Facility Planning, Design & Development

Let’s face it. The economy has played a role in the amount of ambulatory surgery center (ASC) construction projects that are currently underway. But how much of a role varies from one person to another. Despite the tough times, plenty of projects are still progressing, with adjustments here and there to compensate for the recession.

The economy’s effect on construction

So what kind of an effect is the economy having on ASCs and outpatient centers from a development standpoint?

“While we often hear that projects have been canceled or postponed,” says Bill Merkle of MD Technologies Inc. “We have not seen a significant downturn in new construction projects, possibly due to the long cycle time between initiating and completing a project.

“The current economy and scarcity of capital for project financing is causing construction projects to be delayed or put on hold, notes Dana Crothers, marketing director at Cogdell Spencer ERDMAN. She also points out that McGraw-Hill Construction Inc. reported recently that healthcare facility construction starts fell 31 percent in February.

Where the economy has affected new facility development is particularly in financing. Credit from banks that once gave away without difficulty is now hard to come by, requiring two to three times more equity, higher rates and shorter terms. As a result, as Crothers states, more clients are seeking joint ownership partnerships with developers.

Michael J. Rothwell, chief operating officer at Nueterra Real Estate agrees. “The demand for these types of facilities does not appear to have dropped off much, but the underwriting requirements from the financial and capital markets have forced many developers to revaluate the scope and structure of the specific ventures.”

But what’s important to remember is that there still is credit available, and many clients are taking advantage of the economies rapidly dropping costs and continue to develop, declares John A. Marasco, AIA, NCARB, principal at Marasco and Associates. “If you are willing to shop your business banking (the desired relationship, from a bank’s perspective) or contemplate a joint venture structure with a developer, getting financing shouldn’t be a problem.”

Renovation

Another option for physicians/owners is the possibility of renovating their existing facility, in the hopes of riding out the current economic tide and bringing in more revenue. In the process, says Boyd Faust, CPA, chief financial officer at Titan Healthcare Corp., this has led to ASCs either trying to sell their center to a group of surgeons or partnering with new surgeons in hopes of reaching a critical mass for financial sustainability.

“When new physicians join an ASC,” he indicates, “modifications to accommodate new specialties are often required, as well as aesthetic updates to remain competitive with the other ASCs in the market.”

But renovation is not for everyone, states Sam W. Burnette, AIA, senior designer/principal at Earl Swenson Associates Inc. “Renovation is favored over new construction when the building infrastructure, ceiling clearances and structural frame allows creative retrofit of existing spaces.” He adds, “But (it) … is not always the most practical solution due to phasing complexities, the need for continued revenue during construction or program growth on limited site size.

Single specialty vs. multi-specialty

As Faust alludes to, one byproduct of the recession is more centers considering adding more physicians and becoming a multi-specialty facility, a trend that’s becoming more and more popular these days. But there are more factors to consider in that decision, as Marasco puts it. The largest is simply the size of the facility itself. Each specialty has different needs for a facility whether it is preparation, recovery, equipment, supplies and more. And that’s something that every ASC — whether it be a single-specialty or multi-specialty — must consider during the design process, he states.

“Negating enough dedicated and specialized space to any of these areas can have a significant impact on efficiency and therefore patient throughput,” Marasco notes, “which is not good for your bottom line.”

Overbuilding and underbuilding

Whether the physicians/owners decide to go multi-specialty or not, another key aspect in planning and design is overbuilding and underbuilding. Overbuilding a center drives up fixed costs and overhead, affecting profitability. Underbuilding entails costly changes to a space that may have not been correctly designed initially, hurting the practice and potentially jeopardizing patient safety. So what’s a physician/owner to do in order to get the right amount of space?

“The best way,” declares Neil Terry of the Orcutt/Winslow Partnership, “is to do a comprehensive program starting with a pro forma that clearly defines what can be built for the budget available while making a reasonable profit. He continues, “Then thoroughly discussing with the client all the spaces, what goes into them, how they relate to each other and how staff, patients and materials flow through them, all the while challenging the client to look for opportunities to improve efficiencies.”

Marc Jang, President and CEO of Titan Health Corp., suggests carefully considering your capacity. “Design and build your ASC for the case volume you realistically anticipate…It’s important to identify where potential backups will occur since unlike hospitals, the OR isn’t the bottleneck in a surgery center.”

Cutting corners

Naturally a thought that comes to the mind of many physician/owner is to cut back on different elements of either designing that new facility or renovating the current one, in order to save a few dollars. Not a good idea, says Jang.

“Cutting corners now will end up costing you more in the long run … It’s tempting to think you’re saving money on the front end, but doing things right the first time around is a more cost-effective approach.”

Crothers also warns that while it may be wise at the outset to cut corners, the negative impact it will put on the organization’s reputation, image, service quality, patient and staff satisfaction, and safety will hurt more in the long run than the initial hit taken in the purse strings. She offers, that when structuring the initial budget and contracts with design/construction companies, “it’s important to understand the impact that decisions made during the design and construction process will have on the “last” (pre-occupancy) cost of the facility.”

The architect’s role

As with all projects, the design of a facility can be critical in creating an enhanced patient environment and improving clinical outcomes, boosting employee effectiveness and maintaining financial stewardship. So how do architects and their staff in crafting an ideal place for both patients and physicians?

William Massingill, AIA, Polkinghorn Group Associates, says experience is key, especially in outpatient facilities. By paying close attention to staff use patterns, an experienced design team “can design a facility which effectively accommodates efficient flow patterns for patients, physicians, and staff — in particular, minimizing the distances between parts of a facility where staff may have to split their daily duties.”

Carl Nelson, AIA, LEED AP, director of healthcare studio at Orcutt/Winslow Partnership also gives a few suggestions. “Sustainable design, proper planning, understanding the practices long and short-term goals,” He adds. “Design to be flexible and expandable.”

Burnette feels that design teams should focus on proven, sound design principles. In particular, look at things such as “staff-efficient and functional layouts, adaptable structural grids and floor plans, good wayfinding, use of natural light and investment in patient and staff safety.

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