Abstract
Objectives:
To explore how hospital real estate can add value to the healthcare organization, which values are prioritized in practice, and why.
Background:
Dutch healthcare organizations are self-responsible for the costs and benefits of their accommodation. Meanwhile, a lively debate is going on about possible added values of corporate and public real estate in the fields of corporate real estate management and facility management. This article connects both worlds and compares insights from literature with experiences from practice.
Methods:
Added values extracted from literature have been discussed with 15 chief executive officers and project leaders of recently newly built hospitals in the Netherlands. Interviewees were asked (1) which values are included in the design and management of their hospital and why, (2) to prioritize most important values from a list of nine predefined values, and (3) to explain how the chosen real estate decisions are supposed to support organizational objectives.
Results:
Stimulating innovation, user satisfaction, and improving organizational culture are most highly valued, followed by improving productivity, reducing building costs, and creating building flexibility. Image, risk control, and financing possibilities got lower rankings. The findings have been used to develop a value-impact matrix that connects nine values to various stakeholders and possible interventions.
Conclusion:
The findings and the value-impact matrix can make different stakeholders aware of many possible added values of hospital real estate, potential synergy and conflicts between different values, and how to steer on value add in different phases of the life cycle.
Introduction: Adding Value by Real Estate
Corporate real estate management (CREM) is the range of activities undertaken by a company or real estate department to optimally align a corporate real estate portfolio to the organizational objectives and as such to add value to the organization (De Jonge et al., 2008). The concept of adding value by real estate is usually linked to different lists of value parameters and related real estate strategies to facilitate the mission, vision, and objectives of an organization (De Jonge, 1996; De Vries, 2007; De Vries, De Jonge, & Van der Voordt, 2008; Den Heijer, 2011; Den Heijer & De Jonge, 2012; Jensen, Van der Voordt, & Coenen, 2012; Lindholm, 2008; Lindholm, Gibler, & Leviäinen, 2006; Nourse & Roulac, 1993).
Building on this literature, this article explores the concept of adding value by real estate and how this concept is or could be applied in real estate decision-making processes. In this first section, the concept of adding value will be discussed, first in general, then focusing on the added values of real estate. In the next section, a study will be presented into value adding management of hospital real estate in Dutch practice. The article ends with a reflection on the findings, some concluding remarks, and practical implications.
Adding Value by Real Estate
“Adding value” and related concepts such as “added value” and “value added” are multidimensional constructs that are interpreted in different ways (De Chernatony & Harris, 2000; Jensen et al., 2012). In pricing literature, the term “value” is usually defined as the trade-off between the customers’ perceptions of benefits received and the sacrifices incurred (Lezinski & Marn, 1997). Woodruff (1997) mainly focuses on the benefits by defining customer value as the customer’s perceived preference for a product or service in achieving the customers’ goals and purposes. The costs of achieving these goals are not explicitly included in this definition. De Chernatony and Harris (2000) also focus on the benefits. Based on 20 in-depth interviews with leading-edge brand experts, they concluded that added value includes both functional and emotional benefits, as perceived by consumers, relative to the competition, and these often also result in benefits for the firm.
In his real estate lexicon, Keeris (1997) states that real estate value is not unambiguous, rather it is subordinated to subjective appreciation (Keeris, 1997). Therefore, in real estate literature, “value” usually refers to the stakeholders’ (subjective) appreciation in achieving the stakeholders’ goals and purposes. … in real estate literature, “value” usually refers to the stakeholders’ (subjective) appreciation in achieving the stakeholders’ goals and purposes.
In recent CREM literature, different values of real estate are mentioned as well, such as shareholder value, balance sheet value, investment value, commercial value, economic value, functional value, historical investment value, market value, and reconstruction value. Based on 50 different definitions, Jensen, Van der Voordt, and Coenen (2012) traced six different types of added value: use value (quality in relation to the needs and preferences of the users), customer/consumer/use value (the trade-off between benefits and costs for customers), economic/financial/exchange value (the economic trade-off between costs and benefits), social value (e.g., supporting positive social interaction or reinforcing social identity), environmental value (Green Facility Management, environmental impact of facility management, and sustainability), and relationship value (e.g., getting high-quality services or experiencing a special treatment and trust).
