Why Some Construction Healthcare Master Plans Fail (And How to Fix It)

In part two of this healthcare facilities master planning conversation, the hard reality sets in: even the best master plan fails if stakeholders aren't aligned on what it's supposed to solve. Jessica Busch returns with Bill Foulkes and Judd Orlando to tackle the three-layered framework that actually works, the assumption misalignments that derail projects before ground breaks, and why your master plan might be dead on arrival if you're not sequencing your consulting partners strategically. They'll walk through common failure modes. Grandiose visions that blow past the capital envelope, physician-level engagement gone wrong, and how to translate infrastructure risk into C-suite language. With healthcare margins tightening and capital budgets shrinking, the conversation turns to redevelopment over iconic buildings, the looming uncertainty of AI's impact on facility needs, and the single most important step to get right if you're starting this journey. 

Transcript

SPEAKER_02 0:00

And you really are looking at hospitals and healthcare systems that had pretty low margins potentially being cutting half.

SPEAKER_04 0:10

Even the potential impact of AI, and we're talking about capital budgets getting smaller, but the needs not changing. What are gonna be the future impacts of AI in the healthcare space?

SPEAKER_01 0:19

It's our job as consultants to help our organizations accomplish their goals, and sometimes that's not that pretty picture. It's not that iconic building that we want.

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 0:44

Welcome back to the Construction Insiders Podcast. This is part two of our healthcare facilities master planning conversation. Welcome back, Bill, and welcome back, Jud. So let's dive right back into where we were. We had just finished talking about keeping master plans flexible. So I wanted to ask you, how do you keep it flexible without diving into the area of now it's a meaningless document? How do you approach that?

SPEAKER_01 1:14

Yeah, I mean, I think, you know, for somebody in my my seat that that sits within an organization helping lead these master plans, like the worst thing that can happen is it's just a static document that sits on a shelf that really nobody buys into. Um it's a waste of time and it's a waste of money. Um I'm really I think, you know, I think a lot of leaders think that there's only one output and it's going to either be all executable or not executable at all. And that's just not the way I think about it. And I think the industry has has evolved, and I think certain I've met some really great people along the way that have, you know, that have helped teach me as well. But I look at it as like a three-layered um approach because you should be able to execute um, you know, the majority of a master plan, regardless of if you have the capital to do the investments at the larger scale that that may be uh the output. Um the first is you know, going back to what do we have? What's the infrastructure needs? What does our operations look like today? What should we be reinvesting in? What are our reinvestment needs over the five to 10 year horizon to make sure that's part of the plan? Secondly, um organizations always have those um those initiatives that they want to accomplish. Those, you know, they're strategic in nature. Um, maybe they have certain departments that are uh up against the thresholds of what they can accomplish. Um and so those oftentimes you go into a master plan with a lot of those being somewhat already shaped. And so um understanding how they fit in with the master plan, making sure that they fit um into the assets that you want to continue to invest in, that that you can help the organization just further justify those investments and align them is is is step two. And so for most organizations, we should be able to get through step one and step two. And that can be that living framework. Step three to me gets a little bit more into you know the broader view, the you know, the land planning, um, the building development. Um how do we change kind of what our our um intent is today or or our our focus is today, how do we continue to grow? Um that's where um that's where the strategy can change and evolve. And you know, going back to the flexibility of the uh of the envelope, I think that's that's something that we should be able to do effectively. And yes, if this if the strategic object objectives change, uh that is what it is. And I think we we we we do it in such a way that we should be able to evolve it um you know annually or biannually and make slight tweaks, identify the things that have been executed on, and continue to have it be uh a structure, a framework that that um that everybody buys into. That's when you've really done it right.

SPEAKER_02 4:06

Judd, you mentioned the partners, and I think in you see some organizations that uh that get capital dollars approved to do a master plan and jump right into the master plan, right? And that's not necessarily what the organization may not be ready to be able to start a master planning process. There has to be some things that happen in advance of hiring those partners to make that to to make that an effective master plan, right? Yeah, absolutely, Bill.

SPEAKER_04 4:40

What does effective stakeholder education look like then? Because you're talking about taking this data, you're talking about the different three steps. Um what is the most difficult part of that true education outside of just having the conversation?

