Deferred Maintenance vs. ESG Investment – Where do we Start?

Hello, and welcome to today's webinar, deferred maintenance versus ESG investment, where do we start? My name is Regina Costantino, and I will be your moderator for today. Our speaker is Mark Mockel, strategic account executive at Brightly, a Siemens company. Before joining Brightly, Mark was a cofounder and senior vice president at Facility Health Inc, where where he was instrumental in introducing new infrastructure investment solutions and benchmarking capabilities to the health care industry. Mark has an MBA from the University of Michigan, has held executive leadership roles in multiple industries, providing a unique perspective on the challenges facing health care facility management today. As an advocate for increased infrastructure investment and a candidate for the ASHI National Advisory Board, Mark is passionate about sharing his experience with all who serve and are served through the environment of care. Before we begin, I'd like to remind the audience to please feel free to submit your questions via the question and answer feature on your webinar toolbar. Our speaker will leave time at the end of the presentation to address questions. Information on how to view the recording of today's webinar will be sent in a follow-up email. And now I'd like to turn it over to Mark. Thank you. Thank you thank you, Regina. I appreciate the introduction. I appreciate everybody joining today. It's a pleasure to speak with you all. Wish it could be in person, but I'm glad we're able to do this virtually. So we're gonna talk today about deferred maintenance versus ESG, and and talk a little bit about infrastructure investment. A lot of the content that we're gonna share today has actually been shared in previous webinars. Why is that? Well, the challenges of infrastructure investment in our industry have been with us for many, many years, highlighted, of course, through the pandemic. So some of the things we're gonna talk about today will not be new topics per se, but reframing those topics in a way, hopefully, that you can take some benefit, to increase engagement with your nonfacility executive leadership. Again, my name is Mark Mockel. Pleasure to be with you today. My contact, contact information is here, will be shared with you as well. Please don't hesitate to reach out after the webinar if you have any questions or comments. So to phrase this up, I love this quote from Yogi Berra. If you don't know where you're going, you'll end up someplace else. And the reason I frame that is to reset the way we think about infrastructure investment and look at this in a more strategic lens. It's not just about next year's budget cycle. It's about creating a dialogue with your entire leadership team. Where are we now, and where do we wanna be, and how do we get there? Learning objectives for today, we're gonna touch on four key areas. We're gonna talk about strategic asset management, what is it, and why is it important. I'll walk through six key steps required for strategic asset management optimization and how you can lead your teams, through those steps. Gonna focus on asset driven budgeting and forecasting. How do we leverage data and benchmarking to validate our investment needs? And most importantly, how do we align those investment needs with larger strategic initiatives already endorsed by your organizational leadership? That is a fundamental element here. We need to reach out, beyond just our facility teams and engage with our nonfacility leadership about the strategic importance of the work that we do. So let's step back for a second. Go back to to twenty twenty one. I had the privilege of speaking at the ASHI annual conference with Matt Steen from Novant Health and Jonathan Flannery from ASHI and and we were talking about infrastructure investment in a different way. Some of you may have seen this presentation or similar, presentations with buckets, and we talked about how money flows through facilities. How do we itemize and track operational budgets, compliance budgets, and so on and so forth? But the key thing that we were talking about was redefining the concept of deferred maintenance and, once again, looking at the financial side of facility management. And we made some predictions in twenty twenty one. We noted, first of all, that infrastructure aging has been with us for over two decades, and the data shows and the ASHI data shows that we've underinvested in our infrastructure for many, many years. In the throes of the pandemic, we also predicted that securing or allocating needed funds was going to be more difficult, not easier. And I remember in the early days of the pandemic, we would say when things return to normal. And the fact is that normal was not sufficient. And we know today that the lagging economic factors from the pandemic are still with us. So we focused on transforming our thinking. How do we promote the strategic importance of our facilities? One thing that we missed, we underestimated the impact of reduced operational spend in the facility infrastructure. Obviously, we tend to focus on capital investment. That's a a a passion of mine. But what we saw during the pandemic is at at times when capital was frozen or very difficult to