A fundamental shift is occurring in healthcare real estate, specifically where medical facilities are located and how they are being designed. In short, we are entering a time

of tremendous change - and opportunity - if you have the right team advising you.

How to Navigate the Changing Healthcare Real Estate Market

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One strategic path many health systems have successfully taken is the developer-led ambulatory care center / medical office building. The reasons are many:

• Off balance sheet: not a capital expense

• Do not need in-house expertise; allow someone else to manage and hold liability and accountability for construction project

• Off-campus sites are oftentimes easier to access/navigate/park

• Arrangement allows hospitals to provide their patients access to important complementary services without having to financially support or manage those services

Among the first of many important decisions a health system needs to make is the team of developer and architect. Many developers are trying to get into the healthcare market – the claim is that if they’ve developed office buildings, they certainly are able to successfully and economically develop a medical office building. That may very well have been the case in years past, but as the healthcare industry continues to evolve, there are many factors that make pure medical office buildings an obsolete, inefficient, ineffective vehicle for delivering today’s care:

• The types of services being offered in an outpatient setting have increased

• The complexity of the environment required to support these services has increased

• New models of care are required within these spaces

• The buildings adjacencies and relationships are arranged like hospitals (without beds) requiring complex building infrastructure and protocols.

• A cross-referral system needs to be in place for increased market share

• The integration of physician practices is paramount for efficient care delivery: Reduce duplication of services/resources space/personnel. If planned properly, the MOB can maximize tenancy and flex space and further increase patient draw

A Developer-Led Healthcare Market

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HOW DOES THE SYSTEM GO ABOUT PICKING THE RIGHT DEVELOPER TEAM?

Select a developer that has your mission as its primary project goal. The developer has:

• a proven process of user engagement to include proper visioning and programming

• an appreciation for how location and brand relate to healthcare needs for access, flexibility, growth

• a design team member with a track record of de-livering progressively-planned, patient-centered, cost-effective healthcare spaces.

• Creating an environment for ease of information sharing and cross-referrals is critical for business (chronic conditions, make up over 75% of healthcare cost – 1 out of every 2 adults have a chronic condition, patients with chronic conditions typically have between 6 and 15 care providers )

• Patients are more educated and empowered about their healthcare: Patient satisfaction is critical- all services in one place is a satisfier

Deep healthcare knowledge and experience are essential attributes of the design and development team for a successful project. Developers must have an appreciation for the complexity of the project and drive a process of upfront understanding of user needs, while balancing the expectations of their tenants and lenders with regard to building cost and lease rates. Architects must be experienced in healthcare design and be prepared to collaborate effectively with users and healthcare institutions (who are not footing the bill), the developer (who is footing the bill) and the contractor to design a building which serves the needs of the hospital and patients for a price that fits within the lease structure.

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The healthcare market overall is in a state of flux, largely due to the shift towards population health and value-based care, as well as the politics of healthcare reform.

However, the healthcare real estate market will continue to prosper because the current demand for ambulatory healthcare facilities is only expected to grow. The demand is fueled by a large increase in the number of patients to be cared for in the US due to

enactment of the Affordable Care Act, an aging population, aging facilities (built in the 1950s and 1960s), rapidly emerging technologies that fundamentally change care

delivery processes, and the growing importance of patient- and family-centered care.

HOW THE CHANGING MARKET IMPACTS FACILITY DESIGN

St. Elizabeth Healthcare / Covington, KYPhotographer: J. Miles Wolf

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TRENDS ON THE IMPACT OF HEALTHCARE REAL ESTATE

While the rollout of the Affordable Care Act (ACA) has garnered a lot of attention, there are significant trends associated with its implementation that are impact-ing healthcare real estate. The first trend is focused on numbers, specifically the estimated 32 million new patients that will be covered under the ACA. Of these newly insured Americans, 32% will gain coverage from Medicaid, 45% from the individual exchanges, and 23% from their employers.

At the same time, the Census Bureau projects a 36% growth in the number of Americans over age 65, the very segment of the population with the greatest health care needs. During the next ten years, the population aged 65 and over is projected to increase an average of 3.3% per year, resulting in an increase of nearly 17 million people aged 65 or above by 2023. (By comparison, total popula-tion growth during the same period is projected to average only 0.8%.) By 2029, the 65+ age cohort will account for more than 20% of the U.S. population, up from 13.7% in 2012. In combination with the newly insured, this “double hit” increase in patients will place a strain on aging hospital facilities and infrastructure that is already stretched to the breaking point.

The second trend related to ACA implementation is the increase in mergers, acquisitions, consolidations, and strategic alliances by healthcare organizations. Motivated in large part by the desire to capture more market share, the health-care competitive landscape has intensified significantly, and facilities are becom-ing increasingly important to attracting both patients and physicians. As mergers and acquisitions continue, there will be ongoing realignment of facilities to ensure their highest and best use.

Finally, the steady march of technology promises to continue unabated. Due to the ACA and related incentives regarding electronic medical records (EMRs), combined with advancements made in telemedicine, information technology (IT) support and capacity has become a critical driver in the healthcare real estate market for both new and renovated medical facilities.

NOAH TOLSON AIA, LEED BD+C, LEAN GREEN BELT

Healthcare has shifted from a vol-ume-driven practice to a value-driven practice. We need to do the same. Smart front-end thinking goes a long way. Array goes to great lengths to substantiate our solutions with hard data. Our pragmatic process, inten-sified by our unique planning toolkit, enables more informed decisions to maximize flexibility, efficiency, and return on investment. Once a strategic, programmatic directive is formulated, it serves as a springboard and check-point for designing the most appropri-ate solution.