SPEAKER_01 4:57

Some organizations, and I'm sure Bill you've seen it, yeah, they want the CEO or the COO wants to be the one calling the shots and they give all the information and ultimately they lead it very directly. I think there are other, you know, organizations, and I've I've been in a couple where they wanted to get down to the physician level. They want their physicians to be involved in some of the decision making. And and and there's there's pros and cons to it all, right? Um engagement of your physicians gets better um alignment and and and buy-in from the physicians, but that can be a pretty dangerous um proposition.

SPEAKER_04 5:30

But that's something even like we work in a lot in schools and we hear that exact same conversation of they want to get down to the teacher level and usage, and and that can be wonderful or it can be a little dangerous to get that many opinions or cooks in the kitchen.

SPEAKER_01 5:42

Right. Yeah. And so it's really important to make sure that you have a very well thought out strategy before you jump in because some of the less successful master plans that I've been involved in haven't had that, you know, that alignment um on stakeholder engagement um and and the education going into it. It was just kind of get into it, we gotta get it done, but but really we need to educate ourselves on what we're trying to accomplish.

SPEAKER_04 6:09

So you almost went there, and now I'm gonna go there. Um common failure modes and and kind of the warning signs of the master plan not going in the direction we want. What are those fails?

SPEAKER_02 6:22

Aaron Powell One of the areas that I've seen some of the largest failures are when there are too grandiose ideas and too much trying to put into a master plan that far exceed the capital envelope that the organization has to spend. It's great to to have um long-term goals to do certain things and to bring and drive the organization to a different level. Um, but you have to face the reality of how much money you have to spend today.

SPEAKER_04 7:00

Right. Okay. That that's pretty clear and that makes sense. Yeah. Jud?

SPEAKER_01 7:04

Yeah, I would I would add, I mean, we we talked a little bit about leadership and the alignment and and the understanding of of what we're trying to accomplish. I think that's a that's a key one, obviously. Um, but I think the second is the assumptions. If there's not complete alignment on how much of the market share, you know, an organization wants to capture or what the what the intended growth is or what the the um uh you know which services they want to grow at what rates, that can really force the master plan's output to be to be challenged. And I and I was in it was in an organization um where that exactly happened. And it goes back to the physician discussion, you know, the physicians get engaged, they were asked to provide their own growth in in in um, and their growth was overly um uh they they they looked at it a little bit too aggressively. And um and when the master plan was done, um, you know, we fit within the capital envelope, but but there were C-suite leaders who didn't buy into the level of growth that some of the physicians had. And that's that's you know, that's critically important to make sure all those assumptions are laid on the table. Um and there are, I think there are ways, you know. One of the things I would add is that there are ways to get around it. Some people say, well, if we don't get the capital capacity, then we can't do anything. I I would say each one of those is just it's just critically important that you're clear about what the assumptions are that you're making, making sure that if you're not getting, if you don't get the capital capacity from the organization, that you at least um say, here's the assumptions we're gonna make, and maybe you make it uh scenario plans where you you you do it at you know a low, medium, and high level, depending on what they have available. So at least there's some buy-in and and and it can be taken um uh seriously when when it's put when it comes across the finish line.

SPEAKER_04 8:56

So let's keep moving forward in the process. Let's talk about best practices as it relates to sequencing your consulting team. Because that's critical. I mean, especially we've seen it over and over in our business. The minute something gets approved by the port or you know the news is out there about a new tower going up, you get everybody reaching out about I can help you, I can provide this. Um what is the best approach when trying to sequence at this level?

SPEAKER_01 9:23

To me, it's it's it's first you got to know what you're trying to accomplish. I think there's a lot of organizations out there that will sell you these bolt-on services, whether it's a consultant saying that they have some of the facilities planning or an architect and engineering firm uh saying that they have the strategy side. And I think it's there are there are obviously uh uh situations where that can be you know very successful. But I think that um you've got to make sure you understand what you're trying to accomplish and who you're engaging because I've seen you know some of those um those promises that are made really not be able to be delivered, and that can be really challenging.