The definitions show that we should not speak about “the” added value of real estate but about different types of added value, and that added value depends on who profits from the benefits and who is responsible for the sacrifices. The added value of a particular design choice or real estate intervention can be positive for one aspect and negative for another aspect and can differ between shareholders and stakeholders such as clients, customers, and end users. As a consequence, value adding management of real estate and assessments of the added value of different design solutions or interventions in buildings-in-use have to take into account the interests and needs of different stakeholders. The added value depends on what is perceived as desirable and feasible by different stakeholders in relation to their overall objectives.
Empirical Research: The Added Value of Hospital Real Estate
In order to be able to optimally steer on adding value by real estate, stakeholders should be challenged to ex ante define their objectives and to define how real estate might contribute to attain these objectives and to ex post assess the outcome, that is, to what extent the objectives actually have been attained. The current article discusses if and how decision makers in the field of hospital real estate try to add value by real estate, by which interventions, and which values are prioritized. In a separate article, various methods are presented to be able to assess the added value of design choices ex ante, when the building is still in the design phase (van der Zwart & van der Voordt, 2015). The Dutch hospital sector is in a transition phase of formerly being governmental regulated, with strict planning regulations regarding the number of beds per 10,000 inhabitants, strict building codes regarding m2 per bed and functional requirement, and maximum costs per bed and per m2 toward a more competitive market with less regulations regarding hospital buildings. Since the new regulations in 2008, Dutch hospitals themselves became responsible for the reimbursement of their real estate investments, whereas in the old system all capital costs were financed by the government, provided that the hospital passed all steps in the application procedure and got a license to build. As a consequence in the old times, most hospitals were built according to the maximum allowed number of m2 per bed, which was not always optimally efficient. Investments above the cost standard were not allowed, even when this investment would result in lower running costs and life cycle costs. The transition from a governmentally steered system to a regulated market system makes this sector an interesting field of research. … to optimally steer on adding value by real estate, stakeholders should be challenged to ex ante define their objectives and to define how real estate might contribute to attain these objectives and to ex post assess the outcome
Assessed Values
Regarding the multidimensional and multifaceted character of added value, both similar and dissimilar types of added value have been found in the publications mentioned above. Most common issues are (1) reducing costs, (2) improving productivity, (3) increasing user satisfaction, (4) improving culture, (5) increasing innovation, (6) supporting the image, (7) improving flexibility, (8) improving the financial position, and (9) controlling risk (see Table 1).
Nine Added Values of Real Estate.
These nine added values have been discussed in 15 interviews with the chief executive officer (CEO) or real estate manager of 15 different hospitals (Van der Voordt, Prevosth, & Van der Zwart, 2012; Van der Zwart, 2014). Besides these nine often mentioned added values, sustainability has been added to the list in recent years. Therefore, interviewees were separately asked if and how sustainability was managed as one of the added values of hospital real estate.
Research Methods
First, an explorative interview was conducted with the former CEO of the Orbis Medical Centre. Based on this interview and the literature review of the concept of adding value by real estate, 10 semi-structured interviews were conducted with hospitals’ CEOs or real estate project leaders on if and how the added values mentioned before were incorporated in the design and management of the hospital. First, an open question was raised to spontaneously mention which values were incorporated in real estate decision making. Second, the nine values derived from the literature were presented on little cards in a matrix with three rows and three columns (Figure 1). Then, the respondents were asked to rank the nine values according to their importance. The results from these interviews were later discussed in four reflective semi-structured individual interviews with hospital decision makers who initiated a new hospital building after the introduction of the new regulations in 2008.
The assessed added values of real estate.
The ranking of the nine added values occurred in three steps. First, respondents were asked to prioritize the three added values in each row. Second, respondents were asked to rank the three added values per column on least importance. By these two steps, the respondents were made familiar with the added values used in literature in order to be able to prioritize all values in the third step. In the last part of the interview, respondents were asked how these added values were visible in the (design of the) hospital building and which real estate choices were supposed to support these values.
The four reflective interviews also started with an open question about which values are included in hospital real estate decision making. However, the former Step 2—prioritizing nine values—was replaced by a discussion of the prioritization found in the previous 10 interviews. After their reflection on the former ranking, respondents were also asked to describe how these added values were visible in the design of their own new hospital.
