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Pegging Portfolio Priorities: Saskatoon Health Region Evaluates Capital Allocation
July 2009
By Grant Sommerfeld and Susan Anson
Deferred facilities maintenance has been a major and growing issue for the Saskatoon Health Region (SHR), an integrated health delivery agency serving nearly 300,000 residents in Saskatchewan’s most populous urban centre. A large number of hospitals and medical facilities of varying ages, sizes and conditions situated throughout a wide geographic area presented a challenge to maintain a clear picture of building conditions across the entire portfolio.
Annual capital budgets that were not sufficient to maintain all the buildings in good condition compounded the problem. Facilities managers found themselves constantly dealing with emergencies and spending the limited available capital on a largely reactionary basis.
There was no real agreement on how to allocate funds because there was no solid, objective data that anyone could point to. Thus, it became critical for the SHR to find an objective way to assess the current condition of its portfolio and to allocate capital dollars.
As a first step, the SHR set out to better understand the condition of its existing facilities – including 10 hospitals, 29 long-term care facilities and numerous primary health care sites, public health centres, mental health and addictions centres, and community-based settings – to make a compelling case for needed operating and capital funding for facility renewal and ongoing operational maintenance. Some of the concerns included: aging infrastructure; a mismatch between the demand and the capacity of these facilities; needed space for children’s services; and the delivery of higher volumes of both acute and long-term care.
DEFINING INVESTMENT NEEDS
In March 2006, a pilot project was approved to conduct a facilities condition assessment of three Saskatoon hospitals and a long-term care home. Capital asset management and planning software was used to collect, organize and report information in an accessible way that engineers and non-engineers alike could grasp.
Each building was assigned a facility condition index (FCI), which measures the ratio of deferred maintenance (also known as problem dollars) to replacement dollars. Software-supported calculations gave the facilities team the ability to compare and benchmark similar buildings across the portfolio and more readily identify the buildings that were in the greatest need of updates.
From there, SHR opted for a detailed facility condition assessment in nearly four million square feet of health facilities to provide a broader look at the whole portfolio. With a more comprehensive and accurate understanding of facilities’ conditions, decision makers could create multi-year capital plans and budgets.
The FCI helped facilities staff to explain their needs. Indeed, SHR received an increase in government funding in the year after the conditions assessment, partly because capital needs were validated.
Third-party, conflict-free funding forecasts for facilities needs enable the SHR to understand and discuss long-term capital needs. Priorities associated with each requirement support the region in ensuring the continuity of mission-critical systems.
The SHR now has the tools to understand the impact of different funding decisions on portfolio condition and capital costs over time. It also has tools to determine how to bundle approved capital projects cost-effectively by system, category, location, etc.
ONGOING APPLICATIONS
SHR continues to use facilities management software on a daily basis to allocate operating funds, prioritize work, justify decisions and track inventory. Ultimately, budgeters and facilities management staff would like to tie the database into legacy databases and Excel spreadsheets.
They are also considering a capital spending management solution to manage the entire capital spending process. This could streamline capital budget creation, requisition processing, purchasing and reconciliation of expenditures.
The SHR now adds all new buildings to the database – having them assessed and the condition data input to the system. This also prompts regularly scheduled reassessments to keep the data current, particularly with acute care sites.
Perhaps the most valuable result of the Saskatoon Health Region’s capital management program has been strategic. The effort has raised the awareness of facilities needs to the executive suite, while the metric of facility condition index (FCI) has become a valuable tool for discussing facility needs and concerns with executives regardless of their functional specialty.
The facilities staff now has a bigger role to play. It is the steward of the largest single capital asset in the region, and needs, which have often understated in the past, have now become clearer. Facilities management has come to the table in decision making.
Grant Sommerfeld is the Director of Facilities and Engineering Services with Saskatoon Health Region. Susan Anson is General Manager of VFA Canada Corp., providers of VFA facility, Capital Planning and Management Solution, the facilities maintenance software adopted by the Saskatoon Health Region. For more information, see the web site at www.vfa.com. |
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