The Business of Facilities Management BenchmarkingPresentation Transcript
The Business of Facilities Management Benchmarking
ASHE/IFMA MOU “ Why the need for Change”
Ed Tinsley/Todd Wilkening
IFMA Benchmarking Tactics & “How to Use”
2010 IFMA Survey Highlights
Shari Epstein/Todd Wilkening
Real Life Example of How to Use this Information
Lessons Learned, Questions & Answers
What is Benchmarking?
Identifying a comparable standard.
Testing yourself against that standard.
Using the process to improve efficiency and increase quality.
Other Benchmarking Programs
Statistical Analysis Only
Indexed to Patient Discharges or Patient Days
Not Specific to a Particular Facility
Does not Identify Variances or their Cause
Not Useful in Resolving Variances
Not Widely Accepted by Facility Managers
“ Double-Edged Sword”
Performance Benchmarking Metric Distribution, All U.S. Hospitals Top 10% Top 25% Median Bottom 25% Bottom 10% Operating Margin 11.8% 6.9% 2.9% -1.1% -6.3% Expense per CMAED $14,700 $7,600 $5,700 $4,800 $4,200 Revenue per FTE $164,300 $143,900 $123,100 $102,500 $90,500 Occupancy Rate, Staffed Beds 78.1% 69.1% 55.1% 40.5% 25.6% Days Accounts Receivable 39.7 48.6 58.7 73.1 91.9 Days On-Hand Inventory 2.32 3.99 6.14 8.24 10.75 Adjusted Average Length of Stay (Days) 2.37 2.76 3.12 3.66 4.51 Source: Almanac of Hospital Financial and Operating Indicators, 2007 available from www.ingenixonline.com
Benchmark Studies can be a “Double-Edged Sword”
Magazine Article in Healthcare Purchasing News, March 2001 by Todd Shields
“ Downsizing should never be taken lightly, or enacted in an unbridled, compulsive way…”
“ Cutting back too many workers can result in a burst of turnover due to burnout…”
“ Ultimately, customer satisfaction starts to fall if downsizing is done inappropriately…”
“ After consultants come in, nine of out ten times the recommend something smaller…”
You can pay me now or you can pay me later.
How Many FTE’s do I Need?
As Little as Possible?
Same as Last Year?
Whatever the Administrator Says?
Whatever a Consultant Says?
Same as a Your Competitor?
20,000 SF per FTE?
It Depends on Many Factors
ASHE Benchmarking Tool
3 to 4 Hours to Complete
User’s Manual Has Not Been Developed
48 Facilities in Database
Recommendations Based on Adjusted Database Averages
Compares Recommended Costs to Actual Costs
Case Study Comparison
Does not Include Janitorial
Does not Include Security
Does Not Include Biomedical Equipment Maintenance
Comparison of ASHE Tool to NEHES Results
Using the ASHE Tool
Use the Tool Safely
Complete the Workbook
Enter in Actual Staffing and Costs
Consider Other Sources of Information
Develop a Plan
Implement the Plan
Evaluate the Plan
Modify the Plan
ASHE’s Next Steps
Realignment with IFMA Data
Regional and Chapter Conferences
Selling the “C Level” with IFMA
Values and Language
Real Estate & Construction World
Cost or unit per Square Foot = /sq. ft.
Facilities/Environmental Management World
Cost or unit = /dkthm, /kwh, /gal, etc.
Cost or unit = /gallon, /vial, /bag,
Cost per adjusted discharge/patient day, etc
Patient care volumes, procedures, etc.
Return on investment (ROI)
Time Value of Money (TVM)
Strategic, Political, Branding and Image, Marketing
An Executive Quote on Value
"The value, at the end of the day, has to translate to revenue or cost. The ultimate value has to be described in common-sense business terms."
John Hill, Siemens Business Services
Value: How does one define it?
Without a concerted effort to show the business, in terms it understands and what your department is doing to further the business' goals, the chances of having any say down the road about the future of your department will begin to slim .
Inputs match Outputs
Use Per Adjusted Patient Day
Cost per Adjusted Patient Day
- Financial impact
- Adds opportunity
- Strengthened leverage
- Perception as an expense department diminish
- Increased net worth as a business partner
Figure out what you’re looking for
Benchmark companies roughly at your level
Study the system rather than one technique
If you’re benchmarking a system, adapt what you see rather than simply copying it
Remember why you’re doing it
Challenges in FM Benchmarking
High participation level and willingness to provide what is requested
Is data available, accurate and accessible?
Variability of infrastructure, operations
Must be defined prior to making comparisons
Need to normalize data (e.g. climate zones, EUI, rating systems)
Beyond the Data
Are FM departments structured differently?
What does the FM supply chain look like and does it deliver?
Are corporate social responsibility and environmental management tied to FM?
What is the approach to investment and longer-term life-cycle issues?
Hospital by Region
Adjusted Patient Days
This figure is used as a way to
standardize the per unit measure
between hospitals allowing for
more valid comparisons. Adjusted
patient days is calculated by dividing
total charges by inpatient charges,
then multiplied by the number of
inpatient days and admissions.
(Gross Revenue/Inpatient Revenue) x Inpatient Patient Days.
Adjusted Discharges Adjusted discharges is a calculation that adjusts the number of discharges (hospitalizations) to reflect the impact of both inpatient and outpatient volume. The formula is as follows: (Total Gross Revenue/Inpatient Gross Revenue) x Discharges (or days). For this report, we used adjusted discharges as a means to compare costs.
Total Adjusted Patient Days
Total Adjusted Discharges
Utility Cost by Square Foot
Utility Cost by Adjusted Discharge
Utility Cost by Region and Type
Utility by Building Age
Utility Cost Impact
Utility Drivers for Change
Energy Management Practices
Preventive vs. Repair Maintenance
In-house versus Contracted
Environmental Services Cost
Environmental Services Costs by Type and Age
Application to Real Life
Capital Investment - $259,772.00
Utility Rebates - $34,703
Department of Commerce – 50% subsidy of financing interest costs for first 5 years
Find the money!
Positive Cash Flow every year of program
Cash Flow – Year 1; +$79,101 - Value
Cumulative Cash Flow – Year 20; $1,199,902 - Value
Annualized Return on Investment (ROI)– 23.10%
Our project cost $12.92/sq.ft.
Reduction operating expenses of $2.98/sq.ft
Building size of 20,109 sq. ft.
Our project cost $12.92/sq.ft.
Increase in patient revenue (value) of $2.32/patient day
Annual avg. patient day volume of 25,842
What we just did…
Turned the focus away from “expense” and onto added “value” (revenue).
at the expense of, at the sacrifice of; to the detriment of: quantity at the expense of quality.
Value is that quality of anything which renders it desirable or useful.
Environmental Impact *From Reduction in Electricity and Natural Gas Consumption
Reduction in harmful emissions:
Benefits to Human Health - Value
Benefits to Environment - Value
Reduction in greenhouse gases and air/water pollutants: - Value