L’Ospedale Nel Terzo Millenio Major Investment Planning for the Hospital Sector Barrie Dowdeswell European Health Property Network

The agenda Three themes European perspectives on capital investment Trends in hospital investment The changing role of the hospital in a regional health setting Context - Regional devolution is now the principal tool of reform in healthcare throughout Europe

European perspectives - as we enter the third millennium – investment priorities Most countries have not been replacing outdated hospitals quickly enough - but replacement will now be very different Governments are reconsidering the historical focus on acute hospitals for healthcare There is increasing emphasis on alternative capital investments in local communities – Chronic care – Aged care – Mental health – Public health – Local community diagnosis Needs between 8% and 12% of total health spend p.a.

European perspectives – money supply State ‘capital’ money is in decline Increasing dependency on ‘private & commercial money’ All loans for capital will need to be financed out of hospital income - which will be dependent on payment by results Capital investment is now moving into the risk category – and banks have much tougher borrowing standards Hospitals will need to adopt business standards for capital management

European perspectives - capital and population health A strong sustained trend towards some form of regional structural planning / regulation Responsiveness to the changing needs and values of citizens - giving people a say in local priorities Using disease management (care) programmes to plan and implement change Using new technologies to make care more widely available Applying these techniques to rationalise services and health infrastructure Many governments are moving from being providers to regulators of healthcare

Population Health - Sustainability “ shifting health systems away from the current emphasis on acute care towards improved chronic and long-term care, in response to the transitions generated by epidemiological and demographic changes, will be essential in sustaining a balance between affordability and the principle of universal access ” Alexandre Kalache, World Health Organisation Netherlands Presidency – ‘Shaping the EU Health Community’ September 2004

The third age (transition) in healthcare Hospital Morbidity Compression Co- Morbidities Care Public Health Acute Care Chronic Illness Aged Care Diversity Re-emergence & revitalisation Community, Lifestyle

Hospitals

Patterns of change – delivering the new hospital agenda Three distinct models The centralist (national or regional government) structure planning systems – Northern Ireland – Skane Region Sweden – Tuscany The free markets – largely insurance fund based – Netherlands – Slovakia Artificial markets – English NHS – Germany – the privatisation of public hospitals There seems to be a strong trend towards free market principles for hospital provision Many governments are making it easy for new specialist operators to challenge public hospitals

Best in class new hospital models – service led emphasis Hospital design based on care models – care pathways – to improve the relationship between the workforce and the working environment Effective clinical governance – clinical outcome and safety audit to reinforce pathways A strong integrated quality ethos - including high level focus on new threats e.g. opportunistic infectious disease A premium paid for designs that – Are adaptable – Enhance workforce effectiveness and safety – Create a healing environment – Maximise the potential of new technology This will create new challenges for safety and complex engineering technology

Best in class – business emphasis Risk management of capital investment – Ability to service capital debt – Ability to meet and finance changing need – over ever shorter timescales – Workforce responsiveness to change Capital financing models that provide long-term flexibility Leading examples – service and business effectiveness Sittard Netherlands St Olav Norway Hospital la Ribera Spain Rhon Klinikum Germany Coxa Finland Northern Ireland ITALY – you may decide

Example - Service led-design Technology phase Level 1 care Level 2 care Rehabilitation Ambulatory follow up Progressive (care pathway) patient care Multi-disciplinary Team working Rhone Klinikum Average public hospital cost per case - Euro 3,870 Average RK hospital cost per case - Euro 2,660 Public hospital capital element E 270 RK hospital capital element E 722

Example - Service-led adaptability Digital Portal (community) Technology phase Level 1Level 2 Rehabilitation Digital follow up External hospital networks Utilising technology to manage care transitions Widening the scope of care pathways Digitalised Information Transfer systems Technology transfer to other settings ‘Agile space’ R.K. completely refurbish all company hospitals on a 10 year cycle – technology according to return on investment, based on Quality & Cost Effectiveness

Care pathways - European evidence A care pathway is an evidence based prediction of the treatment plan for patients with similar diagnosis – it provides a focal point for the planning and allocation of resources, measuring effectiveness and auditing outcomes – it is also a risk management tool EuHPN EU 17 Country Survey – There will be a rapid and significant growth in patients treated within care pathway- based protocols – an increase from 5% to 60% within 5 years Despite the clinical, quality and planning benefits there is little evidence that capital planners / designers understand or use care pathway models in State health systems The twin aims – Hospital design and operational effectiveness improved by internal treatment (care) pathways Contributing to population based integrated disease management pathways.

