HCD Virtual will be held Nov. 9-12 and offer a variety of keynote and breakout sessions delivered over four days. Healthcare Design is previewing some of the upcoming educational sessions in a series of Q+As with speakers, sharing what they plan to discuss and key takeaways they plan to offer attendees. For more on the HCD Virtual schedule and registration, visit HCDvirtual.com.
Session: Finance for Designers: What CFOs Wish Their Design Teams Knew, Monday, Nov. 9, 4:30-5:30 p.m. EST
Ever wonder what conditions within healthcare systems compete for limited capital? Are you confident in your ability to demonstrate the value stream of design ideas to clients? In this session, speakers from WJH Health, an Orlando, Fla.-based architecture firm, and Catalyst, a healthcare consultancy, will provide an understanding of key healthcare financial and strategic business drivers, terms, and calculation methods, as well as their direct application to design practices.
Healthcare Design: Ok, because you mentioned it, what is one thing you think design teams should know?
William Hercules: Finance is design too. In fact, the finance team has already designed a project before an architect begins. However, they use a spreadsheet to do it. They’ve considered various assumptions for revenue, costs, risks, and a range of expected outcomes protected with contingencies. These are designed to keep the overall organization fiscally healthy. Their assumptions may be based on limited experience or internal data, however—and this is significant—their conclusions have board support, which can’t be undone without considerable pain.
What are some of the conditions within healthcare systems that compete for limited capital?
Hercules: To answer this question, we need to clarify capital expenses versus operational expenses. Capital expenses are typically single events that have some asset attached to them like a facility expansion, IT infrastructure including a new electronic health record system. These may require a multiyear savings program or debt to cover. Operational expenses are ongoing costs associated with running the enterprise like regular staff, supplies, etc. These typically do not require tapping savings or incurring debt.
Lately, most health systems have been migrating, upgrading, and expanding their data systems and associated infrastructure to meet the demands for better predictive analytics, the development of virtual care platforms, etc., which require capital. The costs of new or upgraded durable medical equipment and replacement of major facilities infrastructure may be capitalized.
How will having an expanded understanding of the financial and strategic drivers impacting projects help design leaders in their work?
Hercules: In order to execute the project properly, the design team needs to not only understand the components of the budget (costs), but the financial drivers that support the budget (values), so that the millions of design decisions produce a balanced outcome. No executive wants to hear that the budget was over- or under-shot; both mean that the value and the design are misaligned. Beating a budget beyond a small margin means that capital that was allocated for that project will not be spent but was also encumbered during the project so that it couldn’t be redeployed on other strategic priorities.
For more on the HCD Virtual schedule and registration, visit HCDvirtual.com.