Case Selection
In order to select appropriate respondents, a list was made of the hospitals involved in building or designing a new hospital in the period 2004–2012. This first list was presented to experts in the field and was updated with a few additional hospitals that were mentioned to be in the phase of initiating a new building process. This resulted in a list of 30 hospitals. A selection of cases was made based on heterogeneity in terms of three characteristics: (1) general, top clinical, and academic hospitals; (2) size in number of beds and turnover; (3) current position in the building process, that is, initiation, briefing, design, construction, or use (Table 2). This made it possible to explore whether the type of hospital, its size, and the phase in the real estate life cycle affect (priorities in) value added management.
Characteristics of the Cases.
Note. UMC = University Medical Center; CEO = chief executive officer; S = small, M = medium; L = large; XL = extra large.
The selected cases represent 15% of all Dutch hospitals and 50% of all Dutch hospitals planning or building a new hospital in 2004–2012. The selection includes seven general hospitals, six top clinical hospitals, and two academic hospitals. With regard to the number of beds, the case selection includes four small-size hospitals, five medium-size hospitals, four large hospitals, and two extra-large academic hospitals due to the integration of research and education facilities in the real estate portfolio. Five hospitals were in the initiation phase of building a new hospital, five hospitals were constructing a new building at the moment of the interview, and five hospitals had a new building in use and were in the exploitation phase. Half of the interviews were conducted with CEOs, and half of them with the real estate project manager of the hospital. Information and documents available on the Internet were studied in advance to gain a first impression of the hospital, its mission and vision, and main real estate objectives.
Research Findings
The results of the interviews are discussed according to the three steps in the interviews. First, value-based hospital real estate management in response to the open question is described. Second, the prioritization of added values and the reflections on this ranking in the reflection interviews are discussed. Finally, accommodation choices supporting the added values of hospital real estate are described and related to different perspectives on real estate.
Spontaneously Mentioned Added Values of Hospital Real Estate
Supporting the delivery of good healthcare in a cost-efficient way
The main purpose of a hospital is to deliver affordable high-quality healthcare. Appropriate real estate is secondary but at the same time an important resource to achieve this organizational objective and to optimally facilitating healthcare processes. According to most respondents, real estate being a resource for production should always be judged upon its contribution to business processes and business economics. This topic is highly relevant from an economic point of view and relates to economic value. Supporting the primary process also means that the building should be comfortable. On the one hand, the building should support patient’s needs and well-being. On the other hand, the building should be a pleasant and productive working environment for the healthcare professional. Therefore, the building should support an organizational culture of multidisciplinary and patient-focused working processes. Multidisciplinary collaboration and well-thought communication between the board, managers and staff, and the patients is a trend that hospitals have to make their own.
In spite of the widely used motto “the patient is central,” in most cases, supporting efficient healthcare processes is a key issue in real estate design and management of the building-in-use. Managers assume that it would prove most helpful to the patients if healthcare processes are well organized and facilitated and as such support customer satisfaction, labor productivity, and employee satisfaction. Efficiency is connected to efficient patient logistics, well-organized healthcare processes and efficient logistics, and transport of people and goods. From this perspective, a hospital is a production factory. On the other hand, patients have to feel at ease and therefore the building must have an ambiance of hospitality. Furthermore, it has to fit with the budgets for exploitation costs and energy expenses. … supporting efficient healthcare processes is a key issue in real estate design and management of the building-in-use.
Example: Deventer Hospital, Deventer
The building should facilitate the healthcare processes in such a way that the building meets the organization’s objectives from the first day it opens its doors. In addition, the building must be flexible in order to support business processes for a period of 40 years and to be able to cope with changing visions on healthcare delivery. The building concept is based on the vision that healthcare processes include four different patient flows: acute, urgent, elective, and chronic. This resulted in a process-based building with a focus on logical connections between medical healthcare processes.
Supporting the organizational strategy by the real estate strategy
In most cases, the possibilities and boundary conditions of the current real estate portfolio as well as the desired future supply are taken into account in the real estate strategy. Often organizational objectives such as transparency and appropriate healthcare are translated into the architecture of the building. But a strict translation of the organizational mission, vision, and ambitions into the architecture is also mentioned as being difficult because of both the long planning and construction time—often 10–15 years—and the expected 40 years of exploitation afterward. During this period, the organization will probably change its management structure and style, objectives, and vision on how to optimally organize healthcare processes several times. Flexibility is therefore often mentioned as an important criterion of adding value by real estate. Flexibility should enable the hospital building to support the healthcare processes for at least 40 years, under changing circumstances.