secure, we also saw increasing pressure to reduce staff, reduce FTE, furlough, etcetera. That operational impact or that negative operational impact has had, is also impacting our aging infrastructure. And so we're going to look at this holistically today when we talk about infrastructure. A quick, quick reminder on the buckets. What we really set out to help identify is the concept of nondiscretionary versus discretionary spend. Compliance, energy, general operations, the blue buckets in the middle, that is the foundational element of doing business. If we're going to open our facilities to treat patients, there are certain things that we have to do to perform, and keep the facility running. We also have variable costs in the form of break fix, repairs, failures that that may take place in the, in the environment of care. And when we're spending money in these yellow buckets, we're not really improving the facility. We're just restoring operations to whatever the level was prior to that failure. What that leaves us with then is the green buckets where we have variable cost. It is discretionary, planned replacements, that's capital, but also investments that we can make operationally for preventive maintenance, for reliability centered maintenance, additional inspections, calibrations, and and and improvements that we can make to the facility. It's these green buckets that are often lost in in the shuffle, so to speak. When we see budget cuts, capital or operational, these green buckets are the first to go. And, unfortunately, it's these buckets that can provide the most value in increasing the lifespan, the stability, and the efficiency of our hospitals and senior living facilities. So this next quote, I looked for a quote. I couldn't find one, so why not make one up myself? Managing a facility is different than maintaining a facility. And so what we're really focusing on and with the bucket concept is how do we build budgets? How do we, appropriately allocate our staff? How do we take the engineering knowledge and expertise that we have in our facility teams and rearticulate that into management speak so that we can engage with our nonfacility leadership in a more effective way. So let's bring all this together. The elephant in the room, ESG. So in many cases, in many parts of the country and I've had the privilege of speaking at over forty conferences in the last several years. I visited hundreds and hundreds of health care facilities in all, parts of the country. ESG has a very different connotation depending on where you are and what it might might mean to your organization. So what is ESG? Environmental, sustainability, and and, essentially, the g I'm forgetting the g even as a governance. Right? So we're talking about investment that impacts environmental performance, sustainability, and then governance, meaning what investments can we make in our communities that will better not just the health care facility itself, but the communities that we serve. Now when we talk about ESG, again, people have different ideas of what it might mean. What I can tell you is that in different states, in different parts of the country, some some parts of the country are moving faster into ESG legislation, whether it's decarbonization, energy savings, or other investment needs. So ESG is either the light at the end of the tunnel or it's the headlight of the train that's about to run us over, But it is coming, folks, and I think it is important to understand and prepare our organizations financially so that we have the information available to make good sound management decisions on how we implement ESG, investments. Now back in, twenty twenty or twenty twenty two, sorry, there was a lot of press about the health sector White or the White House pledge and health sector leaders pledging to reach certain reach certain greenhouse gas emission standards. Many organizations signed on for this. Some fifty plus health system, health systems and hospitals signed up for this pledge. In my opinion, this created both a great opportunity for us to engage nonfacility leadership, and it's also created a lot of misunderstandings about what this means. Now for the facility folks on this call and from in the for the engineers, we know that many of these initiatives are impossible to meet or very difficult to meet without very significant investment. And depending on what part of the country that you may live in, the business case does not stand up to scrutiny. But the most important thing to understand is that unless we build a business case so that we understand what investments require and what are the financial implications of that investment, We're just having a subjective argument, and that's the key thing I wanna take away. I'm not advocating for or against decarbonization or sustainability or any of these great things, that could impact us all, but I'm simply stating, let's build a business case so we understand what we're dealing with. So I like to use visuals and analogies as we talk through this. So whether we call it ESG or whether we call it a watermelon, at the end of the day, we all want new, efficient, and highly capable facilities. So I'm gonna use this case of the Toyota Prius to tell the story. Now I used this in a conference