The Hidden Costs Healthcare Leaders Miss Before Breaking Ground

Most healthcare leaders walk into a master planning process expecting a blueprint. What they're missing is a baseline, and it's costing them before construction ever begins. Jessica Busch sits down with Bill Foulkes, Executive Vice President at Cumming Group, and Judd Orlando, Executive Director of Facility Planning and Infrastructure at City of Hope, to unpack what facilities master planning actually is and why so many organizations get it wrong. Bill and Judd break down why volume-based planning beats design-based thinking, what a real asset baseline reveals that leaders don't want to see, and how to make infrastructure risk land with a C-suite that didn't come up through facilities. This episode reframes master planning as a living framework, not a binder on a shelf.

Transcript

SPEAKER_04 0:00

They're taking care of patients or they're they're running the organization for the C C like they shouldn't have to know that.

SPEAKER_01 0:05

That's why it helps them understand what's the best use of you know their capital, which you know we all know is in healthcare, especially, um, is challenged.

SPEAKER_02 0:19

You know, architects show me what what can be built there, and that um doesn't really uh translate to what may be the actual organizational needs.

SPEAKER_03 0:35

This is the Construction Insiders Podcast. I'm Jessica Bush, bringing you the newest trends and strategies in construction, essential to anyone in the industry.

SPEAKER_04 0:45

Welcome to the Construction Insiders Podcast, where we go beyond the blueprints and get into real conversations about what is shaping the built environment today. I'm your host, Jessica Bush, and today we're going to dive into a topic that sits at the intersection of strategy, capital, and infrastructure. Healthcare facilities master planning. I'm joined today by two guests that'll help us really dive in to what's going on and the nuances behind it all. We have Bill Folkes, Executive Vice President at Cumming Group, where he helps healthcare organizations really navigate the complex capital programs and infrastructure decisions they face on a daily basis. And we have Judd Orlando, Executive Director of Facility Planning and Infrastructure at City of Hope. Welcome. Thank you for taking the time out of your busy days to join us.

SPEAKER_01 1:33

Great. Thank you for having us.

SPEAKER_04 1:35

For those who may need a quick warm-up, when we're talking about facilities master plans, what do most people in the C-suite think it means? Um and how far off are they from what they think it means and what it really means in reality?

SPEAKER_01 1:55

That's a great question. Um what I find is that there really is no true definition of master planning. Uh master planning can mean so many different things. And to so many different leaders, um they look at what they're trying to get as outcomes and they may not understand the breadth of what they could be accomplishing. At the heart, um, it's about aligning organizational strategy with the capital decisions that need to be made and being the connective tissue uh there. Um what I find is that oftentimes leaders think that it's a static um uh experience that they're gonna go through where they're gonna get a single document, uh, something that I think of it as a uh a binder of material.

SPEAKER_04 2:40

Trevor Burrus So that static document is very far from what this is in reality.

SPEAKER_01 2:46

I I think for some it is um uh static document is what um is what is needed, um whether it be for uh a board or or or the the the CEO is that's what they want as as output. In some cases, um what it does is it can tee up the next big thing, it can tee up that next building or that next um you know development opportunity that's in front of them. But everybody's output is different. The way that uh we as uh as as facility leaders, um, as consultants, architects uh go into it, we should be approaching it with we are building a living framework and something that um no matter what happens to the strategy is adaptable.

SPEAKER_04 3:27

And so where does the master plan lie in this continuum, Bill?

SPEAKER_02 3:32

Yeah, I think it it really starts with the organizational goals. The organizational strategic goals are the um cornerstone to developing a facility master plan. Those drive what the decisions need to be made in terms of facilities, either new facilities or existing facilities. And um, and so that continuum really starts with the organizational um strategies. And those strategies that they develop are typically annual, right? And so what happens is the strategies that are developed for the organization change over over time, therefore your facility master plan should should change over time as well.

SPEAKER_01 4:17

Yeah, I I would just add that oftentimes um you know if you put yourself in in the um the mindset of a C-suite leader, um, whether you know they have come from differing backgrounds, but oftentimes they don't come from facilities. And so when organizations uh put together strategic master plans, they they have these big visions for especially in healthcare, you know, there's a lot of exciting advancements. Uh I work in the cancer research and treatment um area currently, and what you find is that sometimes there are uh leaders that maybe came up through different backgrounds and they haven't had the experience of of the facilities planning. And so our job is to translate their strategy into um you know, you know, tangible development opportunities that we can take advantage of and do that in such a way that helps them understand what's the best use of you know uh their capital, which you know we all know is in healthcare especially, um is challenged.

