Value-Based Construction: What It Means for Healthcare

Value-based healthcare continues to be key to improving healthcare across the nation. An innovative healthcare delivery model, value-based healthcare prioritizes patient outcomes and produces results that every stakeholder desires. Creating value for patients, providers and payors is an enormous paradigm shift, one that can change the fortunes of the American healthcare industry and transform the lives of patients from coast to coast.

The next evolution of this paradigm shift is to extend the tenets of value-based care to healthcare facilities. Value-based construction, defined as applying value-based care principles to the way healthcare systems contract and complete construction work, can help control costs, maintain and improve facility performance, and deliver quality care through collaboration and data.

Value-Based Construction: Emphasis on Collaboration

One of the great strengths of value-based healthcare is its dependence on collaboration between professionals. With this model of care, the old siloes come down and are replaced by a team of practitioners all following a common course for treatment. The same collaborative atmosphere can apply to construction projects. Like healthcare, the older models of construction project delivery — design-build-bid, CM at risk, and the like — create, at best, a transactional relationship between contractors and project owners. These, too, are fee-for-service models: The more work a contractor does, the more he can charge.

Historically, the transactional nature of the owner/contractor relationship has bred suspicion and antipathy between parties. Owners think contractors are taking advantage of them. Contractors think they are getting stiffed. Neither looks at the other as a trusted business partner. But if they applied value-based healthcare’s collaborative model then they can change that dynamic.

By creating incentives for good work and substituting one transaction for a pipeline of jobs, the entire contractor/owner relationship can be transformed. Imagine hospital facilities staffs forming long-term relationships with contractors who specialize in doing construction work in a healthcare setting. Picture contractors helping healthcare centers meet make the most of their budget by offering value engineering options. Adversaries can become collaborators. More importantly, care facilities can better serve their patients.

 

Value-Based Construction: Reliance on Data

A key tenet of value-based healthcare is the implementation of evidence-based standards of care that follow patients from doctor to doctor and from facility to facility. This same concept can be applied to healthcare construction.

As it stands, healthcare project owners depend on contractors to produce construction estimates with current and accurate costs. Even if a facility uses a construction cost database such as RSMeans data to create their own independent estimates, when the rubber meets the road and work needs to be contracted, there may be discrepancies between the in-house estimate and the contractor’s bid because both parties aren’t always working from the same set of facts. That reality creates inconsistent cost standards from one project to the next.

A value-based approach to healthcare construction would embrace cost data engineered for contracting construction services. In much the same way that value-based care relies on an evidence-based approach to the care of an individual patient, value-based construction would use preset, independently-verified material, labor and equipment costs specific to the needs of an individual facility.

Possessing such unit line items and sharing them with contractors would create common ground and ensure that project owners are paying a fair price for the work they need. Further, certainty regarding the costs of construction would allow healthcare facilities to budget more accurately and find more avenues to bolster the patient experience.

Gordian offers solutions for every phase of the building lifecycle. See how our procurement, facilities planning and facilities benchmarking solutions can help your hospital system or healthcare facility create value and improve the patient experience.

Value-Based Construction: Healthcare’s Next Evolution

As the healthcare world continues its pivot from the fee-for-service model, industry leaders should take the opportunity to apply the principles of value-based care to its construction practices. Doing so can help finance and facilities leaders establish long-term partnerships with contractors that can help them meet their goals, control costs and create firmer budgets, and deliver the outcomes their patients need.

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About Gordian

Gordian is the leader in facility and construction cost data, software and services for all phases of the building lifecycle. A pioneer of Job Order Contracting, Gordian’s solutions also include proprietary RSMeans data construction costs and Facility Intelligence Solutions. From planning to design, to procurement, construction and operations, Gordian’s solutions help clients maximize efficiency, optimize cost savings and increase building quality.