just some weeks ago, and I actually got some negative feedback, from a certain individual. It says I don't like Priuses. I said, okay. That's fine. It's not about Prius. It's not about hybrid. It's not about batteries or whatever. Maybe it's just a new pickup truck. The point is we all want and desire new facilities. We want upgraded equipment. We want the most most modern safety standards integrated into our facilities. But yet many of us are driving one of these. So this is a nineteen seventy seven Chrysler, and this is a picture of this car sitting in my driveway. And a couple of about five years ago, I made a poor parenting choice. I loaned money to my stepson so that he could buy this car. Now it's a beautiful car. If you like, seventies automobiles, for any of the older folks in the audience, you'll understand this. But my stepson tried to use this as a daily driver, and he quickly became frustrated by the fact that it burned considerable amounts of fuel. It was in the repair shop all the time. The air conditioning didn't work and so on and so forth. And so what I had to remind him is no matter what, without significant investment, this car could never run better than it did when it came off of the assembly line in nineteen seventy seven. Now the analogy here, folks, is a lot of our facilities are fifties, sixties, seventies vintage. Or even if their, some equipment has been upgraded, you may still be operating assets that were, designed and installed in those decades, which means without significant capital upgrade, it's impossible to achieve modern performance and modern efficiency if we're still using equipment that is some thirty, forty, or fifty years old. So I hope you can appreciate this analogy. It's just a different way to tell the story, and I'm sure that many of you understand and are dealing with on a daily basis the very situation that we're describing. So let's take some perspective. We go back to nineteen seventy seven, this is the first MRI full body scan. Doctor Damadian there on the left, and it was part of inventing this technology and bringing it to market. To me, this looks like a medieval torture device, and we would never allow our loved ones today to be diagnosed with a piece of clinical equipment from the nineteen seventies. From an IT perspective, Apple was incorporated in nineteen seventy seven, and the Apple two computer was brought to market. We would never allow our patients or our health systems today to use such obsolete information technology. So where am I going with this? In virtually every other part of health care today, we have this concept of planned obsolescence. We often replace equipment in clinical engineering or IT that is otherwise functioning fine, but it's not up to date with current security standards, performance requirements, or even capabilities. But yet on the infrastructure side, we seem to ignore this concept. This is a picture of a generator that was installed in a hospital in the United States in nineteen seventy seven. For those of you that are into this, it's a good old two cycle Detroit Diesel six v ninety two. Does it work? Yes. Is it efficient? No. Is there a higher risk of breakdown? Yes. It's a fifty year old piece of equipment, but that generator is still in service today. And that brings us to the concept of deferred maintenance. What is deferred maintenance? Well, I like to define it so so that we have a clear canvas that we can work from. Deferred maintenance are infrastructure assets that have exceeded industry expected useful life based on either age or condition. These assets are not in imminent failure mode, but the age of the equipment is an accumulation of risk or indicates an accumulation of risk. So they should be evaluated carefully for renovation or replacement. And communicating the objective reality of deferred maintenance is not something that we should be afraid of. We don't always do that well in our industry. So one of my passions, if you will, is to make this objective reality known to all in the industry. It is a continuous reality. Now going back to that generator, obviously, to remain in service, it's being tested monthly. Right? We're doing the annual inspections, the triannuals. And so it may be performing just fine. I have to presume that it is if it's still in service. But we require data and documentation to show that. But no matter what, just like that nineteen seventy seven Chrysler, it may be running fine around town, but we don't wanna drive our family to California in it. So, really, what it comes down to is what level of risk are we willing to assume, with our leadership. Final comment on deferred maintenance. I like to rethink of this as facility debt. It is not our position as facility leaders to tell the CFO of our organization that they are making the wrong decision. But while we do have a fiduciary responsibility is to put the data in their hands so that when they make the decision to fund a new MRI instead of a a an air handler or a life safety a piece of life safety equipment, They are, in essence, borrowing from the life of the facility, and it is a debt that needs to be repaid. It won't show up on the balance sheet. It won't show up in the financial statements, but we all know that increasing deferred