Not Business-As-Usual Anymore

Posted on June 3, 2011

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In Florida, the state legislature is balancing the budget, and taking dead aim at healthcare.

What this means for Florida hospitals is lost income in the scale of millions of dollars a year starting this year. An independent medical center now copes with a $3.4 million ‘haircut’ to their Medicare reimbursibles. A large, urban, regional hospital system takes a $20 million hit. A prominent, multi-state system contemplates combined reductions in reimbursibles, research monies, and other funding sources in excess of $45 million.

These are not isolated incidents within Florida. Sobering though it may be, the significant scale and sudden slicing is not something overcome with a little hospital belt-tightening and increased internal efficiencies.

The adjustments here have ripple effects felt throughout an organization.  It means mission redefinition, service line overhauls, manpower (read: jobs) reductions, vendor contract scrutiny, debt service restructuring, and procurement strategizing. It means business model innovation and sustainable operations. It means nothing is sacrosanct.

When millions are cut from the coffers, it means hundreds of thousands will be trimmed from the facilities budget. Such an adjustment could mean the difference between doing a project or shelving it—even after sunk costs like due diligence, land acquisition, and a CON are executed and approved. Ouch.

Now is the time to look at your hospital’s project teams and project delivery methods. If an opportunity existed to gain better budget and schedule control of your projects via design-build, would you do it? If an opportunity existed via design-build to complete projects faster on the whole—which means a smaller loan, smaller interest payments, earlier move-in, sooner revenue generation—would you do it? If an opportunity existed to get a higher quality building with more accurate and reliable cost information via design-build, remove the majority of litigation risk from your projects, and eliminate non-scope related change orders, would you do it?

News flash:  the status quo was just de-funded. Will your hospital redefine its future through critical analysis of project procurement practices, and make the necessary tough decisions? If not, your competition is. Their projects, our clients, are getting funded.

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