Noah Tolson is Array’s Practice Leader for Planning. Noah’s varied experienc-es in developing products and bringing them to market, launching a company, and working as a strategic consultant all led to the strong importance he places on a sound plan that is informed by “round thinking” and supported by hard data. At Array, Noah moni-tors all planning activities within the firm and is involved during the critical planning phases of every project. In an industry where efficiency and lean practices are becoming increasingly important, Noah offers a track record of designing projects that maximize operational efficiency, resulting in significant cost savings for his clients. He brings a broad skill set to facilitate project delivery with a comprehensive understanding of various project types. His diverse architectural experience includes many strategic and design projects for healthcare, academic and corporate clients.

Click here to visit Noah’s blog page.

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HOW THE CHANGING MARKET IMPACTS FACILITY DESIGN

The market trends described are complicated by shortages of key medical personnel. The passage of health care reform has set in motion long-overdue efforts to address the large number of uninsured in America, and in doing so increases the need for clinicians to care for them. This situation exacerbates a physician shortage driven by the rapid expansion of Americans over the age of 65. The US Department of Health and Human Services estimates that the physician supply will increase by only 7% in the next 10 years. In some specialties, including urology and thoracic surgery, the overall supply of physicians will actually decrease. As a result, by 2020 our nation will face a serious shortage of both primary care and specialist physicians to care for an aging and growing population.

The nursing industry is also facing a serious shortfall in nursing talent. A perfect storm of retiring baby boomers, an aging nurse population that is leaving the profession and too few nursing instructors is laying the foundation for a healthcare crisis. One report estimates that by 2020, there will be a staggering shortage of nurses – possibly more than 1 million vacancies. Healthcare architects can address the increasing shortage of physicians and nurses by designing to increase staff productivity: fewer steps, less redun-dant operations, reduced lost time due to job-related injuries, etc. Since the single highest cost in healthcare over time is people, improvements in staff productivity have great potential for reducing costs and improving quality of care.

Healthcare systems feel the pressure on their bottom lines due to changing reimbursements and increased competition, so many are taking a closer look at their real estate portfolio and facilities in an effort to control costs in response to revenue constraints and operating cost pressure. A fundamental shift is occurring in healthcare real estate, specifically where medical facilities are located and how they are being designed. Healthcare systems and hospitals are seeking advice and consultation from architectural firms with solid expertise in healthcare design and a keen understanding of the healthcare real estate market. Array Architects is primed to fill the need.

Doylestown Hospital /Doylestown, PAPhotographer: Jeffrey Totaro

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To elaborate on page 2 bullets:

• The types of services being offered in an outpatient setting have increased. As a result, the complexity of the environ-ments required to support these services has increased exponentially. Once restricted to basic preventative medi-cine, clients of Array now perform 70%–90% of procedures in outpatient settings through advanced laparoscopic and minimally invasive surgery. Successful ambulatory care facilities are designed to maximize flow. At Array, we develop separate and distinct circulation areas for both patients and staff, and introduce intuitive wayfinding to enhance and streamline the patient care process. Preventative care re-mains important; indeed, medical practices today are look-ing to expand their offerings to include wellness elements, such as gyms and spa amenities.

• New models of multi-disciplinary care are evolving to sup-port accountable care organizations (ACOs), the Primary Care Medical Home, and other evolving care models. As a result, the standard 96’ x 200’ floor plate may not be appro-priate.

• Adjacencies of key departments in ambulatory/surgical facilities require complex building infrastructure and may require redundant MEP (mechanical, electrical, and plumb-ing engineering) services.

• Integration of physician practices is paramount for effi-cient care delivery. The integration can reduce duplication of services/resources/space/personnel, resulting in cost savings. Multispecialty clinics are becoming more popular where services are rotated with a number of practices shar-ing the same space. This arrangement allows for improved space utilization, increased integration across specialties, and less capital cost. The benefits: improved patient health outcomes, higher patient satisfaction rates, and greater market share through cross referrals.

• The healthcare facility design should create an environ-ment that facilitates information sharing and cross-re-ferrals. This is key for effective coordination of complex, chronic care. Chronic conditions make up over 75% of healthcare cost – 1 out of every 2 adults has a chronic condition, and patients with chronic conditions typically have between 6 and 15 care providers.

• Patient satisfaction is becoming critical for full reimburse-ment – co-locating services in one place (“one-stop shop-ping”) is a key patient satisfier. Streamlining the check-in and intake process through features, such as kiosks and pre-admission registration, has dramatically changed the design of waiting rooms. “Research shows that most patients and their families judge the quality of clinical care received based on their perceptions of mostly non-clinical care environments” according to Julie Cooper, MS, EDAC, a healthcare interior design principal. These perceptions determine where patients choose to go for services and whether they will return. According to Cooper, “patient sat-isfaction with medical environments is now mission-critical for US-based healthcare administrators. Patient-centered design, convenient access to services, and the therapeutic hospitality the patient encounters not only improve patient care, but also have far-reaching marketing and financial impacts on the healthcare organization.”

• With antiquated facilities on hospital campuses, many or-ganizations are looking to move as many services to newer facilities, using the older spaces for post-acute care.

