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Investing in the hospitals of the future – let’s be strategic instead of tactical

Findings of a Europe-wide study on capital investment in European healthcare systems confirm the view that facilities should be planned and built to ease the patients’ pathway through them, and not seen simply as beds or buildings

Bernd Rechel
Researcher at the European Observatory on Health Systems and Policies, WHO

Stephen Wright
Executive Director
European Centre for Health Assets and Architecture

Barrie Dowdeswell
Director of Research,
European Centre for Health Assets and Architecture
Nigel Edwards
Director of Policy
NHS Confederation

Martin McKee
London School of Hygiene and Tropical Medicine

The European Observatory on Health Systems and Policies and the European Health Property Network/European Centre for Health Assets and Architecture conducted a study on capital investment in European health systems from 2006–2009. It found little evidence to inform those seeking to ensure that capital investment in the health sector will maximise health gains, meet the expectations of patients and staff, and facilitate the efficient and effective delivery of health services. This was despite considerable expenditure on hospitals in European health systems.
It is apparent that many investments in health facilities place an undue emphasis on short-term tactical considerations, such as keeping projects “on cost and on time”. More important is creating sustainable structures to optimise population health and support the development of organisations delivering healthcare – as is ensuring that the changing needs of patients are met throughout the lifespan of the facility. Yet these goals are often neglected.
Some factors that would increase the chances of a capital project being successful have been identified: taking a whole-systems and life- cycle perspective, systematising care pathways, ensuring quality at entry, understanding the relationship between capacity and the services to be delivered, engaging with patients and staff, and ensuring future flexibility.[1,2]

Initial review
The study had two components. The first began with a review of academic and grey literature on hospital planning and design, supplemented by informal interviews with key informants and professional associations, and by internet searches. This enabled us to identify a series of capital projects and related initiatives from across Europe, each illustrating innovative approaches to hospital planning and design.[3] The issues addressed included flexible design, a focus on clinical pathways, integrated regional planning and integration of models of care into design. The final selection of case studies was based on the potential to learn generalisable lessons, while maintaining geographical diversity (Table 1).


The second component was a ‘thematic analysis’ of the key issues identified in the first stage, based on a review of published literature and the findings of the case studies. This analysis was supplemented with a series of reviews of how the national or regional context shaped the implementation of developments. These included:

  • The diverse approaches to capital investment in Europe
  • The emergence of new models of care
  • Developments in thinking about how to use capital assets to provide solutions to specific health service challenges
  • New capital financing models, the application of life cycle economics
  • Experience with facility management
  • Innovations in sustainable design.[4]

Ensuring quality at entry
Effective management of the initial stage of hospital projects can be critical in determining subsequent success or failure. Yet, too often, there is no comprehensive analysis of needs, so projects are insufficiently related to the ultimate objective of health facilities – to improve population health.
Furthermore, many projects suffer from a rush to certainty, whereby planners and politicians strive for measurable indicators with which to assess the project. This creates a powerful incentive for conservatism, inhibiting the adoption of innovative solutions that incorporate emerging evidence of how imaginative design can enhance health outcomes, patient experience, and organisational effectiveness. This emphasis on tactical rather than strategic actions has led to the replication of facilities that have little relevance to contemporary expectations, are of limited effectiveness, and are unsustainable. 
To overcome this, it is necessary to incorporate a focus on quality in the initial phase of projects. However, this necessitates sufficient financial and human resources, with appropriate regulatory instruments such as quality-at-entry controls playing a part (Figure 1).

Taking a life-cycle perspective
One of the key lessons is the importance of taking a life-cycle perspective. In recent decades, capital assets have been virtually free for most healthcare providers in Europe, as they were financed by government budgets, with little or no risk to providers. Given the dominance of this mechanism of capital financing, there is often little awareness of the real costs of capital assets and concepts such as life-cycle economics remain underdeveloped. However, this is changing. In the Netherlands, for example, the government has included the cost of capital in output pricing mechanisms.[5] In the UK, National Health Service (NHS) hospitals pay annual capital charges to the Treasury (finance ministry).
From a life-cycle perspective, it is apparent that the initial investment is only a small proportion of the costs of the building over its full life cycle, from the early design phase to planning, construction, use and – possibly – demolition. The Norwegian government now calculates the life-cycle costs of all major public infrastructure projects.[6]  Such accounting practices reveal that a considerable part of hospital costs are not related to ‘primary’ medical processes, but to ancillary ‘secondary’ services, such as facility management. Hospital design that takes explicit account of facility management costs is likely to result in significant efficiency gains – findings reported in our study indicate that 20% cost savings are readily achievable.[7]