maintenance is a reality. So looking quickly at some national data from our database, what we're seeing now, and this is over a hundred thousand major mechanical, electrical plumbing assets, close to a hundred million square feet. We are seeing that on average, fifty four percent of the assets that we're tracking in this database have exceeded industry expected useful life and should be considered for replacement. That number was about forty one percent on the front end of the pandemic. So, again, the data is showing that the lack of financial investment, relatively speaking, over just the last three years is leading to a significant increase in age of plant or in deferred maintenance. Now what it allows us to do, though, is start to model what level of investment should be required. And we're seeing numbers in the range of three up to nine dollars per square foot per year would be the necessary capital investment, to address that deferred maintenance percentage and to drive that down. The point is we wanna talk not just about next year, but we wanna talk about the next ten years and work with our nonfacility leadership to affect that trajectory. And I must say here that the lack of preventive maintenance or reduced preventative maintenance increases the aging quotient of the of these assets. And so this is really a combination of not just capital investment, but we're also seeing that the impact of reduced operational spend is, expediting, if you will, the aging of our infrastructure. So coming back to these two concepts, deferred maintenance, my nineteen seventy seven Chrysler, and ESG investment, the Toyota Prius or the new Chevy Silverado. Where do you start? Well, the answer is you start with the data. These two things cannot be addressed individually. They should be addressed one and the same because we desire the new shiny things, but we're driving the old inefficient thing. But without data, again, you're just another person with an opinion. So that's where we wanna focus the next segment of this webinar. We're gonna talk about these six steps and define strategic asset management. So strategic asset management involves the management of the maintenance. So coming back to my quote, managing is different than maintaining. And we wanna look at the physical assets of an organization throughout each asset's life cycle. Now this is a people, process, and technology, play. Now, obviously, software and technology are a big part of tracking that, and that's what we do in our organization. But what we also do is spend a lot of time consulting, looking at the culture of the organization, and defining the business processes that allow us to properly, implement strategic asset management. It could be something as simple as if you take if a technician removes a pump, removes an asset from the facility and puts in a new piece of equipment, the business process suggests we need to make sure that we document that change so that we can start the new preventive maintenance on that new pump as soon as it's installed. So that's a cultural element as well. Do we wanna be reactive in our maintenance strategy? Do we wanna be preventive? Do we wanna be predictive? Right? So there's, again, business culture, business process, and then the application of technology. What we're ultimately trying to ask ask and answer are these three questions. How much should be invested to properly maintain the facility? Where should that investment be made to maximize performance and mitigate risk? And then how do we measure that performance, to document those improvements so that we can show our financial leadership that we're being good stewards of the financial resources they provide? So now let's walk through the steps. How do we build this business plan? Well, it's gonna start with your work order system, The CMMS system in your facility and, more importantly, the inventory that resides within that CMMS system is a hundred percent the foundation of everything that we're gonna talk about. If you or we if we don't know what's in our facilities today and we do not have that base line inventory data intact, every other decision that we make is going to be flawed. And that's gonna come back to my statement in the learning objective. What is asset driven budgeting and forecasting? We've done a little bit of a disservice to ourselves and that we benchmark everything against square footage. Well, one million square foot, as a one million square foot facility in downtown Chicago is gonna have a very, very different financial footprint than a one million square foot greenfield site in a rural part of the Midwest. East Coast, West Coast, very, very different. That's why we wanna focus on the assets. It's not about the square footage, folks. It's about the asset density, the vintage of those assets, the layout of the building, the service lines that are supported. But at the end of the day, it's the assets themselves that drive the workload. It's the boilers and the chillers that and the cooling towers that drive the energy consumption. It's the quality and efficacy of the building envelope itself that can can impact positively or negatively the the efficiency of those assets. It's the number of exit lights that drive the workload required to do