Facilities Capital Planning and the Building Refresh Program at Kaiser Permanente Northwest Eric Rinearson Director, Facilities Maintenance Services Kaiser Permanente Northwest

Integrating Strategic Facilities Capital Planning into the Core of the Business Background Our goals Where we are today How we got there Lessons learned

Our Facilities Condition Assessment Program Headquartered in Oakland, CA and founded in 1945, Kaiser Permanente is one of the nation’s largest not-for-profit health plans, serving more than 10.6 million members Over 38 hospitals, 18,650 physicians and 193,170 employees Over 1,175 facilities and 75 million gross square feet in active portfolio FCA Program initiated in Northern California in 2005 Expanded to other regions 2006-2008 FCAs now a key determinate of maintenance funding in corporate 10-Year Strategic Capital Plan 42,000+ open requirements in the current system

NW Region 62 total buildings on the current Refresh Schedule over the next ten years 34 medical office buildings 13 dental office buildings 15 administrative buildings

Building Refresh Program came through Facilities Capital Planning Process Identified over 18 systems and related requirements to be member-facing. Most systems and requirements were considered to be expense in nature. Used the data to request >500% increase to the operational budget. Working with accounting and finance, developed a once-every-ten-year program to capitalize expense systems. Moving away from a project-by-project approach (patchwork); to updating the entire building to improve the member experience. Driving to ensure the condition of KP facilities are in line with industry benchmarks and support enterprise goals. We identified over 18 systems and their related requirements to be member facing. Most of these systems and requirements were considered to be expense in nature. As we looked at operational budgeting reduction, we used this data to ask for over a 500% increase to the operational budget. Working with accounting and finance we developed a once every ten year program to capitalize these expense systems. We are in the process of moving from a project by project approach (patchwork) to updating the entire building to improve the member experience. We wanted to ensure that the condition of Kaiser Permanente’s facilities are in line with industry benchmarks and support enterprise goals.

Where We Are Today 1 building complete, 2 under construction, and 7 fully scoped and ready for construction. Engaging architects and building management early: building walk throughs to identify scope and set expectations. Architects perform a second walk through for a more detailed scope leading to a bid set of documents. Current plan calls for refreshing 7 buildings per year or about 5 exam rooms per week, for the next ten years.

How Are Requirement Costs Determined? For the initial cost estimation: use the VFA Facility® RSMeans ® cost estimating data, combined with the assessor’s industry experience and knowledge of the facility types. After the bid set of document is released, get competitive bids and build the overall budget from actual costs.

How We Got Here Passionate, persistent champions at multiple levels: Senior exec -> strategy Operating level -> implementation Start simple, enrich over time Clear linkage between facilities and the business Innovation Closed loop program ensures current, actionable data Technology: updated information from subject matter experts and the systems they own Effective organizational design, socialization, and operational management enables it to work in practice, not just in theory

Innovation: Effective Organizational Design, Socialization, Operational Management Regional facility managers responsible for overall data quality SLT rounding and building walk throughs Progress tracked against overall corporate facility condition goals Any changes in FCI over the previous month are highlighted Performance is viewable at the national, regional, service area, and medical center area at any time Result: able to identify trends and spot problems, enabling a quick response and adjustments, resulting in qualitative and monetary benefits

Linking Facilities to the Business: Prioritize Funding by Business Importance Business Importance Factors Each requirement in VFA Facility is assigned an Importance Factor Determines what requirements should be done and when Criteria and weighting developed via team process and consensus Utilizes pairwise analysis which looks at requirement characteristics and applies a score Standard decision support tool for ranking Looked at getting the highest (higher $ of deferred maintenance) scoring buildings updated earlier in the ten year program.

FCA Forms an Integral Part of the Planning Process FCI scores provide an overview of overall portfolio health and reaffirms the need for ongoing funding. Requirements provide the amount needed to include in the capital maintenance planning process. RS means estimates and requirement due dates support business cases for funding projects. Business Importance Factors answer: What do we need to do first? Which facilities do we need to address most? Given the competing demands for funding, when and in what order should we do it?

Keys to Success Specific timeline and deliverables mapped out with input from VFA and KP regional staff. Key players from various areas at kickoff meetings to provide input – engineers, capital project managers, etc. Putting the member at the center: what will the member experience when coming into the facility?

Lessons Learned High quality, consistent, current data is critical foundation Strong analytical tools facilitate credible business case Passionate, persistent champions link facilities to the business, create opportunity for success Effective organizational design and implementation makes it work in practice

Next Steps Look at internalizing some construction Identify ways to optimize the schedule Keep data up-to-date