Inflation, supply chain impact year
Inflation, supply chain, project delays, and employee mobility impacted the year in healthcare facilities management. These are consistent themes across the facilities spectrum nationwide.
This theme is highlighted in our recently released survey. We also hear it in the latest High Reliability podcast. Our guests on the podcast are:
- Carol McCormick, Director of Facilities, Plant Operations, & Maintenance for CHI Health Immanuel and CHI Health Mercy, Omaha, NE;
- Dr. Robert Feldbauer, System Vice President of Facilities and Administrative Services, UC Health, Cincinnati, OH;
- Robert Hacker, Director of Facilities, Planning, Design, and Construction, Community Memorial Hospital & Ojai Valley Community Hospital, Ventura, CA.
Among the many topics Carol, Bob, and Robert discussed, impacts from inflation and supply chain were prominent. Select comments from each are excerpted below:
We’ve been fiscally conservative, and we’re trying to cut as much out of projects in order to get them done. When I say cut out the most, cut is in regard to dollars.
In a simple project completed during the middle of Covid, we opened a 75-bed SNF. The first portion was building the new SNF. And then the second portion of that was going to tear down the old one. Well, we put that on hold during Covid. We had originally bought that out at $1.2m. We’ve put it out on the street three times since. It comes back that the lowest bid we can get is about $3.5m.
Hospital leadership is asking me Well, how are you going to get it done? I didn’t believe it myself, so I went back out for pricing. And when the pricing came back, well, the cost was so high that we had to accept reality. This is what the market demands, and here’s what the market conditions are. That’s what I’ve been up against.
Some of the switchgear and electrical gear that I’m seeing has delays for up to a year out. California also has other specific project requirements for seismic. But the projects are still coming.
Our master plan phase one project luckily kicked off in January 2020. We avoided a lot of the costs and time delays because our subcontractors and suppliers were in the market and were ordering way earlier than you would in the normal course of a project.
Other projects that we do on an annual basis, and the projects here in 2022, we had put together budgets a year ago, and we have some struggles (making sure they stay on budget). We mitigate as best as possible, but there are some cost overruns. We let our capital committee know, and we show them data. We show them here is where everything’s increased, and there’s at least an acknowledgment upfront as we’re moving forward on projects. We make determinations of a) do we still move forward, b) do we descale, or c) is it a priority enough where we adjust the costs and keep moving?
And even things like the electrical distribution that Robert pointed out, that’s just critical, and it’s chronic everywhere. Working with the team, we discuss how can we mitigate this. Normally you would set the switchgear, and you would build your way out. Well, how can we start at the endpoint and build our way in so that a lot of the work’s done by the time you get that switchgear? Manufacturers, they’re all in the same boat. So again, a lot of work and trying to coordinate.
Listening to Bob and Robert, the same thing is occurring here. We try to get senior leadership to understand that costs have gone up as much as they have and that supply chain is as tight as it is. Really, this is a thing that we work on daily. I’ll hear all I want is flooring and paint; why does it cost so much money? I could paint that wall for you on the weekend.
So you know it’s interesting to listen to us as a group of facility leaders across the country and understand that our situations are the same.
I lost an emergency generator back in March. We paid a pretty penny per month to rent a temporary one, and we just brought that generator back online last month. Supply chain and the cost of everything, it’s a full-time job for all of us. It extends the length of our projects.
We had a TJC survey, and we had some HVAC work we had to do as a result. We needed one part, but we needed them for a number of units. We went to 4, or 5 or 6 different suppliers (to find the part). That was two or three full days for my team just to make those phone calls and figure it all out.
Capital is an issue, and finding a way to maintain aging infrastructure to meet some of the sustainability goals is difficult.
G/MA Nugget: A look behind the scenes
The employee market is a frequent topic for us. From our podcasts to our YouTube videos to our articles, we talk often about the state of this market.
Ironically, after we spent time in this podcast discussing the unique employee market, I received a call within minutes of the podcast ending from a client. He was calling to tell me that a role we filled in California is open once again: Never a good call to receive.
Help us fill this Executive Director role. Drop us a note using the form below, or call us, to discuss.
If the outdooors in the beautiful Great Plains suits you better, help us fill this Director role.