• Facilities are being placed in retail areas in the suburbs to provide access and convenience for patients, as well as extending brand recognition for the system. Many health-care organizations are looking at non-traditional real estate such as abandoned “big box” retail stores and repurposing general office buildings.

developing healthcare for today | PAGE 9

As the demand, funding, and legal circumstances surrounding healthcare con-tinue to change, healthcare facilities and business models will evolve as well. With increasing demands being placed on healthcare services – as the provi-sions of the Affordable Care Act go into effect, and as 10,000 Boomers sign up for Medicare each day – healthcare organizations are rethinking not only how, but WHERE they deliver healthcare -i.e., inpatient vs. outpatient environments. This is readily apparent based on results of an annual survey of hospital CEOs by the American College of Healthcare Executives (ACHE), in which 51% of CEOs answered “yes” to the following question: As the organization continues to strate-gize on how best to respond to the Affordable Care Act, have there been discus-sions with senior leadership about potential changes needed to existing facilities or campus design? Thus, we should see increased demand for the foreseeable future for a variety of medical properties: free-standing medical office buildings, outpatient facilities, rehabilitation centers, as well as redesign of the tertiary care campus to support only the most critically ill and acute cases.

The Urban Land Institute estimates that 64 million square feet of additional med-ical office space will be required during the next decade to meet the increased demand, and it will cost more to construct. According to REED Construction, the average cost of a medical office building across 25 metropolitan markets last year came in at over $240 per square foot, with New York, San Francisco, Boston, Chicago, and Philadelphia having the highest medical office building costs at $257 to $303 per square foot. However, hospitals can control those costs by understanding how the market is impacting medical facility design.

CARL DAVIS SIX SIGMA GREEN BELT

Our culture of continuous improvement has allowed us to develop streamlined processes and workflows to deliver projects more efficiently. This gain in efficiency has allowed us to improve our margins and to increase invest-ment in our knowledge assets, while also allowing us to continue offering fees that are competitive in the mar-ketplace. But simply improving internal workflows does not necessarily deepen a culture of innovation where real and sustained long-term value for our clients, can be created. Array under-stands that our clients expect compet-itive fees, but we also know that what they seek in their healthcare designer and what their projects need more than anything else from their design team is innovation and creativity to drive solu-tions that create long term, sustainable value.

As Array’s CEO, Carl is able to infuse his diverse business background into a healthcare-only design prac-tice that has been recognized as an Architecture and Engineering industry performance and growth leader. Carl understands the importance that pru-dent business decisions and processes have on healthcare projects. By provid-ing project delivery teams and clients with his seasoned business expertise, Carl helps Array’s clients do well while they continue to do good.

Click here to visit Carl’s blog page.

“Healthcare design and construction doesn’t start with the building. Savvy healthcare clients are becoming increasingly convinced that their facilities need to become an extension of their market strategy. It’s imperative to understand that a project’s financial success will ultimately be based on knowing their target customers, analyzing the demographics of their service areas, identifying their competition, and understanding what distinguishes them from the competition.”

- Paula Crowley, CEOAnchor Health Properties Excerpt from Healthcare Design Magazine, July 2014

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IF YOU BUILD IT, THEY WILL COME

Historically, organizations have taken an “if you build it, they will come” approach when developing new facilities – with a healthcare facility often forming the seed of new development for any given location. However, over the past several years, organizations have begun to adopt an approach of locating full-service ambula-tory healthcare facilities in close proximity to established community service fa-cilities, business centers, shopping centers, residential neighborhoods, long-term care facilities, schools and transportation hubs.

It should be no surprise that the major driver of this trend is the consumer.

With two income families as the norm, the age-old notion of “time equals money” may even be challengeable. We are living in a world where precious nature of time can often trump money. Both the baby boomers and generation X-ers now form the majority of healthcare users in the country, and the characteristics of these general populations are driving providers to re-think the strategies of healthcare delivery. These consumers see enormous value if able to bundle visits to a single/convenient location. They will seek out providers who allow them to take care of routine exams for all family members, lab work, diagnostic imaging, urgent (often nighttime) care and pharmaceutical needs – all in and at a single location. The good news is that the bundling of a critical mass of ambulatory care services in hub locations can also provide opportunities to save operational costs by consoli-dating and streamlining workflow processes.

While the advent of the satellite comprehensive ambulatory care facility does not foretell the demise of flagship healthcare facility development, this trend is a re-ality that merits some thought and discussion. For some systems, this is new ter-ritory, while others – like Kaiser Permanente – have been out of the gate for some time now. In any case, it is important for healthcare organizations to understand the unique aspects of this more distributed ambulatory care hub-and-spoke concept for healthcare delivery – especially in the “Affordable Health Care Act” environment that demands efficiency without sacrificing (but improving) quality.

Click here to read the full article on “Ambulatory Healthcare Real Estate Strategies.”

ADRIAN HAGERTY AIA, LEED AP

Adrian has built his career by leading significant healthcare design projects in the National Capital Region for more than a quarter century. His passion for delivering healthcare design excellence has been proven by successfully lead-ing the design of numerous projects for many of the most noteworthy health-care providers in this region including Kaiser Permanente, Mercy Medical Center, University of Maryland Medical System, Adventist HealthCare, Johns Hopkins Medicine, and the Department of Veterans Affairs. Adrian is a strong advocate of integrated project deliv-ery, and prides himself in building and maintaining positive relationships with the entire project delivery team, so ev-ery member feels a sense of ownership in the successful outcome of a project- ultimately exceeding the expectations of his clients and healthcare provider stakeholders.

Click here to visit Adrian’s blog page.

developing healthcare for today | PAGE 11

While the factors listed above that differentiate healthcare construction from general commercial construction may seem to be issues concerning only the healthcare system/hospital, these are all

concerns that architects and developers must invest in as well. Deep healthcare knowledge and experience are essential attributes of the design and development team for a successful project.