Example: Meander Medical Centre, Amersfoort
First a long-term accommodation plan was made to formulate a real estate strategy. This strategy consisted of a renovation of the existing hospitals to support their use for another 10–12 years and in the meantime designing and constructing a new hospital on a central location. All complicated top clinical cure was centralized in the new hospital building. In addition, a regional hospital was renovated and converted into a day care hospital and four outpatient centers were established in the region. The central building is divided into three parts: (1) a hot floor with all high technical functions, (2) wards with standard one-person bedrooms, and (3) multifunctional examination rooms, all parts with different technical installations and constructions and different access to patients. Flexibility is realized by the expandability of the building, adaptability of the floor plan and exchangeability of rooms.
Increasing the opportunities to finance hospital real estate: Writing business cases
Liberalization of the regulations of hospital healthcare investments introduced new possibilities for hospitals to invest in new infrastructures but also new risks. With the new regulations in 2008, hospitals not only became responsible for their own real estate, but they also became responsible how to finance their real estate within existing budgets for healthcare delivery, without extra financial support from the government. The new financing system has made the payment of investments and running costs dependent on production in terms of diagnosis–treatment combinations, resulting in a very business-like approach: no more square meters then necessary and life cycle costs as low as possible. The hospitals that started a new building project after the introduction of the new regulation show a shift from focusing on maximum capacity and quality according to the standardized maximum m2 per bed and costs per bed toward less capital expenses and increasing productivity. Recently built and currently being built hospitals are designed and constructed on the basis of a business case and pay great attention to creating a compact building with a small amount of surplus square meters to enable future production growth, low capital costs, and a high level of flexibility. Slim fit buildings are accompanied with extendibility in the future. New business cases need to be presented to financiers in case of extensions. The planning and construction period decreased from the usual 10–15 years to 4–5 years. Slim fit buildings are accompanied with extendibility in the future.
Example: Gelre Hospital, Zutphen
From the first initiative on, it was known that the building had to be financed at own risk and had to be reimbursed by healthcare production. Therefore, a business plan was presented to financiers. The starting point of this business plan was to focus on keeping the capital costs as low as possible in order to gain a competitive advantage with regard to the costs of healthcare products and services. This is accomplished with a cheap, functional, and lean building with little surplus square meters and a focus on flexibility, anticipating future alterations. Also typical for this project is the short period of 4 years in total from initiative to design and construction.
Strengthening the market position
Due to the reorganization of healthcare toward a more free-market like system, health insurers have gained more power. In order to optimize the quality/cost ratio, health insurance companies are becoming more selective in contracting healthcare suppliers and in refunding patient’s healthcare expenses. This will lead to a situation where no longer every hospital will deliver all types of hospital healthcare. Most hospitals are already part of a larger network, with one central location for all complicated top clinical healthcare and several day care hospitals and outpatient centers in the region. In this “horizontal” cooperation, peripheral locations demarcate the service area of the hospital and aim to ensure that patients choose this hospital, only going to the central location if top clinical care is necessary. Other hospitals have chosen for a “vertical” cooperation in the healthcare chain to anticipate to the changing context of healthcare services, by building alliances with general practitioners, home care, and elderly housing organizations to deliver healthcare in their region. Real estate management is used to support these trends and to facilitate the delivery of the right healthcare at the right place.
Prioritized Values From the List of Nine Values
The results of prioritizing nine added values as part of the 10 semi-structured interviews with the CEOs or project managers of 10 hospitals are presented in Figure 2. The horizontal axis is scaled from 1 = highest priority, that is, top 1 to 9 = lowest priority as ranked by the respondents. The nine added values are presented on the vertical axis of the diagram. Horizontally next to these added values, the priority ranks are plotted for all interviewed hospitals with their names abbreviated according to Table 2. When two or more added values were given the same priority, these added values received the same average rank. The dashed-lined boxes cluster the answers that were given most frequently, usually showing a maximum of three exceptional ranks per added value. The bold abbreviations show the hospitals with a median ranking for that particular added value. Due to the huge variety, the average rank is no representative expression of the different thoughts. Furthermore, rankings represent an ordinal scale and no ratio scale. For this reason, we present the median scores. The added values on the vertical axis are ordered from the least prioritized, that is, the highest median rank (below) till the most highly prioritized, that is, the lowest median rank (above, at the top). If two added values share the same median, the average was used to choose the priority rank.
