private system. And in health care, it's important to accept change and be flexible to meet it while being sensitive to budgets and resources.
Karen Vegas: We're more interested in what we can get out of our teams. Everybody knows there's a lot of work out there, so we're figuring out ways to get successful teams together and build lasting relationships. That, to us, is more important than how we contract.
Jeff Fyffe: When we look at the different types and sizes of projects, we see the $20 million-and-less projects as ones to pursue. On the larger projects, we are not seeing design-build as a delivery method. History tells us that with clients they lose control and lose participation. Q: How do you procure a project that helps improve speed to market?
Bill Whipple: We're looking to grow our partnerships in the AEC industry. We want to bring the partners together that we want to work with. On very complicated subject matters, we want to partner with you and improve your knowledge of the project subject matter.
We need design professionals who can think in multiple design sets. We don't need long design narratives from engineers-just the key systems that were selected and the thought process that went into it. We're also using a lot more data. There are eight different platforms we use in the planning process. We need to consolidate that, and we're looking at databases on the planning side.
I think the University of California (UC) system is starting to learn this-the value is in the owner's reputation. We have found that we are attracting the teams we want because of the reputation of our projects. What's difficult is that this collaborative process is a great discussion, but there's a gap in who can participate in that sort of process.
Jeff Fyffe: We're looking for entities that can work together through difficult situations and do what's best for the project. That sounds easy, but how many projects have you worked on where the moons were aligned and that project came together perfectly? We're looking for a group that's done it before and successfully. Of course, things are a little different for us as we work across state lines. I would say we probably see other states a couple of years behind in terms of being transparent, opening up to their partners, and understanding the benefit of an integrated approach.
Q: How do market conditions effect the way you want to deliver projects?
Karen Vegas: It forces us to be more flexible with how we want to contract. We're looking to build new relationships with new contractors. Right now, we're all pursuing you-which is great, but it jacks up the price. It's not a buyer's market.
In California, it takes 5 to 7, even 10 years, to build a hospital. Our problem is everything gets more expensive as we wait. The service we get from our design professionals is less, but we are paying increasingly more. We can't move things quickly enough to justify the cost. Our credibility slips with our own administration. So, we need to learn how to make choices on who we work with. It's very hard to make these things happen in real time.
Q: Another delivery model that's newer to the health care market is developer involvement in project delivery. Is that something your organizations look at?
Bill Whipple: Sutter Health has not done a public-private partnership (P3). When we do engage developers, we access money at a 3% interest rate. Developers usually do so around 7%. So, it would have to make a lot of sense for us to go that route.
Stuart Eckblad: University of California, San Francisco (UCSF) is a bit of a two-headed organization. The campus side has done a few P3s and have had some success, mostly with patient care facilities. On the health care side, we can borrow for a lot less. And that gives us more flexibility for change. We haven't found an organization that can meet those requirements.