Architects must be well-trained in healthcare design and be prepared to collaborate effectively with users and healthcare institutions (who are not footing the bill), the developer (who is footing the bill),

and the contractor to design a building that serves the needs of the health system and patients for a price that fits within the lease structure. Developers must have an appreciation for the complexity of the project; they must follow a robust process for soliciting and understanding user needs, while

balancing the expectations of all involved parties regarding building cost and lease rates.

WHAT TO LOOK FOR IN AN ARCHITECT/DEVELOPER

Montefiore Medical Center / New York, NY Renderingr: Array Architects

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UNDERSTANDING FACTORS THAT INFLUENCE DESIGN

In selecting an architect for your next project, make sure you en-gage a firm that understands the evolving healthcare landscape. This will contribute to the success of your project on multiple levels. The adage “time is money” is applicable to all types of design, but in healthcare design and construction, where costs can hover around $300/square foot, the adage could easily be “space is money.”

It is important for owners to realize that healthcare construction varies dramatically depending on the type of facility desired and its geographical location. The cost of construction per square foot will fluctuate depending on the service provided or depart-ment area. For example, administrative space is cheaper to build than surgical space. That is why it is important to hire an archi-tect that specializes in healthcare design and understands the factors influencing design that go well beyond building codes including: How healthcare reform is affecting patient volumes.

• How the migration from a fee-for-service to a value-based model will impact facilities.

• Awareness of new care models and their reliance upon “big data” to support population health initiatives.

• An appreciation for how location and brand relate to health-care’s needs for access, flexibility, and growth.

• Current and future regulations imposed by the Centers for Medicare and Medicaid Services (CMS) and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), and their impact on the built environment.

Because medical technology is one of the fastest advancing industries in the world, your architect should assess the scope and magnitude of your healthcare facility construction/reno-vation project and its impact. Information technology and “big data” fundamentally change the way care is delivered and work

is performed in healthcare. Therefore, it is essential to know not only the infrastructure but also the ways information will be captured in the facility and what the space implications are of kiosks, computers on wheels, and other data input devices.

To keep a healthcare facility on pace with the current advance-ments in information technology (IT), the planning of all IT systems has to start at the very early stage of a project. This is particularly true for the planning of the IT infrastructure, espe-cially in large complex facilities, where the careful planning of IT infrastructure can have large impacts on construction budgets, long term planning for adaptability and robustness, introduction of new (wireless) technologies, layout of emergency power sys-tems, integration of different building automation systems, and flexibility of energy and lighting control systems. What makes early decisions necessary is the ongoing convergence of tech-nologies which makes it possible (and ultimately necessary) to run multiple systems on one single cabling infrastructure and logical network system.

The always on and everywhere availability of the network has often been compared as the introduction of the 4th Utility. This is not without consequence for the early planning decisions, as the integration of low-voltage communication, life safety and automation (CLA) is no longer a matter of choice but a necessity. This includes everything from the wiring for clinical/operational devices and control systems to patient terminals. Additionally, voice over IP telephony, video and television, PA systems, and wireless devices will all run over the same backbone and via universal data access boxes. As EMR access becomes the hub of all activity, providing frequent, comfortable, convenient, and reasonably private access points is critically important.

developing healthcare for today | PAGE 13

“Since its July 2009 completion, the project has been considered a major success, with none of the typical post-occupancy issues inherent with new construction. The team delivered the project on-time, with a very low percentage of change orders, most of which were due to client-requested enhancements.”

- John PayneAnchor Health Properties (former)

St. Elizabeth Healthcare / Covington, KYPhotographer: J. Miles Wolf

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WHAT TO LOOK FOR IN AN ARCHITECT/DEVELOPER

As specified above, your architect/developer must be knowl-edgeable of CMS and JCAHO regulations regarding health-care facilities, as well as requirements of the Americans with Disabilities Act. Whether you are a healthcare system/hospital building or operating a hospital (or ambulatory surgery center), or a developer converting a “big-box” former retail space into a multi-functional healthcare space, you need to maintain regula-tory compliance to receive Medicare, Medicaid, and third-party reimbursements. You want to always be ready for one of those unannounced accreditation surveys by organizations, such as CMS, JCAHO, Healthcare Facilities Accreditation Program (HFAP), and DNV Healthcare.

New and challenging “Life Safety” and “Environment of Care” standards related to healthcare facilities have been introduced and have caused both owners and developers to be more vigi-lant regarding documentation of equipment maintenance. The new requirements, effective July 1, 2014, apply to medical equip-ment and utility systems equipment. The impact of the change is that all healthcare organizations subject to the Medicare Conditions of Participation will have to revise medical equipment and utility systems management programs to match the new requirements.

The revised CMS approach introduces an Alternate Equipment Management (AEM) program for those hospitals that intend to deviate from simply following manufacturer’s recommendations. CMS stated: “The determination of whether it is safe to perform facility or medical equipment maintenance in an alternate man-ner must be made by qualified personnel, regardless of whether they are hospital employees or contractors.” In Appendix A, CMS goes on to define qualified personnel: “In the case of facility equipment, a Healthcare Facility Management professional (facility manager, director of facilities, vice president of facili-ties) would be considered qualified. The hospital must maintain records of the qualifications of hospital personnel who make decisions on placing equipment in an AEM program, and must be able to demonstrate how they assure contracted personnel making such decisions are qualified.”

Why is this important to you as a developer? As the property owner, you should make sure all parties (hospital or physician group, or in some cases, both) understand what testing, mainte-nance and documentation requirements will be necessary and who will be responsible. In addition, you may want to have these requirements, and who is responsible for the documentation, included in the lease rather than trying to figure out later how

to comply when the facility has failed a CMS or JCAHO survey. Valuable reimbursement dollars are at risk.