Some observed effects of cost-led capital concepts for new hospitals Hybrid capital models Tendency towards standardised (low cost) benchmarks resulting in poor design (there are some exceptions) Appears to inhibit the effectiveness of the crucial triangle of - workforce - work systems – design Underinvestment in technology Project decisions are often remote from the workplace Cost pressure is weakening commercial interest In the 1970,s the built environment represented 75% of project cost Today technology represents 75% of project cost

Capital models and effectiveness Models PPP Workforce shares PPP Public shares Independent Not for Profit PPP Conventional Public Procurement PFI Sustainable lifecycle effectiveness clinical and utility Dominant influence on effectiveness Scale of care pathway based planning Degree of clinical workforce engagement Supportive capital funding models lowhigh * * * * * * preliminary EuHPN survey hypothesis Co-relation to Hospital Infection Rates ?

Example – design and hospital infection risk, survey of new hospital projects Single room ratios – confidence parameter between 50% and 100% ref. EuHPN international ‘expert report’ Service led models – achievement well above minimum standard Cost-led models – almost all fell well short of confidence parameters Some countries e.g France, Finland, Italy already have a strong cultural disposition to ‘privacy and family rooms’

Capital investment in the future is about – risk management Clinical risk – changes in technology and models of care Workforce risk – availability, change management Demand risk – markets, consumerism and healthcare transitions e.g. chronic care Political risk – policy shifts, public opinion Financial risk – debt servicing and capitalisation Implicit is health and safety risk There will be a new and sustained focus on cost benefit analysis

Risk management and Design The key is the adaptable hospital and its place in society Elasticity – demand volatility Functionality – changes in service type Sustainability – lifecycle economic value Transferability - technology platforms for knowledge and treatment exchange High value sustainable design impact The future effective lifespan of most modern hospitals will be around 10 years Refurbishment and adaptation may be the new growth area for capital

Regional structural planning

Why we need structure plans Healthcare is not a commodity it is a fundamental societal value and right There is a continuing need to ensure equality and accessibility across populations There needs to be controlled management of policy shifts e.g. – Transferring more care into local community settings – more progress on hospital rationalisation and role delineation – this should not be a provider led exercise Maximising the benefits of scarce resources Pooling and sharing resources within economic population groupings is the best way of avoiding cost-led damage to hospital investment

The evidence for structural change in acute hospitals is compelling 8% of average daily acute bed usage can be saved by better primary care / hospital integration 10% can be saved by concentrating specialist expertise e.g. hip replacement 15% to 20% can be saved by providing better chronic illness support in the community On average there are between 5% and 15% of patients awaiting discharge because there are inadequate community facilities This evidence points to a continuing decline in acute hospital beds This does not take account of the long-term benefits of knowledge transfer and new public health investment – the health campus resource Most of these inefficiencies will be overcome as integrated care pathways are introduced

There are plenty of integrated structure models – changing the psychology of care Population size 11 million E health Home support Community resource centres Polyclinics Specialist centres Community hospitals Regional knowledge centres ICT based technology, information and knowledge pathways Technology based equality of care for all citizens The benefits of the best centres of excellence – delivered locally

We need structural coherence Hospital free for allStructural frameworks Cataracts Hips Core services Chronic care Markets contestable choice‘tariff’ based contracts Acute networks OR

Making the capital system work better balance and equity Structural planning systems and frameworks Capital financing and procurement models Work process based hospital planning and design A need for strong synergies between the systems, and mutual confidence and accountability between the agencies Note: Most countries have one dimension Some countries get two out of three right Few countries match three out of three The issues - balancing hospital autonomy and efficiency and incentivised regional frameworks

Conclusion - Investing in societal capital “ Strategic capital asset planning and investment maximizes the performance of fixed, physical or capital assets that have a direct and significant impact on achieving corporate objectives. Companies and organizations depend on vital assets to drive their business; however, they often see them as individual, stand-alone objects operating independently. In reality, companies are a collection of strategic assets that exist as a single system.” Harvard Business School - capital investment symposium, 2003

Health, the State and the economy HEALTH genetics lifestyle education healthcare wealth other socio- economic factors environment productivity labour supply education capital formation ECONOMIC OUTCOMES McKee et al LSHTM

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