Why Should a Facilities Director Care About Operations?

June 24, 2014  |  David White

With aging facilities and underfunded infrastructure projects, directors of healthcare facilities are looking for ways to maximize capital.

Counterintuitively, one source of significant savings in both facility construction and operating budgets is outside the typical purview of the facilities department: improving the delivery of care and flow.

When the low-hanging fruit has already been picked, nontraditional solutions can help control costs.

One square foot of hospital space costs $47 per year on average to operate, according to the American Hospital Association. This amount includes utilities, maintenance, security, insurance, and environmental services. Given this ongoing expense, it is essential to minimize wasted space. As an example, underutilizing four existing 750 dgsf exam rooms wastes approximately $160,000 annually. That’s $2.4 million in facility operations costs over fifteen years.

We would consider underutilization to be an exam room that is occupied less than 50%-60% of the operating time. These spaces can be converted to flex space or be repurposed into a more highly utilized function. Or they can be closed so you don’t have to pay to heat, cool, clean, and maintain them. (See our recent blog post describing the top 10 signs of underutilized space.)

The same idea applies to new construction. When the cost to build one 110sf exam room can exceed $50,000, it is critical to not build any more rooms than are necessary. Process improvements can impel a smaller, more efficient facility sized to support streamlined staff workflows. In a streamlined process, patient throughput improves by 10-20%, which increases the percent of time each exam room is occupied. This effectively increases the utilization of the room so that you can see the same number of patients in fewer rooms (thus less cost.)

As a hypothetical peak-time example, a facility may estimate a need for 8 new exam rooms, but if we can demonstrate that each would only be occupied 20% of the time, they could instead build 4 new exam rooms and occupy each the 80% of the time, saving $200,000. (See our recent blog post describing how the quantity of available rooms affects room utilization.)

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At FreemanWhite, we use interactive dashboard tools to visually convey how construction costs and room need decrease with patient flow improvements.

With healthcare reform, we anticipate less new construction and more investment in improvements to existing infrastructure. In order to “fit” new service lines and convert existing non-code compliant spaces to code-compliant within the same square footage, this approach helps hospitals do more with less. It’s not just air handlers and generators that can save money, but square footage too.

 ABOUT THE AUTHOR       David White MBA, LEAN/DFSS Certified
outcome_David WhiteDavid White takes a scientific approach to challenging problems, creating analytical tools that provide customized solutions. He specializes in innovative intelligence that helps clients draw meaningful conclusions, with a talent for interactive tools that support decision-making.

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