The original American with Disabilities Act (ADA), and the revised Act effective March 15, 2011, guarantee the civil rights of all disabled people, not just those limited by physical disabil-ities. In the summer of 2012, the Department of Justice and Attorney General announced a new, joint-enforcement program called the “Barrier-Free Health Care Initiative,” with the goal of ensuring that persons with disabilities have access to medical information as well as physical access to medical buildings. The initiative addresses many aspects of healthcare environments and services, such as facilities, diagnostic equipment, web-sites, parking, transportation, information in alternative formats, videophones, and sign language interpreters. The best advice: anticipate the needs of disabled patients while in the planning phase by mapping out the entire path of travel for the patient from the parking lot, into and throughout the healthcare facility, and back out to the parking lot. Referred to as the “ADA Path of Travel” requirement, this technique will help you incorporate all codes: parking, drop-off, entrances, protruding objects along corridors, toilet rooms, signage, and alarms. Note: ADA minimum standards do not address bariatric design. With the increased obesity in the general population, larger door widths, wider and more sturdy chairs, stronger toilets, and grab bars are needed for both patients (and their family members) and staff. Another caveat: be aware that the ADA standards are enforced as civil rights violations and are separate from building code violations.

Visioning Workshop Array Architects and Anchor Health Properties

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In this next section you will find six questions you should ask prospective architects and developers. The architectural firm you choose should be able to address each of these

questions to your satisfaction.

HOW TO SELECT THE RIGHT ARCHITECT/DEVELOPER

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SIX QUESTIONS TO ASK WHEN SELECTING THE RIGHT ARCHITECT/DEVELOPER

1. WHAT IS THEIR DESIGN PHILOSOPHY?

This question is not focused on the architect’s aesthetic design, but on their design process. It is important to hire an architect that brings value to the project through their design process. Ask how they conduct their programming process. Do they utilize pro-cess-led design to inform the program? Be wary of architects that say “tell us what you need, we’ll draw a set of plans and specifi-cations and give it to the contractor to build.” That may result in a building that met someone else’s past needs, but not your future needs. Array employs a process-led Lean Design* approach: Discovery › Analysis › Creation › Solution (with checkpoints along the way).

* See question #3 below.

2. HOW DO THEY STAY AWARE OF EMERGING TRENDS IMPACTING HEALTHCARE DESIGN?

Between healthcare reform and advances in medical technology, the business of healthcare continues to evolve at break-neck speed. Your architect needs to be aware of a wide range of issues ranging from how BYOD (bring your own device) impacts the design of HIPAA-compliant spaces to radiation shielding requirements for seven-Tesla ultra-high-field magnetic resonance imaging equipment. Ask about their knowledge sharing practices. Do they share ideas and information that result in better-designed facili-ties for patients? At what conferences do they speak? Do they write articles? Your architect cannot design a state-of-the-art facility based on five-year-old best practice information.

3. DO THEY HAVE EXPERIENCE IN LEAN DESIGN?

Healthcare reform, and its emphasis on incentivizing efficiency, has spurred the use of Lean principles in healthcare settings to achieve organizational financial goals. Lean principles have been used to improve staff workflow, patient care, and safety while eliminating waste. Lean can also be implemented during the design and construction process to improve project delivery. Ask if your architect has experience in Lean Design practices and if they have designers who have completed Lean Six Sigma Design certifica-tions. Utilizing a Lean Design approach allows the design team to fully understand the operational issues that must be supported in the new space. By designing buildings to be more efficient for staff, when the facility becomes operational, the expectation is improved efficiencies and lower facility costs.

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SIX QUESTIONS TO ASK WHEN SELECTING THE RIGHT ARCHITECT/DEVELOPER

By implementing Lean Design principles with your architect during design, you can identify potential staff inefficiencies posed by the construction. This includes activities to help users see through a new set of lenses and redesign processes for maximum efficiency. Through this process, the design team addresses the fundamentals of what happens in the workspace to ensure all the resources or “flows” come together in the right place, in the right quantity, and at the right time to support the care provided without error. Spaghetti diagrams and value stream maps help teams identify opportunities to remove waste, workarounds, rework, and roadblocks that impede flow. The goal of all process redesign is to move towards an ideal state: continuous flow of value-added work. There is a set of key flows to analyze and test called the “7 flows of healthcare:” 1) Patient and Family, 2) Staff, 3) Provider, 4) Medicine, 5) Supplies, 6) Equipment, and 7) Information. As different layouts and adjacencies are considered, teams should test the 7 flows to evaluate layout options. Lean process development informs the design by identifying key adjacencies based on continuous flow.

The challenge for healthcare administrators and staff is to think differently about how care is delivered and how the work is done. This allows clinical collaboration with the architects to incorporate an improved vision for care into the design. In summary, the integration of Lean in the facility design process can result in these positive outcomes:

• Flexible, multi-functional space that can be shared to optimize utilization.

• An improved work environment that is patient-centered, efficient, and afford-able.

• Optimized patient flow and workflow to create operational efficiencies (e.g., increased staff productivity).

• Patient satisfaction rates increase. In the redesigned process for continuous flow, care comes to the patient, so the patient is not traveling all over the facility. Thus, the patient has a better experience.

• Satisfied Staff. Increased time with patients results in more profession-al contact and less frustration for staff. Layout of new space designed to support the work, so staff has less workarounds and roadblocks to take their focus away from safe patient care.

• Design plans that include space that is not over-built to accommodate inef-fective processes, hence reducing the overall cost of the project.