As the costs and risks of capital investment are increasingly shifted to healthcare providers, it will be essential to increase capacities for dealing with the life-cycle costs of capital investment. The long-term market value of health assets will become more important, especially where the building can be put to other uses if no longer required for health services. This could include the conversion of parts of hospital buildings for non-medical purposes, such as hotels.

Whole-system perspective
Health facilities cannot be considered in isolation from the rest of the health system. The hospital treatment episode often forms only part of a much longer or wider care pathway for the patient.[8] There have been significant changes in the configuration of health services in recent decades. Much care previously provided in hospitals has been shifted to other settings and the potential for substitution by primary, social and free-standing ambulatory care is increasingly being recognised.[9] The move towards community settings has largely been driven by financial considerations[10] – but with little evidence that this leads to demonstrable cost savings. It has also followed the growth of opportunities to provide more complex and sophisticated diagnosis and treatment in primary care settings. Rehabilitation and palliative care are now provided nearer to the patient more often.[11-13]
These trends have triggered increasing interest in planning on a system-wide basis, as expressed in terms such as ‘territorial healthcare’, ‘continuity of care’, ‘integrated care pathways’ and ‘care networks’.[14-16] New networks of care are emerging that are not confined to hospitals; for example, packages of care for those with chronic conditions such as diabetes, asthma, heart disease or cancer that are based on integrated clinical pathways that cut across primary, secondary and social care.[17, 18] An example of a hospital linked closely with community services is the Alzira II model, from the Valencia region in Spain, examined closely in our case study volume.[19] Overall, the spectrum of services provided for a designated population is gaining more attention than the details of where they are delivered.

Systematising care pathways
The primary function of health facilities is to enable healthcare workers to deliver high-quality care that meets the health needs of the population being served. Our case studies suggest that this requires the integration of facility design with clinical pathways of care. Attention to clinical pathways began to develop in the 1980s, leading to standardisation of procedures, based on the recognition that, in many areas, patients had, at least initially, similar needs. Examples include the diagnosis of breast lumps or rectal bleeding, or the management of acute chest pain. Of course, a significant number of patients will need to depart from the care pathway. It is essential to incorporate sufficient flexibility to meet the needs of those who have particular needs and, especially, the many who have multiple co-existing disorders. Nonetheless, it is often possible to create simplified channels for large numbers of patients that provide opportunities for improved co-ordination and thus patient experience.
The need for thinking in terms of systematised care is reinforced by looking at hospitals – and healthcare in general – as settings for managing processes. As in many other complex process areas, something like an 80:20 rule applies, where 80% of activities can be standardised and subjected to cost-minimisation protocols. This has implications for capacity planning, since spare capacity needs to be built into the system to cope with the 20% of care which is non-standard and to allow for inevitable surges in demand.

The relationship of services to capacity
In view of their rapidly changing context, health facilities, and in particular hospitals, are always in danger of lagging behind the services that should be provided from them. Rather than facilitating new ways of working, they can often act as barriers to change. Capital must instead be designed as a facilitating element in an investment strategy that enables the provision of appropriate services.
There are no magical answers to the question of how to integrate health services with capital assets. One of the fundamental issues is to decide which services should be provided and where they should be located (in hospitals or elsewhere), while allowing for future flexibility. Once this decision has been made, it will be crucial to ensure a smooth flow of patients, staff and goods, and to develop models of care for routine conditions and procedures that can be aligned with facility design. Insights from management concepts such as lean thinking suggest that the major barrier to gains in efficiency and effectiveness is often not simply inadequate capacity but rather a failure to understand the processes involved. Such an understanding will make it possible to eliminate waste – broadly defined to include waiting, mistakes and inappropriate inventories.
Historically, hospital capacity has been proxied by numbers of beds, but it is becoming obvious that this is an inadequate metric. The continued use of ‘bed numbers’ fails to consider the trade-offs and complementarities from investing in different types of health capital, including information technology and diagnostic equipment and staff.[20]
True capacity must be understood in terms of the processes being delivered, recognising that a single item or area of activity may act at one moment as a critical bottleneck for the entire system. To release this capacity constraint, it will be necessary to focus on choke points that stop the institution from processing patients efficiently. However, this requires that much of the work processes are systematised, a further recognition of the value of care pathways.
A key message is that facility design and the delivery of health services need to be planned and implemented in an integrated fashion, internally within health facilities taking account of functional interlinkages and externally across the whole trajectory of care. What is required is a new way of looking at health facilities, not from the perspective of buildings, beds or specialties, but rather from that of the path taken by the patients who are treated in them and the processes delivered by the health professionals who spend their working lives in them. This should make it possible to identify and overcome the bottlenecks that prevent a more efficient use of resources.