SPEAKER_02 10:04

Matching the needs with the skills that the providers can bring. Yeah.

SPEAKER_04 10:10

So how is the current environment as it relates to construction and healthcare, um, how is that changing or is it changing the way we approach master planning right now?

SPEAKER_02 10:23

Boy, uh it's it's a it's a little bit of a tough environment. I I think Judd can comment on that for sure. But when you look at um, you know, a master plan driving new facilities, you have increases in construction cost, you have things uh outside forces like tariffs and um and material costs. You combine that in the healthcare sector with the regulatory, some of the things that are happening in the in the regulatory side of things, and you really are looking at hospitals and healthcare systems that had pretty low margins potentially being cut in half. And the first thing that happens when um when revenues start to go down is capital plans start to get smaller.

SPEAKER_01 11:14

Yeah, I mean it but you know what's interesting is it doesn't mean that the you know that the needs are are are getting smaller, right? And so what that forces is that's forcing us to look at what are you know the infrastructure the existing infrastructure, a lot of the things I've talked about throughout, but you know, how do we create um redevelopment opportunities to make you know make use of what we have? It's it's our job as consultants and and architects and and and leaders within the organizations to help our organizations accomplish their goals. And sometimes that's not that pretty picture. It's not that, you know, that big, you know, that big iconic building. Let's do some redevelopment, but it it helps continue to grow um the organization's strategic needs and and and continue to help you know add to the bottom line, which is critically important in healthcare right now with you know with the challenges that it that it faces.

SPEAKER_04 12:15

And challenges, I'm sure, right? But not to open a can of worms, we haven't touched on even the potential impact of AI. And we're talking about capital budgets getting smaller, but the needs not changing. What are gonna be the future impacts of AI in the healthcare space? Um, these are things that you guys are also having to keep in the back of your mind, I'm sure.

SPEAKER_01 12:33

And I I mean I'm sure in in your organization as well, questions are being asked, right? We're being asked by our leaders, um, you know, where is it that your business is gonna change? And um, you know, it's it's exciting and and um uh a bit daunting, but you know, I think we just don't know yet. And um I'm sure there are people that will be listening to this podcast that have ideas about you know where they think it's gonna change. Um, but you know, until it, until it, you know, as it relates to master planning, I I don't know what that future is just gonna look like. Uh even, you know, the design of construction industry as a whole, yeah. I think we're starting to see some um, you know, some some bottom level things come in that are really interesting and fun. Um but how it how it helps us strategically and in this level, uh I I'm interested to see what the future holds. Okay.

SPEAKER_04 13:21

Um so final question, because I've I've kept you guys for a while and I know everyone needs to get on with their day. Um so what would you say, taking this all in, what is the first most important step for someone that is embarking on this kind of master plan journey? What would you suggest?

SPEAKER_01 13:38

Yeah, I mean, I think that um you know we've talked about a lot of it it throughout this. I think you know, understanding what you're trying to accomplish, what your what your organization is trying to accomplish. If you're an architect, um, if you're a consultant, if you're a facility leader, we need to understand exactly what the organization truly wants to get out of a master plan. That that is the most critically important step. And then educating, you know, the organizations that we're working with, that we are going to we are going to create something that is a is a living breathing document that looks at everything from um um from what we have to what we need to do to me is is is what makes for success in my mind. And I again I know there are uh other or or there are there are people, there are organizations that haven't done it that way. Um but you know, with the amount of money we're spending, making sure we know what we're trying to accomplish and getting a good output, um, it allows organizations to you know spend their capital wisely. And that's that's that's our jobs um as as consultants and architects and engineers and planners.

SPEAKER_02 14:45

Well said.

SPEAKER_04 14:47

Well, guys, um Bill, Judd, this has been an incredible conversation. So thank you. You've really laid out a genuinely um practical, realistic framework, I believe, for our listeners about how to really look at healthcare facilities master planning in a smarter way. So thank you for taking the time with us today. Um and for the listeners, if you've enjoyed this episode, please like, subscribe, share. If you've missed part one, please go back and listen to part one. It was a really engaging conversation as well. Um and until next time, keep building the future. Thank you.

SPEAKER_00 15:20

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