SPEAKER_04 5:17

So, and when we're talking about different ways of looking at this, we've heard you know the volume master plan, um volume-based, excuse me, versus design-based. What is the difference? What does it matter? Um Bill, can you walk us through the Sure, I'll start off.

SPEAKER_02 5:36

I'm sure I'm sure Judd can add to this as well. Historically, there's been two um kickoffs to to master plans. One's been a very much a design-based master plan where um in the past CEOs have come in and said, I want to build something, you know, architects show me what what can be built there. And that um doesn't really uh translate to what may be the actual organizational needs. The actual organizational needs are very much um foundational to demographics, volume projections, and translating that into what the future needs, whether it's bed needs, ORs, whatever that is, that will be able to actually drive revenue for the organization. Um volume projections is a very interesting topic to me because there are kind of it's a little bit of a black box. There are two uh two pieces to that. One is um the demographic growth to a specific location, and the second is um the uh amount of market share that an organization is going to achieve by building something new. And so when you take those two factors together, it really drives how much more an organization needs to have in in the physical structure to be able to service the clientele that they have.

SPEAKER_04 7:08

And what are some disadvantages or when can you rely too heavily on one how do you get in trouble by doing that, or how do you pick which uh approach?

SPEAKER_02 7:19

Yeah, um it is interesting. I think most of the organizations, because of some of the uh uh financial constraints have really gone away from the design-based master plan. That was more uh based on kind of uh older thinking about uh providing uh a monolith, if you will, to uh to a CEO as he um as he finished out his career at a at a location. And we've really transitioned much more to the um to the statistical analysis, if you will, of what the needs of the organization are are that we're or the needs of the community will be. Thank you so much. Yes, the needs of the community to be able to match the needs of the community with the financial needs of the organization.

SPEAKER_04 8:12

And blending all of that.

SPEAKER_01 8:14

Yeah, I I think it also matters where you where the organization is in its development. They may think they have a high-level strategy, but it doesn't necessarily translate down into um, you know, tactical uh the ability to to to to achieve anything tactically. And so there's a need to translate a lot of those high-level organizational strategies um into you know uh looking at the data, looking at the market, looking at the things that are out there, and then getting in into the design opportunities. I look at it as sort of like a sliding scale. You've got you know the volume-based, you know, the data, the market-based on one side, and you've got the design based on the other. And most organizations will fit somewhere in in the along the continuum. Um, and and you know, we'll talk a little bit about the partners and how you, you know, kind of identify the right partners, but that's where, you know, making sure you have the right people helping you at the right times is critically important.

SPEAKER_04 9:10

Where does asset baseline fall into this process? Um, what does it actually look like in practice?

SPEAKER_01 9:18

Yeah, this is something that this is an area where I feel is is critically important and and often overlooked by uh executive leaders. You know, I talked about it. And it and when you think about master planning, it does, you do want to think about what's that next big thing. But and the less, you know, the less sexy part of it is what would that look like? What does our existing infrastructure look like? Where where are we today? What are our gaps? Um, you know, where um where do we have um opportunities and and where do we have uh risks that we should be concerned about?

SPEAKER_04 9:52

Transparent audit of what's right existing, what's going on?

SPEAKER_01 9:54

Yeah, because you know, organizations tend to, again, we're talking about leaders who weren't facility leaders, right? They're not behind the scenes looking at the infrastructure of older buildings. And when you um the way I look at it is I I look at it as like a three-level approach. The first level is, you know, what are the what are the ads, what do the infrastructure look like that we have today? Where are the gaps and the risks? How do we uh analyze that and make sure that we are looking at, you know, the investments that are going to be needed into that infrastructure to keep the operations going? Because, you know, the the the most critical thing is is keeping operations going. Um the second is looking at uh the capacity constraints that that that an organization has, the utilization of that space, um, and and what does that lead up lend us to? And then the third part is really the operations. Is it effectively being operated? If it's and when you overlay these things, I I I I've I've always told my teams like I think of them as like heat map. And when you overlay these these things, what you do is you get a pattern that that starts to emerge about uh certain assets in the portfolio that aren't uh performing. And in those cases, a lot of times the master plan should be focused as much on um repurposing assets, you know, maybe exiting an exit strategy for those assets, um, a redevelopment opportunities. Um not necessarily the thing, you know, that that um people want to hear, but but when when done correctly, um, you know, organizations do want to listen to that because they don't want, they don't want an impact of their operations down the line.

unknown 11:26

Right.