Plot diagram of prioritized added values of real estate.
Figure 2 shows that supporting innovation, increasing user satisfaction, and improving the organization’s culture were often given high(est) priority by the respondents. Cost reduction was highly prioritized by four respondents but got a lower ranking by five other hospitals. Increasing productivity, optimizing flexibility, and supporting corporate image are prioritized in the middle. Risk control and increasing financing possibilities were usually given low priority by the respondents. One hospital (GD) ranked the priorities of the nine added values almost opposite to most other answers. This hospital was planning a new hospital according to the so-called living building concept, a new form of public–private initiative.
Regarding the function of the respondents, no striking differences came to the fore between the prioritization of the added values of real estate by CEOs and by real estate project managers. However, prioritized values showed to be different in different phases of the building cycle, that is, between the initiation phase, the design phase, and the use phase of the building. By respondents involved in the initiation phase, values such as risk management and increasing financing possibilities were highly prioritized, whereas in the use phase, stimulating innovation, user satisfaction, and improving organizational culture showed to be highly prioritized. … prioritized values showed to be different in different phases of the building cycle,
Reflections on Prioritized Values in Additional Interviews
The findings from the 10 interviews have been discussed in individual semi-structured reflective interviews with four hospitals in either the initial or construction phase of a new building. The interviewees showed to be quite critical about the top ranking of increasing innovation. They perceive innovation as a means to improve patient satisfaction and not as a goal in itself. Also according to the four additional interviewees, the main objective of a hospital is to deliver accessible, affordable, and high-quality healthcare. For this reason, the additional interviewees also stressed the importance of improving efficiency. Although efficiency is always important, it became even more important after the new regulations in 2008.
Since the new regulations, risk control and financing possibilities are perceived as becoming more important as well. “Without risk control and a good financial business plan, the other added values of real estate will never be attained. Therefore, the most important values are those values that make other values possible. [ … ] If this ranking [as in Figure 2] is followed, one stays in the old thoughts from before the regulations changed.” This may explain why the GD hospital ranked risk control as priority one, as this hospital proactively anticipated the new liberalization of hospital real estate regulations. … the most important values are those values that make other values possible.
Discussion
The ranking priority of Figure 2 show three clusters of prioritized added values that can be related to the widely used triplet of people–process–place (Duffy, 1992). The top three prioritized added values by the respondents are stimulating innovation, increased user satisfaction, and improving corporate culture. These three added values of real estate are related to “people” and contribute to the organizational performance with regard to “people working together, in a smart way organizing things efficiently” as one CEO mentioned in the interview. The second cluster of added values includes cost reduction, increasing productivity, and optimizing flexibility. These three added values all contribute to the (production) process of healthcare services and the prizes of these products and services. A flexible hospital building makes it possible to adjust real estate to new circumstances or new ways of healthcare delivery. This helps to improve productivity and to reduce running costs and as such reduces the price of healthcare products and services. As one CEO mentioned, “Maybe it is not that surprising that improving productivity is in the middle of this configuration. Some added values are enablers and contribute to a higher productivity, others are more the result of an increasing productivity.” The third cluster of added values—contributing to corporate image, controlling real estate–related risks, and improving finance possibilities—are related to the real estate portfolio and as such to “place.” As one CEO mentioned in the interview, “Contributing to the corporate image or financial possibilities are strongly related to the location and appearance of the hospital building. I can imagine that it becomes important if a hospital is located in the city center, but otherwise it is less important as a real estate objective.”