• A vision for the future that is clearly developed and communicated with staff, providers, patients, and the community.

ANTHONY CAPUTO LEED AP, LEAN SIX SIGMA GREEN BELT

Healthcare buildings are inherently com-plex. Designing these spaces requires developing and implementing concepts which will represent transformative built solutions all the while appreciating the healing which will take place and the lives subtly affected by the building’s shape, performance and functional adjacencies.

As an Array Practice Leader for Design, Tony is focused on leveraging his dedica-tion to the healthcare industry. That com-mitment to excellence in developing and implementing design concepts is seen through his multitude of successful proj-ects across the country, touching every service line. In addition to his well-round-ed expertise, Tony offers a depth of understanding designing projects that carefully balance operational efficiencies, building performance and fiscal realities while delivering the emotional poetry of inspiring design.

Click here to visit Tony’s blog page.

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4. WHAT IS THEIR COMMITMENT TO EVIDENCE-BASED DESIGN?

At a time when healthcare organizations must watch the bottom line, and cannot provide every “bell and whistle” for physicians, the role of evidence-based design is becoming more critical when allocating precious capital dollars. Evidence-based design (EBD) is the process of basing decisions about the built en-vironment on credible research to achieve the best possible outcomes. It seeks to gauge the impact of specific designs on productivity, employee and patient morale, and patient out-comes. Healthcare administrators and clinicians will understand and appreciate EBD since it is very similar to evidence-based medicine in that both combine knowledge of research with good clinical judgment to set hypothesized outcomes and test them. Thus, EBD serves as a common language of communication for architects, clinicians, and facility administrators.

It is important to hire an architect who has deep knowledge in this area. Ask how many professionals in the firm have evi-dence-based design accreditation and certification (EDAC-certified). What are specific project examples where they utilized EBD? While some in the healthcare industry cite the lack of “hard evidence,” EBD is gaining ground, and studies that are more rigorous will soon be complete. As the body of data grows, facility and real estate professionals will be compelled to evalu-ate and apply it.

EBD encourages participation and collaboration with the end-users of healthcare facilities, with end-users being defined as those who use or occupy the building/space -e.g., healthcare system, tenants (providers and staff), maintenance person-nel, patients and their families. Since users evaluate the built environment differently from designers, participatory design approaches attempt to bridge a gap in understanding between users and designers. Successful construction projects are designed, built, and equipped to meet users’ needs. Whether it concerns the function and expression of an entire building or the design of a single space, users hold a unique knowledge, which should be integrated properly in the design to ensure a success-ful building project. Failure to effectively engage all stakeholders can result in costly changes if design errors are found during construction or if even more costly renovation “fixes” are needed after opening.

5. HOW DO THEY SUPPORT YOUR OPERATIONAL MODEL?

As a recent article in Healthcare Design points out, staffing, operations, and maintenance account for 75% of costs in a fa-cility’s life cycle, while construction, equipment, and furnishings account for about 23% of these costs. According to the article, planning and design make up the remaining 2%, but can have

tremendous impact on a facility’s overall operational efficiency and return on investment (ROI), not to mention occupant com-fort, sustainability and more. Your architect must be conscious of how the built environment will support its clinical staff/oper-ations long after the building is constructed. The ability of your architectural firm to impact the operational costs, safety and environment of care can save more than the initial cost of the project in a short period of time.

6. MOST IMPORTANTLY, DOES THE ARCHITECT/DEVELOPER HAVE YOUR MISSION AS ITS PRIMARY PROJECT GOAL?

Healthcare facility construction and renovation represent huge investments; it is critical that they fully support, and even enhance, the healthcare organization’s mission and strategic priorities. In the famous words of Winston Churchill:

A growing body of research shows that there is a strong link between the design of health care settings and outcomes experienced by patients, staff, and families. There is mounting recognition that risks and hazards of health care-associated injuries and medical errors result more from design problems with systems of care than from provider performance or negli-gence. By introducing safety-driven innovations into the facility design process, the design team will be able to make significant contributions to patient safety. In Error Reduction as a Systems Problem, Moray stated “…people of good intention, skilled and experienced, may none the less be forced to commit errors by the way in which the design of their environment calls forth their behavior.”

Make sure your architect and developer are invested in linking the design of your healthcare facility with your organization’s pa-tient safety and quality improvement goals. Ask them questions regarding how facility design can improve the quality of care delivered in the facility, and how that care will be patient- and family-centered. Ask them to recommend design strategies

“We shape our buildings and afterwards our buildings shape us.”

Please click the imageabove to view video

FOLLOW EACH PATIENT FROM REGISTRATION TO CHECK OUT OVER THE COURSE OF TWO HOURS

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regarding your other strategic priorities, such as increased efficiency of operations or increased staff/clinician productivity. Maybe your organization is committed to sustainable design and green practices; if so, explore their interest and knowledge, as well as their projections regarding ROI on building construction cost (green compared with traditional). More information on green building practices is included in section D of this publication

Array ‘s work with developers is currently seeing tremendous growth. New York, Florida, North Carolina and suburban Pennsylvania are hotbeds for system expansion. Developer-led projects have been popular, and are already bringing value to healthcare systems and their adjoining communities. With 30 years of exclusive healthcare planning and design experience, Array has amassed a wealth of knowledge regarding users’ perspectives, life-cycle costs, appropri-ate/durable materials, and sustainable systems to keep the building efficient for the long-term. Array is well-versed in market trends, and affiliates consistently with highly qualified healthcare develop-ers and leading sub-consultants. We have specialized teams in six practice areas [Continuous Improvement, Asset Advising, Planning, Design, Interior Design & Design Technologies, and we were the high-est-ranking healthcare-only practice in Architectural Record’s 2013 “Top 300 Architecture Firms.”

