IFHE 27TH CONGRESS, TORONTO – KEYNOTE ADDRESS


this lens. What does, this investment and design add to the overall system capacity to address the local, strategic, or national population and health needs? Crucially, System Economic Modelling


introduces the notion of trade-offs in how to reconcile the competing demands of the brief against new priorities such as carbon reduction, budgetary constraints, and increased infrastructure resilience post-COVID. Looking at the future demand for


healthcare facilities and services we should assess them based on pure population needs, pre-disposition to diseases at different age groups, by gender, location, and year. By contrast, the common practice of projecting the activities of individual hospitals into the future based on the observations of the past is effectively ‘supply projection’ not ‘demand projection’. It tends to take all the problems and baggage of past inefficiencies and extends them into the future. Having a common language and a scientific approach will help with the correct arms-length methodology for the system-wide healthcare capacity planning and financial modelling.


Life cycle and revenue versus capital assessment and capacity For many decades, decisions about healthcare capital asset investments have been driven by business cases that link planned activity (the outputs of hospital service lines) to a cost-per-m2


(mostly


based on historic values) and a ‘standard capital envelope’. The result is an inflexible cost ceiling that is highly risk averse, focused only on the hospital as a standalone entity, and unlikely to take account of factors such as coming changes in clinical models driven by emerging technologies and changing epidemiology/demography, a need for rapid adaptation of the physical estate, and different modes of governance and public accountability. Without some capital headroom to build in significant capacity to adapt and flex the estate and to ensure robust and future-proofed, high quality design and construction, new hospitals will always struggle to achieve sustainability targets and to offer patients and staff an environment that is, and will continue to be, conducive to the highest standards of care. The focus on capital cost, here and now, is all the more puzzling given that the value of the capital is negligible, when compared - as it should be - with the through-life cost of running the facility. By far the biggest cost of running a hospital is that associated with the human capital that arrives and leaves every day: the staff who make it work. Preliminary and simplified Discounted Cash Flow (DCF) modelling based on data for an existing NHS hospital business case suggests that


IFHE DIGEST 2023


a hospital with a capital expenditure of around £250 million will have a discounted lifetime Net Present Value (NPV) of cost, mainly of clinical and associated services, of well over £4 billion. Put simply, it is more important to ensure that the billions are spent efficiently and productively over the lifetime of the hospital than to play around with a few millions on the capital expenditure number now. Further, a small productivity


enhancement enabled by new buildings and equipment that are well aligned with the business model of the hospital – where productivity change is specifically designed-in from the start – will rapidly, quantifiably, and provably recompense any required associated uplift to the upfront cost


Finally, there is a cost – but also an opportunity – in allowing for some additional capital budget to accommodate highly innovative and potentially game- changing advances in construction techniques and emerging technologies during the planning and design phases. The costs and opportunities associated with implementation programmes to guide change, push through service transformation and, potentially, some physical relocation, should also be considered. The capacity of a hospital is


categorically not well captured by the number of beds, which is just one small part of the capital stock. Capacity is the ability to do work. What a hospital does can only be evaluated in the context of the system in which it is embedded. What matters, then, is the capacity,


cost, and performance of the system, with and without the hospital concerned. Equally, the accepted desirability of having extra ‘flexibility/adaptability’ – notably stated on numerous occasions in the context of COVID-19 – could be cogently addressed as the need for extra buffer capacity. A system modelling framework can create scenarios to tackle the question about the size of the premium worth paying to retain spare capacity needed to meet future contingencies. If investing in a new hospital means that the system has more capacity to do work than before the investment, then the true capacity of the hospital is simply the calculated increment in the system’s ability to do work.


Integrated Healthcare Infrastructure Planning Framework Principles The key aim of developing an Integrated Healthcare Infrastructure Planning Framework is to ensure that future healthcare Investment plans, regardless of where they are managed, located, and governed, are primarily being decided, accessed, and approved based on the target population clinical needs, functions, and benefits to the wider healthcare ecosystem required to serve that population.


This means there must be a Health


Service Plan using common methodology, terminology, and measurement units determining the services to be offered in each facility by specialty, volume, and patient acuity. The results are converted to standardised physical units referred to as Key Planning Units (KPU). These will determine the sizing of each facility from a clinical activity angle, leading to a full project brief.


Only when this phase is completed


and agreed should the process of design, procurement, and construction take place. In theory, this phase should not be contentious – there is a strong legacy and successful history of many successful hospital build programmes due to the extensive availability of expertise available to deliver and build these facilities. The issue of failed or wasted healthcare


investment is almost always associated with an inconsistent approach or poorly governed healthcare planning process, usually due to unrealistic political constraints relating to time and capital spending, lack of healthcare planning expertise, or just simply because they who shout the loudest get what they want. An integrated healthcare planning


framework is one that sets out a clear route map to follow, underpinned by a common approach, and based upon sharing learning and adopting proven best practices to ensure, where possible, that project teams are not repeatedly having to start from scratch, usually in isolation or behind closed doors or, in some cases, in secrecy, until their detailed plans are costed and ready to build.


Training the healthcare stakeholders In order to advance a rational, methodical, scientific, and standards-based healthcare planning model, there is a need to share the necessary information with the entire industry. Learning a little from each project at a random pace is neither sufficient nor dependable.


IHEEM has taken the initiative to


organise such training courses with international partners such as TAHPI with the experience of systematic healthcare planning using standardised methodology, terminology, and software tools. These online courses have been extremely successful and permanently booked-out, indicating the hunger within the healthcare industry to learn, adapt, adopt, and standardise based on a pool of ready-to- use knowledge.


l This article is based upon the keynote address ‘A common language for planning and design of new hospitals’ as delivered to the IFHE 27th Congress in Toronto, Canada, on 17 September 2022. The authors would like to acknowledge the Wolfson submission working group – IHEEM, UCL, The Bartlett & European Health Property Network.


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IFHE


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