rounding. So that's the concept of asset driven budgeting and forecasting. Start with that, idea in your mind, and I think it'll change that perspective. So where are you today with your work order system? Centralized, standardized, or decentralized? Do we have that accurate inventory? Are we accurately tracking our work orders in and PM performance? How are we doing and reporting our compliance and inspection, testing, and maintenance requirements? The point here, folks, is this is a good time to sit down with your maintenance teams and have a very honest and transparent, discussion. Where are we today? What do we need to do better, etcetera, which leads to the next question. Okay. Now that we know where we are today, where do we want to be? If we know that our inventory is not accurate, do we want to have an accurate inventory? I hope the answer is yes. Are we reactive, preventive, or predictive? But where do we want to be? So what we're starting here is a gap analysis. Where are we today? Where do we want to be? And this provides that safe place, I hope, to start engaging both with your teams, your maintenance management teams, and also your nonfacility leadership. Let's create a vision of where we wanna be, and then let's talk about how we get there. Now one important element, and this is a critical, critical part of health care today, and you see I've got examples of manufacturing, information, or data centers, health care, education, government, municipalities. Oftentimes, in organization, there are two different funding strategies. Why? Well, on the facility utility side, there is this, I think, a false perception that there's no return on investment. Now air handlers, boilers, and chillers will often not achieve the same direct return on investment calculation that, say, an MRI or a CT would. Why? Because I can bill directly against that CT or that MRI. I can't bill patient revenue directly against the boiler. So understanding in your organization, how do they approach facility utility assets versus, quote, unquote, revenue generating assets? Now I think we know the answer to that. But I do think this is a great opportunity to reconnect with your leadership and say, okay. Understood. This MRI, the CT, etcetera, etcetera, we're doing direct billing against those, those assets. We're doing direct billing against operating rooms, but those operating rooms don't function without a without proper test and balance, temperature humidity control, which is provided by what? By the HVAC system. So the air handlers, the VAVs, all the different elements that make up that HVAC system can be linked in some way to the revenue that those spaces preserve. So I bring this to your attention just to to, I guess, ask, you know, document and define, have these discussions with your leadership so that we can better align the facility utility assets. So we'll take the clinical engineering assets. We'll put them to the side, and we'll just again focus on, the facility utility assets. And this is the tough question. Do you know what assets you have and how they're performing? This is, again, coming back to inventory validation, possibly the performance of a facility condition assessment by a third party or by yourself. Location hierarchy. Do we know the make, model, serial number, and engineering capacities of our assets? Do we know when they were installed and what their expected useful life is? I call this situational awareness. And what we're essentially doing is making sure that we have a firm handle on the facility as it sits today. Then we wanna move and talk about prioritization or risk and criticality. Now this is a framework that we use. There are many out there. There is no right or wrong way to do risk, assessment, except to make sure that you're compliant with NFPA ninety nine version two thousand twelve, which is an accreditation requirement. The way we do risk ranking and criticality criticality at Brightly is we wanna look at four primary elements. What type of asset is it? How what is the risk if that asset were to fail? What type of maintenance is required? And then what type of redundancy is available? In this case, what I'm focusing on is HVAC. Right? So we if we look at, a typical one million square foot campus. We might have fifty to seventy five individual air handlers. Some of those may be the exact same make, model, and serial number, and they might even have the exact same installation date. But one of those air handlers may serve a warehouse or a professional office building or a noncritical space. Another may serve an OR, ICU, or an isolation space. The point of this is all air handlers start out equal, but what we really need to understand is what spaces do they serve and thus make adjustments to those criticality scores. The thing I really wanna focus on here, when we talk to engineers and facility leaders, we talk about risk. Mostly, Pete, we think of probability of failure, and that's age, condition, work order history, preventive maintenance history, etcetera, etcetera, historical capital investment, that all speaks to the probability of failure. What this criticality score really focuses on is impact of failure. So it's just as important to know what spaces are impacted, what service lines are impacted