Engaging patients and staff
It is important to involve patients and healthcare workers in the design of new facilities. Yet, in practice, they are only rarely consulted in the construction of new hospitals.[21] Where consultations do take place, they often take on a pro forma character. In a telephone survey of 500 nurses in English hospitals in 2003, 99% of interviewees argued that it is important for them to be consulted on decisions about the design of hospitals, but over half (52%) believed that they do not at present have any influence on the design of hospital environments.[22] In focus groups conducted with nurses in the UK in 2004, participants noted that many consultations are purely nominal and the views of staff are not taken into account in the final design. They suggested that it would be better if the staff working in affected units were consulted prior to the start of the building work.[23]
Healthcare workers are often most aware of the practical obstacles in existing facilities and frequently identify possible solutions to them. Examples of hospitals that have involved their staff in capital investment decisions illustrate the benefits of a more participatory approach. Involvement of employees was one of the success factors in an investment in new beds by a 68-bed acute-care hospital in the US. After the purchase, the number of staff injuries and patient falls declined substantially, increasing nursing satisfaction and reducing nursing time.[24] The St Olavs Hospital in Trondheim, Norway, underlines the benefits of involving staff in the design phase of new hospital projects, with more than 500 of them participating in discussions on the new hospital. One result of this involvement is the ‘sengetun’  – bed-courtyards for step-down care, reflecting a desire to minimise walking distances for nursing staff.[25]

Ensuring future flexibility
The importance of incorporating future flexibility into the design of health facilities is now well established within the community of hospital architects, although awareness among planners and policy-makers seems still to be low. Ideally,
buildings should be adaptable, allowing for changes in layout, function and volume. Architectural solutions include easily removable inner walls and partitions, the inclusion of ‘soft space’ next to complex areas, and the incorporation of scope for outward expansion. Standardisation of hospital components can help; for example, where modular structures reduce the cost of production and assembly. As mentioned, it may also be important to look beyond the life of the hospital, recognising the potential value of the estate and the scope for later conversion of some elements to offices, hotels or apartments, when the time comes for a replacement of the facility.
However, flexibility in new hospital projects extends far beyond questions of facility design, and includes how capital investment and hospital services are financed. In hospital care, there is a trend away from global budgets towards case mix-based funding and many countries now fund hospital services according to activity levels. In Germany, some health insurance funds have agreed variable rates with provider networks for integrated care to specific groups of patients, in which the rate varies with patient volume. Where this revenue stream is also the source of capital investment, there is an incentive to ensure that the resulting facilities are efficient and flexible.

Further research
Research on improving capital investment in the health sector has so far been underdeveloped. One reason may be that such research is intrinsically difficult. There are few opportunities for unbiased comparisons, such as through randomised controlled trials. Capital investment projects are often highly dependent on context, so lessons may not be easily generalisable. In many cases, key data are unavailable to researchers. This may be a deliberate policy – as with the Private Finance Initiative and Independent Sector Treatment Centres in the UK where contracts are deemed to be commercially confidential, even though they involve large sums of public money. This secrecy has concealed examples of phenomenally poor value for money [Pollock, 2009 #330]. More often it is because relevant data are not collected systematically and made public.
Overall, there are few attempts to document and analyse the experience of capital investment as a process. One reason for this may be that this is not in the interest of the private companies involved which do not want to jeopardise their chances of being awarded similar projects in the future. The few examples where detailed evaluations have been done have involved major failures. The evidence base on how to improve capital investment needs to be expanded.

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