From our CRE Outsourcing and Service Delivery Thought Leader Contributor, EY.

Health care organizations often face challenges in cohesive strategic capital planning. It’s crucial for leaders to address departmental demands and efficiency issues while aligning investments with long-term goals for accelerated value capture. This guide highlights strategies for prioritizing operational efficiency, financial viability, sustainability and adaptability, each of which is pivotal in advancing health care infrastructure and services.

1. Identifying capacity, infrastructure and operational needs

Health care organizations should carefully evaluate their departmental capacity, infrastructure and operational requirements to prioritize capital projects that match the evolving needs of the health care system. The goal is to position hospitals to provide quality care effectively and stay responsive to new industry trends.

Capacity assessment: Hospitals need to conduct a comprehensive capacity assessment that includes analyzing patient volumes, land use, services, lease vs. owned audit, space usage and demographics across combined sites. Hospitals often find overlapping services, underutilized areas or single-use spaces. These findings present opportunities to streamline operations. They also allow for adjustments in the length of leased spaces if they don’t meet business needs. For example, leaders may consolidate comparable, less-used departments into one efficient unit and repurpose the space for sought-after services or new care models with multiple-use spaces. Additionally, an evaluation of the space planning could reveal lease rates that are significantly above market or that have increased disproportionately when compared with commercial lease space.

Infrastructure assessments: Hospitals must thoroughly evaluate their physical infrastructure to verify uniform quality of care, which may involve renovations or equipment upgrades. This enhancement of their assets should allow the facilities to stay competitive and uphold health care standards. Decisions on new construction or leases should be guided by the hospital’s master planning and capacity studies. A standardized process for business cases is essential for all departments. This process should also be used for new construction or property leasing, with clear criteria for determining when a facility is “at capacity” to justify the need for additional capital or space.

Operational needs: Hospitals aim to enhance their operations by improving workflow efficiency, increasing staff productivity and integrating support services seamlessly. This effort transcends mere physical updates, envisioning a more coordinated and streamlined approach in the functioning of laboratories, diagnostic centers and administrative offices to eliminate unnecessary overlap. To achieve this, hospitals must leverage the full potential of their current facilities management systems through advanced analytics. Equally important is the consolidation of various energy management systems to confirm comprehensive digital oversight and control of all facilities and equipment.

Maintaining adherence to regulatory standards is nonnegotiable, as it determines that health care services meet the required safety and sustainability benchmarks, thereby upholding the integrity of these vital institutions. Involving all stakeholders — medical professionals, patients and the community at large — is crucial for customizing enhancements to meet diverse needs and to foster support for these changes.

Strategically phased construction and renovation plans are advisable to reduce the impact on hospital operations so that patient care remains uninterrupted. By aligning these operational enhancements with overarching objectives, hospitals can significantly improve the quality of care and operational efficiency, as well as realize cost savings.

2. Developing a detailed financial plan with clear ROI objectives

Developing a detailed financial plan with clear ROI objectives is essential for hospital financial stability and strategic growth. Finance teams must manage capital investments with precision, using ROI targets to guide capital allocation during executive strategy sessions.

The plan should include strategies for both major and minor projects, with appropriate funding mechanisms. It’s important to distinguish between investments for facility upgrades or expansions and those for new technology, as well as to separate capital projects from maintenance needs. ROI considerations must encompass patient care, staff satisfaction and compliance, verifying that capital spending aligns with the hospital’s mission and quality of care.

Risk management is crucial for identifying potential overruns or delays and incorporating contingency plans. Early stakeholder involvement is key to accurate cost, scope and schedule estimates, fostering alignment and commitment throughout the project.

A detailed financial plan with clear ROI goals leads to judicious investments that support the hospital’s mission and operational effectiveness.

3. Designing for sustainability and adaptability to future trends

Hospitals must address inefficiencies and system duplications, aiming for environmental sustainability and preparedness for future health care shifts. The key challenge is to harmonize these disparate systems, with a focus on environmental sustainability and readiness for upcoming trends in health care.

Sustainability poses a complex challenge for hospitals. Unifying diverse energy efficiencies and infrastructures requires standard upgrades for sustainability. Often, acquisitions or facility studies uncover outdated systems, creating opportunities to adopt energy-saving technologies such as high-efficiency HVAC, smart lighting and solar panels. These upgrades are crucial for cutting operational costs and aligning with environmental standards and public expectations. Hospitals should strongly consider eco-friendly practices to remain competitive and meet current health care sustainability demands.

Adaptability is key in addressing future health care trends. Consolidation combines facilities with distinct specialties, driving infrastructure updates to align with new care models, technology and delivery shifts, such as outpatient services and telemedicine. Flexible infrastructure is critical in hospital renovations and expansions.

Conclusion

Strategic capital planning is key to address the complexities of expansion and renovation. Comprehensive assessments of capacity, infrastructure and operations are essential to position investments to support immediate needs and future growth. Strategic management of capital projects, aligned with organizational objectives, can drive innovation and success in any health care setting. Leaders must focus on sustainability, adaptability and financial planning with clear ROI goals.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.