as it is to know the condition of the equipment itself. So, again, I encourage you, where possible on the facility utility side, use your HVAC zone mapping, tie it to NFPA critical state. Again, it's a compliance requirement. We should all have this risk ranking in place or something like it. But linking the asset risk to the space risk is a great way to help prioritize that investment. So when we come back to that HVAC, and what we can look at is, in this case, a POV, a professional office building, We may derisk or or or deescalate, that particular air handling unit. It's a nonclinical use case, and there's little to no risk in case that unit were to fail. We may actually choose to run that unit to fail. Right? Again, that's a management decision. We may also look at HVAC in an acute or an isolation space. We're gonna escalate that individual unit to to infection control where injury or death is the possible outcome. Now we're not trying to be overly dramatic, and we're not trying to create artificial, excitement around it, but we all know that and and if we learned nothing else from the pandemic, it's the importance of controlling airborne pathogens in our health care facilities. So I encourage you to use this framework or use one that you may have in place. Use your fingers and your toes if you have to, but look for different ways to connect facility utility assets to nonfacility outcomes, whether it be patient outcomes, revenue goals, etcetera. Now, obviously, at the top of the list, we have our our our, defined life safety assets. A fire alarm, of course, is a, defined as a life safety asset, and it is required that we do risk ranking and we track performance of, not only that, fire suppression, emergency power, ATSs, and so on. That's part of maintaining deemed status, and and and so we do need to focus on that, obviously, for compliance and accreditation. The point is, folks, the best risk ranking framework is the one that you will use, that you will deploy, and that you will follow. It can be simpler than what we just presented. It can be much more complex. And what I'm here to tell you is choose one that you will use and deploy. You can always add. You can always evolve as your organizational maturity evolves. But it is so, so important to follow industry guidelines if those are available. But most importantly, engage your leadership. What is important to them? If decarbonization or energy reduction is an important strategic goal for your leadership, incorporate that into your risk ranking. It is entirely appropriate to identify those assets that are known to be most inefficient from an energy perspective. They're the most aged in terms of, you know, potential failure risk. Maybe we're still running air handlers with pneumatic controls. I would highlight those all as risk or criticality inputs and say, this piece of equipment with pneumatic controls is only going to perform this way. Right? It's that old Chrysler. But if we upgrade and we install new capabilities, we put a fan wall instead of the, the the legacy equipment. We install variable frequency drives. There's so many different, technologies that can be deployed that will increase the efficiency of that. So, again, look for ways to engage your leadership. So when you ask the question, have you applied standardized risk ranking for your facility utility assets? Again, right now, this big gray box is all of the inventory. But when we apply the risk ranking, what it does is it gives us the ability to isolate those different asset classes. Life safety, radiology, etcetera, obviously, that's gonna be at the top of the list. Joint commission or d m DNV or any other accreditation bureau from CMS itself tells us we have to manage those assets in a certain way. And those are excluded even from any AEM, alternative equipment maintenance and management policy. But everything else, starting with the high risk assets in the yellow, the green, and the blue for moderate and low, it's up to us now as facility leaders to determine how do we want to manage those assets. I like to use risk ranking or criticality to focus in on the yellow box. What are those highest risk assets that are not governed by CMS guidelines per se, but are so, so critical to the performance of the hospital? We may choose to employ a a very specific PM or reliability centered maintenance, strategy on those assets, and we may choose in the green or the blue boxes to do less maintenance. The point here is there is no right or wrong answer, but we wanna demonstrate to our leadership that we are managing our facility. We are making proactive choices about where we wanna allocate our resources, where do we wanna allocate our budgets, right, and what maintenance strategies do we wanna deploy based on this risk and and criticality. Some examples, HVAC, of course. HVAC for acute or critical spaces, highly, highly important. It goes without saying. Another element that I like to focus on is a roof or the building facade itself. If we have a roof, that's leaking on top of an acute or critical space, we're introducing so much risk from an infection control perspective. And as we all know, nobody wants to fix the roof. Nobody cares about the roof until it starts leaking. Right? So why not, again, use, this