In addition to the clustering of values according to the triple place–space–use, another similarity came to the fore, with the triple cultural value, use value, and future value. This triple was mentioned in a PhD thesis of Niemeijer (2013) about the added value of hospital architecture. This triple is a slight adaptation of the triple use value, experience value, and future value that is mentioned in the National Architecture Policy document “Space for Architecture” (Architectuur Nota, ruimte voor architectuur Ministeries WVC & VROM, 1991). These reports led to a lively discussion about spatial quality. Hooimeijer, Kroon, and Luttik (2001) conducted a study to conceptualize spatial quality. They came to the conclusion that spatial quality is contextually bound and dependent on location, time, scale, and social and cultural influences. Different stakeholders have their own views on quality, depending on their particular interests and preferences. Hooimeijer et al. (2001) used the classic tension in design tasks between form and function as a starting point for the conceptualization of spatial quality in (1) experience value, (2) use value, and (3) future value. Experience value focuses on identity, diversity, recognition, and meaning. Use value regards functional suitability and effectiveness in use and exploitation. Regarding future value, durability and long-term efficiency are central, which asks for extendibility and adaptability. As such the three concepts represent form, function, and time. There is also a similarity with the three terms that Vitruvius used in his first treatise on architecture in 60 BC. According to Vitruvius, architecture must meet three criteria: (1) Venustas, which can be translated as the perception of beauty, (2) Utilitas, which focuses on usability, and (3) Firmitas, which refers to the strength and stability of the construction and as such to sustainable use (Hooimeijer, Kroon, & Luttik, 2001). The main difference between then and now is that in addition to form, function and time, or experience, use, and being well constructed, cost efficiency and risk control are of growing importance.
Though hospital real estate is being regarded now more and more as a resource for production, there was a remarkable difference between the answers to the open question and the response to the question to prioritize nine predefined added values in the more structured part of the interview. In response to the open question what values are included in the design and management of hospital real estate, most respondents mentioned facilitating the primary processes and supporting productivity as the main objectives. Confronted with added values of real estate mentioned in the literature, the main real estate objectives shifted from process-oriented priorities toward the contribution of real estate to organizational strategic objectives such as stimulating innovation, improving culture, and increasing user satisfaction. Whereas in the open interviews flexibility was often mentioned as an important added value, in the ranking assignment this issue was never given high priority, probably because it has been a common issue in real estate management for decades. Cost reduction splits the interviewees into two groups. Some of the respondents ranked cost reduction at the top of highly prioritized values, whereas others gave this issue low priority. This split does not follow the distinction between CEOs and project managers. Although in the open interviews most hospital managers call cost reduction a basic issue in most real estate decisions, in particular since the new healthcare real estate regulations, in the ranking assignment cost reduction only got median priority. The same holds true for productivity and flexibility. An explaining factor here might be the phenomenon of social desirability: Respondents may tend to avoid the image of just managing on costs and risks. … in the open interviews flexibility was often mentioned as an important added value, in the ranking assignment this issue was never given high priority,
Methodological Reflections
The qualitative approach of this research—using semi-structured interviews with open questions—provided much information on how real estate added values are perceived by hospital managers and how they are prioritized in hospital real estate decision making. The results contribute to a better understanding of adding value by real estate and the values mentioned in the literature, in general and specifically for the healthcare sector. Although quantitative concepts have been used to summarize and interpret the research findings—modus, mean, average, and a plot box—these results should mainly be regarded as qualitative data. The priority diagram (Figure 2) is a representation of limited number of only 10 rankings on priority and as such it is just a first exploration of (clusters of) priorities. Besides, the rankings by the interviewees might be influenced by their role in the organization and their responsibilities. A second limitation of this research is the limited time per interview (on average 1.5 hr). A third limitation of this research is the broad scope including many possible added values of real estate. In order to get a better understanding of HOW to attain these values, by which design and management choices, further research in-depth is needed into all separate values, for instance, into flexibility, productivity, cost-effectiveness, and risk control.
The overall validity of the results can be improved by conducting more in-depth interviews and organizing workshops and expert meetings to discuss and compare individual rankings. Judgments of quality and decisions on design and management are often based on joint conclusions rather than on individual opinions and preferences. For this reason in future research it is recommended to supplement the individual interviews with focus group discussions with participants from the selected hospitals.
An interesting topic for further exploration in in-depth interviews and group meetings is the impact of the position in the life cycle, ranging from initiation to design, construction, and building in use. The preliminary findings are promising but should be assessed in-depth. Another interesting topic for further research is how to cope with complex “soft” constructs such as innovation and supporting culture. These topics showed to be highly prioritized but are not well elaborated yet. Finally, it would be worth to apply the same research methods in other sectors such as office organizations or higher education in order to explore similarities and dissimilarities in different fields.