SPEAKER_02 11:26

And Jed, you're exactly right because what you see in an organization is they have a certain amount of capital capacity to be able to build new buildings. They think, okay, we're gonna take that entire capital stack and be able to put new buildings in place when in reality what they need to do is price out the infrastructure requirements for those buildings first, taking into account the risks associated with it and in effect deducting out how much that's gonna cost before they can really look at building new.

SPEAKER_01 12:01

Yeah, absolutely. And and then what that does is, you know, I mean, like I mentioned earlier, is uh the organizations go in thinking they're gonna achieve A, B, and C. And that that then begins to um it's the very beginning of showcasing an organization that they need to be open to reprioritizing as they go through because things develop through throughout the the the lifecycle of the master plan that make the capital reprioritization need to occur. And so it's a it's a constantly evolv evolving process as you go through and making sure that um you know organizations understand the impacts and that they're getting the best bang for you know the the the uh the sometimes minimal capital that they have to spend. Yep.

SPEAKER_04 12:46

So risk mitigation is something in our industry we talk about constantly, but when we're talking about really making infrastructure risk conversations land with leadership, especially the leadership that might not have the background or the expertise um that our teams do, how do you make that land? What are those conversations actually like?

SPEAKER_01 13:07

Yeah, this can this can be very tricky. And um, you know, it was in one organization where we did a number of studies um showcasing um you know just the risk that we had in a in in a specific building. Yeah, through those multiple studies, they didn't really land. And so simplifying it goes back to you know the conversation about who are your leaders, what language do they speak, and then making sure that you're you're translating it very simply to some extent.

SPEAKER_04 13:31

It's just translating, right? It's that language translation.

SPEAKER_01 13:33

Yeah. I mean, if you're a nurse, you know, you and you don't see behind the scenes, number one, you don't see it, and number two, you wouldn't be able to understand it probably if you go in there, but if they understand what it serves, um, you know, that air handling unit or that electrical gear and and the risks of it, um, it starts to uh get everybody um on the same page.

SPEAKER_04 13:53

Well, because they should they shouldn't have to understand that's not their day-to-day. They're taking care of patients or they're they're running the organization from the C-suite. Like, they shouldn't have to know that.

SPEAKER_00 14:01

That's why that's why they got us. Yeah.

SPEAKER_04 14:03

There you go. So jumping ahead a little bit here, um, in terms of planning for maximum entitlements. If you know you're not necessarily gonna build it all, why are we planning for it?

SPEAKER_02 14:18

When you uh have a greenfield or brownfield site and you're starting to look at at master planning that, and you really want to do look at maximizing the entitlements that you have there because exactly what you're talking about, um, Judd, the flexibility associated with what's going to happen. I I had a 150-acre site that we were looking at. Um, we master planned that site for about 4.4 million square feet of build-out. The ultimate build out, it's about 90% done, is actually much less than that. But what we were able to do was provide maximum flexibility within the construct of that 150 acres to be able to um do some of the things that they did that they would otherwise not be able to do, even though it wasn't maximizing the square footage, it was maximizing the flexibility. I have another example that is um based on being in a downtown environment where uh the client was looking to maximize the entitlements for an entire city block to be able to build a new hospital bed tower. In that instance, um they looked at the the uh footprint of the building and tried to maximize that all the way up to the to the max maxing out the entitlements. Um what they didn't realize was that the form and function, the requirements of what they were building didn't really drive the entire usage of that uh of that footprint. Uh think of it um from a hospital bed tower as a podium and then um and then a bed tower. And what they ended up uh developing was something that was very inefficient in the upper floors where the bed tower was, um, where the beds were because they had too much space because they were trying to maximize the the square footage that they had available to them. At the podium level, it made complete sense. At the bed tower level, they really should have stepped that back and it would have gotten a much more efficient building.

SPEAKER_01 16:36

Yeah, I think it's important for for to understand that the organizational strategy changes. Where I work now, it's our organizational strategy has changed because of some of the regulatory changes that have been required from um you know our partners at the state level. We needed the ability to to maneuver within. And luckily for us, we had done a a you know, kind of a long-range, you know, uh specific plan with this with the cities in which we we operate, and we were able to kind of change our strategy a bit. And I think that's just one example.

SPEAKER_04 17:10

So that is a great note to end on. I'm gonna pause you guys there because I want to dive in to the importance of keeping master planning flexible. Um, so um, like, subscribe if you want to catch part two, make sure you do that. Um, and we'll be back with more in just a little bit. Thank you.