Samaritan Medical Center Shares Lessons Learned During Expansion Project
Written by Thomas Carman, President & CEO
Samaritan Medical Center, Watertown, New York
View Original Massachusetts Hospital Assoc. Article
Samaritan Medical Center, located in the city of Watertown, NY, is a 294 bed, full-service community hospital serving the needs of its local communities since 1881. In 2006, our future projections and strategic planning confirmed the hospital's need to expand its current facilities to meet the demand of our growing communities. Like many hospitals embarking on an expansion, we engaged an architectural firm to prepare a Master Facilities Plan that would meet our program requirements while staying within our budgetary limits.
Lesson # 1
The current, most frequently utilized hospital design method forces the hospital to make key project assumptions about project cost. The decision to move forward with a hospital construction project many times is made without reliable cost information. In our case, cost estimates developed as part of our master plan led to assumptions which did not prove out after we had submitted a certificate of need application.
As we moved forward in the planning process, we became aware that our project was quickly growing in cost, and had expanded beyond our budgetary objectives. Our initial cost estimate for the parking garage portion of our project was $5.9 million. Yet, the final, low bid for the project was $7.6 million. When the bids for the parking structure came in over our initial projections we were alarmed by what we should expect for the other aspects of the project. We took some extra time to examine the projected costs of the 130,000 square foot patient pavilion portion of our plan. An estimated cost, provided by an estimating firm, indicated our Patient Pavilion project was $10 million over budget.
Lesson # 2
We learned the hard way that the cost of a hospital design is not necessarily the first priority of the firm doing our design work. In fact, our original design firm did not fulfill their responsibility to meet our project budget even though they were well aware of it. We, the hospital, were at risk in this process. Not our designer or our consultants. As we looked at the balance of our planned project we spent many long and hard hours attempting to identify how to meet the objective program we had identified. We could no longer move further down the design road without attention to the eventual project costs.
As it became clear that our efforts to "value engineer" our project were not going to deliver the programmatic outcomes we needed nor meet our budget, we considered our alternatives. One alternative would have been to engage a firm that would manage the process by stacking contingency upon contingency. This approach would have an end result of delivering the project "within budget." It was conveyed to me by an industry source that one hospital in our area chose this option and actually told a group of Construction Management Firms not to send in preliminary numbers that might be too low. They wanted to set their budgetary bar high enough to ensure they would stay within budget. While this approach may help to guarantee that a maximum price is not exceeded, it hardly assures a cost effective outcome. We eliminated this option as it would not deliver the best outcome for Samaritan Medical Center. It was at this point that we opened discussions with a hospital designbuild organization that provided the hospital with a guaranteed cost that met our budget and included all of our programmatic requirements.
Lesson # 3
The architect’s pen is as essential to controlling project cost as is the ordering pen of our medical staff. Several firms are noted for their ability to provide cost discipline in the hospital design and construction process. We asked firms specializing in hospital design and construction to evaluate our planned program and offer design solutions. Our Board Chairman John Wheeler put it this way, “As Trustees, we have a responsibility to our community to ensure completion of every phase of this much-needed project and to achieve all of the objectives in our Facility Master Plan.” Some design firms have learned how to harness budgetary realities while producing cost efficient yet functional and attractive hospital buildings. Some design firms have not.
One firm, using a completely integrated approach, proposed a guaranteed cost of $51 million dollars for the parking garage and Patient Pavilion, which would then be constructed at the same time and within the hospital CON budget. Firms that will take this risk before working drawings are 85% complete do exist. When we reviewed the design-build solution for our master plan, a completely new and innovative design was prepared for us. This design incorporated all of the functional and programmatic elements that were included within the original hospital CON.
Some of the firms offering a design-build approach offer the benefit of a guaranteed cost for a project before the expense of Construction Drawings is incurred by the client. In our circumstance, working with a firm that provided this flexibility to us resulted in a successful financial and operational outcome for our expansion project.
Lesson # 4
While your architect may produce an impressive master plan, the ability to convert that master plan into a cost effective design utilizing best practice design should be considered. Measuring your original design solution against an alternative design with a guaranteed lump sum simply makes sense. In the end, our decision to move away from the traditional Architect/Engineer/ Construction Manager approach and to engage a hospital design-build organization gave Samaritan Medical Center the benefit of a guaranteed cost within our original budget. Most importantly, all programmatic elements are addressed including the parking structure, a new Emergency Department, new Surgical Suites, new ICU/PCU, and private patient rooms on the Medical/Surgical unit. I am convinced that by challenging our original Master Plan design assumptions at Samaritan Medical Center, we were able to complete our Master Plan objectives within the available budget. In the Healthcare arena, there is a time and a place for a second opinion. We certainly benefited from one on our expansion project.
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