Conclusion
Based on the prioritization of the added values of real estate in the interviews, it can be concluded that experience values such as stimulating innovation, supporting user satisfaction, and improving organizational culture are highly valued. These are followed by more tactically oriented use values, such as improving productivity, reducing building costs, and supporting the flexibility of the building in order to be adaptable to changing care processes. Future value such as image, controlling risk, and future financing possibilities are mentioned as possible added values of hospital real estate as well. Prioritized values may be different in different phases of the life cycle of the building. In the initiation phase, much can be changed quite easily. Design choices will have a long-lasting impact on the use value, experience value, and future value of the building and on the effectiveness and efficiency of healthcare processes. In the phase of a building in use, one has to cope with the existing situation, with much more limited opportunities to change.
The research findings also show that it is import to be clear about the concept of added value and different value parameters and how to apply this concept in a particular sector. In hospitals for instance, it makes sense to split the value parameter user satisfaction into patient satisfaction and employee satisfaction. Although stimulating innovation seems to be a clear value, it was often connected to improving culture, that is, to stimulate a culture that supports and facilitates innovative processes. Based on the interviews, it makes sense to add improving safety as a separate added value. Sustainability should be added to the list as well. In the interviews, this topic was not presented as an item on the predefined list but in addition to it. It turned out that this topic is not highly prioritized, usually argued by the statement that the main aim of a hospital is not to be green but to deliver affordable high-quality care. However, all interviewed hospitals try to contribute to environmental values, often in connection to the corporate social responsibility debate. A restriction often made was that investment costs have to be paid back within a couple of years. It is expected that in the next coming years, the pace and culture of “corporitization” drives the quest for a sustainable dividend. Most other values can be perceived as preconditions for a sustainable future.
In order to support decision makers to apply the insights from this research into practice, a so-called value-impact matrix has been developed (Figure 3). This matrix shows the nine added values plus sustainability in the rows and four types of stakeholders in the columns (based on Den Heijer, 2011). The cells include checkpoints of possible measures to attain the different values. This might help to optimally align the accommodation strategy with the organization’s overall strategy. The value-impact matrix is a tool to enable discussions with various stakeholders on how to optimally accommodate hospital care, in the initiation, design, and occupancy phase. It may help to define the accommodation objectives in the initiation phase, to assess ex ante—in the design phase—if and how the building adds value to the organization, and to assess ex post—in the building-in-use phase—which objectives actually have been attained. Using the value-impact matrix, focus groups with end users and other stakeholders can discuss design choices or accommodation characteristics in a more structured way by assessing all values from the perspectives of different stakeholders. After this inventory, it can be checked whether all values and perspectives have been adequately addressed in a balanced way. The value-impact matrix is a tool to enable discussions with various stakeholders on how to optimally accommodate hospital care …
Value-Impact Matrix.
The value-impact matrix can also be used as a starting point for further research on adding value by real estate, both in the healthcare sector and in other sectors, and in different ways, for instance in a generic way by elaborating all cells by a literature review, and in a more case-related way by using the value-impact matrix as an instrument for ex ante discussions to clarify the set goals, to assess the architectural design sketches, to define clear performance indicators, and to assess actual performance ex post by post occupancy evaluations of the building in use. So far, the value-impact matrix is an interesting tool for better understanding of possible added values of (hospital) real estate, how to attain these values, and why this is important from the perspective of different stakeholders. Additional research is needed to transform the value-impact matrix in an evidence-based design tool that can be used by architects and in co-design processes including user participation.
Implications for Practice
The overview of added values of hospital real estate can be used to raise awareness among decision makers of opportunities for value adding management.
Prioritized values in practice can be used as a reference frame to evaluate the current real estate strategy and tactical/operational decisions in the design and management of hospital buildings.
The value-impact matrix is a valuable tool to discuss how to add value by real estate and to explore potential synergy and conflicts between different values from the perspective of different stakeholders.
Because design choices have a long-lasting impact on the use value, experience value, and future value of a building, a careful analysis of the alignment of design choices to organizational objectives and taking into account the interests and needs of different stakeholders is of utmost importance.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.