We believe healthcare design projects must focus on providing high value solutions that support best practices, foster collaboration, promote outstanding patient experiences, and anticipate future flexi-bility. Working together with you, Array Architects will map an optimal future workflow and patient experience using process mapping, oper-ational planning, virtual mock-ups, and simulation modeling. Our goal is to work with you to develop a comprehensive project that supports your mission of caring for your community.

NEW REAL ESTATE OPTIONS FOR HOSPITALS

While the greatest expense most successful medical organi-zations have is employment, the second is real estate. With that in mind, having a trusted real estate advisor reviewing your organization’s real estate usage and options could contribute to a healthier bottom line. With the numerous market, regulatory and reimbursement changes of the past year, a review of the following areas by a developer focused on the healthcare market could provide significant savings:

• Does your ambulatory portfolio and hospital location sup-port your strategic plan? What assets are underperforming or have become obsolete? Return on assets in healthcare lags virtually every other industry.

• Due to the increase in hospital-employed physicians and

the uptick in acquisition of physician practices by hospi-tals, many hospitals have seen their lease management activities increase exponentially and are outsourcing lease administration.

• As more physician practices merge, in an effort to control their finances, shorter leases are becoming more common.

• Stark and Anti-Kickback Statute laws have been in place for over twenty years; however, following the ACA implementa-tion, they have become more stringent and enforced with more vigilance. Many healthcare organizations lack special-ized expertise to ensure that self-reporting is in place so that CMS reimbursements will not be jeopardized.

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As the medical and healthcare industry continues to evolve, there are strategies that your developer/real estate representative and architect can utilize to help you remain on an appropriate course.

STRATEGIES TO STAY AHEAD OF THE CURVE

Indian River Health & Wellness Center / Vero Beach, FL Rendering: Array Architects

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FLEXIBILITY

When designing and constructing facilities, flexibility should be a key driver. Modalities of care are changing rapidly and your facil-ities will need to respond just as quickly. Consider standardizing features of medical office buildings wherever possible so they can be easily and more inexpensively adapted to other uses. Also, consider investing in the design of a prototype for your am-bulatory care and medical facilities. There is no need to reinvent or redesign the wheel with each project. Determine what works for your organization and replicate it across your service area. A side benefit: increased brand recognition and speed to market.

CONSIDER GREEN BUILDING PRACTICES

Investigate all sustainable options possible in the design and construction of healthcare facilities. While achieving Silver or Gold LEED certification may be setting the sustainability bar too high, there are many incentives and options for pursuing envi-ronmentally-friendly design choices that could achieve LEED certification. First, investigate all opportunities to recycle your construction waste. Second, identify design and engineering options that reduce electricity and water use. Lastly, focus on selecting sustainable project materials that support high indoor environmental quality (IEQ). A combination of these strategies could contribute to LEED certification. Several of these green building strategies may cost more initially, but if healthcare ex-ecutives can get over the short-term fiscal hurdle, the dividends for both the healthcare system and the environment could be huge later on.

The costs are hard to predict and vary per project, but an esti-mated 1%–3% increase in the construction budget should be anticipated. This can be largely off-set by savings, particularly in energy consumption. Some studies have shown that invest-ment in sustainable building practices have a payback time of less than 5 years. The US Green Building Council (USGBC) has accelerated the introduction of green building practices through the Leadership in Energy and Environmental Design (LEED) pro-gram. The LEED process is elaborate and requires substantial data gathering and reporting. The documentation and soft costs associated with LEED will impact the Architectural/Engineering firm’s fee. This may explain why a very small percentage of LEED registered projects are healthcare related. In addition, some LEED credits are harder to obtain for medical facilities compared to non-medical facilities. In response, an organization called the Green Guide for Healthcare (GGHC) has been conducting pilot studies as an alternative to LEED certification. Their program is a voluntary, self-certifying toolkit that includes construction and operations checklists. This approach may assist projects

in attaining green principles, while saving some documenta-tion and certification costs typically associated with LEED. The USGBC has been working with the GGHC to develop a health-care-specific LEED checklist for future use.

STAND-ALONE AMBULATORY SURGERY CENTER (ASC) OR HOSPITAL OUTPATIENT DEPARTMENT (HOPD)?

As medical technology has advanced, more diagnostic and sur-gical procedures have migrated to the outpatient setting. As a result, the number of free standing ASCs has increased dramat-ically in the US, and this trend is expected to continue. A report from SG2, a national healthcare consulting firm, projected a 22% increase in ASC services from 2010 to 2019.

Often designed through a consumer lens, ASCs are popular, cost-effective choices for patients and payers because they offer an enhanced patient experience at prices that are with-in their high-deductible insurance plans. Many ASCs provide one-stop-convenience for a range of outpatient and diagnostic imaging services. They are a welcome alternative to traditional hospital outpatient departments (HOPDs), which can be more institutional in their design and more difficult to navigate since departments are not necessarily co-located.

Did you know WHERE the procedure is done determines the cost? Currently, ASCs are reimbursed by CMS at approximate-ly 55% to 65% of the rate at which HOPDs are reimbursed for the same procedure (depending on the specific procedure and other factors). This growing divergence in payments is driven, in part, by differences in how the payment systems are updated each year to account for inflation. Despite the fact that ASCs and HOPDs offer the same services, the CMS applies two differ-ent measures of inflation to update each payment system.

