A couple weeks ago I met with a Vice President of Operations at a medical center in a town of about 20,000. We were discussing recent project history and she noted with pride that her hospital has been using the same architecture firm that built the hospital over 45 years ago. In this day and age, it is stunning to hear of such loyalty.
When I pressed her on the details of that relationship, I found the current firm is the third iteration of the original firm that built the hospital. The hospital’s current architecture firm happens to be a large, international, multi-office practice that is several hours away in a very large city. The original architect of the hospital is deceased (not surprising), though their current project architect does have over ten years working knowledge with the hospital.
As much as I appreciate loyalty, I questioned the stance because it almost appeared to be loyalty of a de facto type, a given. Assuming the same architect who has always done your work should continue to do your work appears to be a safe move, but can be a dangerous assumption. Legacy relationships have come under fire while companies from local to Fortune 500 have been tossing out the old and stale legacy providers in exchange for more sophisticated, nimble service providers.
As consolidation continues to occur in the design, engineering and construction industries (and we need it), firms will get larger. The same is happening in healthcare. Large is not bad; large is actually preferred for financial strength, access to resources, and depth of talent to name a few. What is bad about large for a hospital’s designer or builder is culture and service can change when a consolidation occurs.
I have spoken with hospitals who noticed that when their incumbent architecture firm was bought or merged with a multi-state firm, quality changed, responsiveness lagged, client knowledge suffered, prices crept up. There are some key life events, to borrow an insurance industry term, in a firm’s life cycle that leave the firm vulnerable:
- Leadership Change – A new President, CEO or Chief Operations Officer can change policies and how business is done on a big scale. A new Director of Healthcare can affect how services and responsibilities are handled on the project level.
- Ownership Change – Going from private to public or employee-owned, or even domestic to internationally-owned can affect work—especially if the parent is a conglomerate and the design, engineering and construction are a small part of the menu of company offerings. Also, new investors mean the potential for new managerial input and influence.
- Merger / Acquisition – Dramatic differences can occur when a local or small / medium-sized firm is acquired by a national or international, multi-office mega-firm.
- Departure of Key Personnel – Project directors leave the company. Healthcare principals retire. Project architects get promoted. Any key client contact or relationship manager loss can signal the defection of their client(s) as well because they have the most knowledge of the client’s hospital.
This is not an indictment of large firms, but of culture change that can negatively affect client services. Consolidation does not always have to be to the detriment of the existing client base, and it shouldn’t. In fact, these are good times to look at the existing service relationship and how well it is serving your hospital or system. Negotiation-wise, it is a good time to confirm or ask for some deliverables you may have always wanted to improve. Firms will want to keep their existing clients happy, especially in an acquisition because value of the acquired firm is often tied to its existing client base.
Similarly, it can make a lot of sense for hospital administrators to look outside of their usual talent pools for expertise. Hospitals, like other large companies, need new perspectives that established relationships cannot deliver at times. Many industries hire outside consultants specifically for fresh ideas, and to avoid what organizational behavior experts call group think, or the tendency for employees of a company to adopt similar biases that hinder management, execution and growth due to company culture.
Loyalty is not dead, nor should it be. Blind allegiance, on the other hand, ought to be questioned. Hospitals should look at each project engagement on a case-by-case basis. Unbeknownst to all, sometimes the best way for your current architect to remain an institution at your institution is by not embarassing himself on something outside his baliwick—and stepping aside on a project, so a different team can preserve the rep of your current one.
Owner's Toolbox 
Posted on February 17, 2012
0