Because of this growing disparity in the payments that ASCs and HOPDs receive based on reimbursement rules set by CMS,

Montefiore Hutch Ambulatory Center / New York, NY Rendering: Array Architects

developing healthcare for today | PAGE 23

there are financial incentives to treat patients in HOPDs rather than in the more economical ASC setting. Thus, it is increasingly attractive for hospitals to acquire ASCs. Even if an ASC is not physically located next to a hospital, once it is part of a hospital, it can terminate its ASC license and become a unit of the hospi-tal. According to an analysis of ASC closures by the Ambulatory Surgery Center Association, one-third of the 179 ASCs that have closed since 2009 did so after being purchased by hospitals and converted to HOPDs. When an ASC is converted to an HOPD, the hospital is entitled to bill for services at a higher rate.

While it may seem like a “no brainer” to go the HOPD route because of higher reimbursement, it is important to understand the competitive market. There is risk in pursuing the HOPD model, since independent lower-priced ASCs may also be in the market. In addition, with healthcare reform, price transparency is becoming an important factor in where patients elect to have care.

As healthcare designers, Array understands the importance of supporting the business drivers of our healthcare clients. Recently, Array designed a new Greenfield hospital, featuring a five-story atrium that links the central diagnostic and treatment/surgery chassis with the inpatient tower on one side and an out-patient medical office building on the other. This design allowed the hospital to maximize the use of expensive diagnostic and treatment (D&T) equipment, as it supports both inpatient and outpatient populations, and care is reimbursed at HOPD rates.

MANAGE REAL ESTATE AND FACILITY ASSETS WISELY

Finally, manage your real estate and facility assets wisely. Determine if you can support the staffing levels to handle the increased complexity of leases, ROI, and asset management so that your facilities are contributing profitably to your bottom line. If not, hire specialists who can.

STRATEGIES TO STAY AHEAD OF THE CURVE

William Macklpwe Medical Office Building / New York, NY Rendering: Array Architects

Healthcare Global features the latest healthcare business news and information for executives in the Healthcare Industry. Noah Tolson’s article, “How to Navigate the Changing Healthcare Real Estate Market” was recently featured in the October 2014 issue.

PAGE 24 | developing healthcare for today

MEDICAL OFFICE BUILDING AS “FRONT DOOR”

Ultimately, the goal of the MOB is to become the primary location for education, preventative care, wellness, outpatient procedures and outpatient surgeries – becoming in essence, the hospital’s “Front Door.” A successful MOB will provide a consistent stream of referrals for the inpatient hospital. This makes brand rec-ognition across your outpatient and inpatient facilities critical – and architectural design can be a powerful tool to create brand loyalty and awareness. Developing consistent signage and wayfinding programs is important, so that a patient and their family knows they are in YOUR hospital. Incorporating modular layouts for physician offices, utilizing similar materials, finishes and furniture can help your patients navigate different locations and make them feel comfortable and cared for.

At the epicenter of the Affordable Care Act (ACA) is the philosophy that health-care should be focused on the wellness of the patient rather than narrowly focused on the symptom/diagnosis of a singular event. Creating the experience of having everything a patient and their family needs under one roof, conveniently organized and accessible, designed to promote a conversational and simplified sharing of information will result in a patient-centered experience and enhanced brand recognition. The future of Medical Office Building design will be closely tied to how it supports patient-centered care. The ability of MOBs to adapt and respond quickly to developing market conditions as healthcare delivery adapts to the nuances of the ACA make it the ideal candidate for development of new best practices founded in Lean design.

Click here to read the full article on “Trends in Development of Medical Office Buildings.”

SHANE WILLIAMS AIA, ACHA, LEAN GREEN BELT

The impact of our design is very rewarding. It can be seen in the way patients and visitors flow through the space, the way staff and administrators function within the space and the way equipment is placed efficiently and un-obtrusively. The Array team brings spe-cialists who are accustomed to working with healthcare providers as well as with facility management personnel to deliver healing environments that meet schedule and budget while supporting evolving approaches to best practice medicine and emerging medical tech-nologies. We understand the technical and management challenges faced by hospitals and the need for flexible facil-ities that meet changing demographics and patient needs. Design creates the response. Our passion for organizing the building in support of the patient, visitor, and caregivers, is more than developing the components into an efficient, effective layout. It’s about cre-ating moments of respite, of reflection and of celebration. Those experiences are founded in design.

Shane’s design background features international hotel destination projects as well as large healthcare campus design. As a result, he is able to infuse hospitality elements that enhance the patient experience while respecting the operational efficiency. As a Practice Leader for Design, Shane ensures that every project’s “big idea” is translated into the smallest of details.

Click here to visit Shane’s blog page.

Who We AreARRAY-ARCHITECTS.COM

We Are Healthcare Architects

We are a team of architects and designers with unique backgrounds, but we all have one thing in common - we share a strong desire to use our expertise and knowledge to design solutions that will help people in moments that matter most.

This focus makes us leaders in our field. There’s a degree of compassion, empathy, and sensitivity that goes into every project that we touch. It’s designing a nurse station with sight lines to every patient. It’s building a Behavioral Health facility without corners, so that patients are safe. It’s translating the operational needs through the technical details to fine tune the lighting system in a neonatal unit so caregivers can match the lighting to each baby’s stage of development. It is a deeper understanding, honed through relationships spanning

decades.

Together, we discover optimal solutions with our clients. It is our four decades of specialization that allows for effective communication, collaboration and precision in the complex, changing world of healthcare.

Array’s Knowledge Communities

We believe strongly in sharing our expertise and knowledge with others. We invite you to explore each of our thought leaders and share your thoughts with the healthcare design community.

Click here to visit our blog.

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