risk ranking to help identify those needs? Now in health care, as we know, PM optimization or AEM policy, if you're going to deviate from OEM or manufacturer's requirements, It's required that you perform a risk ranking assessment and that you document that AEM policy. So, again, from an accreditation standpoint, you can show that these were management decisions, we have the data, and we're justified in making these adjustments. So document, document, document. Now when we step back and put these six steps together, in talking about how we address these with with Brightly and with the solutions that we employ, On the CMMS side, we have what's called the WorksHub. That is a CMMS system designed exclusively for the health care industry, already incorporating all of the different compliance elements that are required. And then on the strategic asset management side, we deploy a solution called Origin. Origin is sitting on top of the CMMS. And what I wanted you to see graphically is that we're taking that operational data, that operational intelligence, which is our PMs, work order history, all of our compliance elements, and we're running it through these filters. We wanna understand what spaces do those assets serve. Right? We wanna be able to look at, facility utility assets versus clinical assets that may be tracked in the same system. But more importantly, we wanna filter this information based on risk and criticality so that when we look at our long term budgeting and forecasting in origin, we can actually see, where do we need to be over the next five or ten years. This is how we propose optimizing infrastructure investment. This is the Brightly solution. There are other CMMS providers in the market, obviously. The point is work with your provider. Work with, your consultants or your engineering firms. It is entirely appropriate to use the same strategy. Look at your operational data, apply risk and criticality so that you have the data in hand to really engage your leadership. So key takeaways from these six steps. It is important to define strategic asset management for your organization. Hopefully, I'm giving you some tips. In the information shown here, please take it and use it. I call it the playbook. It's not the answer, but it's been well tested in the market. So I hope it's helpful for you. Understand where you are today with your CMMS platform. Are you reactive, preventive, predictive? A little bit of the of of all? Understand understanding where you are is the key to determining how do you want to manage your facility in the future. Steps four and five, so, so important. Align your leadership align with your leadership. Sorry for the typo. Align with your leadership on your asset management strategy. If they're giving you certain budget allocations, be transparent. This is what we can do, and this is what we can't do. It's so, so important that we educate and communicate with our nonfacility leadership so that they, along with us, can make better decisions. And then install the appropriate business processes to maintain that inventory accuracy over time. I can't speak to it enough. Most CMMS systems fail not because of features and functions. They fail because the inventory itself, the efficacy of that baseline data deteriorates over time. And when that happens, once the organization, once your technicians start to lose trust in the system, it's it's very difficult to recover from that. So, again, focus on those business processes. Encourage your team to use the technology in a way that makes their jobs easier. Not to be big brother, but to show how important it is that they record their work efforts so that the organization can make better decisions. And then install the business processes that incentivize people to do the right thing versus creating overly burdensome tasks and schedules and so on. And then finally, apply standardized risk rankings for your assets and to prioritize those requests. And and that can be used, again, both on the operational budget and the capital budget. And I'll say it one last time. The inventory, the asset driven inventory, budgeting, and forecasting is so, so critical. So let's summarize. What does asset driven budgeting and forecasting business outcomes. So when we're talking about a particular asset, a particular capital project, or even a system, What is it? What does it do? Well, we can say we need a million dollars to replace air handler twenty one. Well, nobody cares about air handler twenty one. What does it do? Air handler twenty one supplies air, temperature, and humidity control air to operating rooms one through four. Why is this important? Because we have to monitor those conditions in order to perform procedures in a safe and compliant way. What's the risk or impact if it fails? Well, in the best case, we're just impacting revenue. In the worst case, we could introduce infection control issues in a particular suite or or complex of suites. How does it align with other initiatives? Well, we're in the health care business, and our ORs and our critical spaces are a hundred percent required to perform the very medical procedures that we want to in our communities. So I could go on and on. Chilled water pump. What is it? It's a pump. What does it do? It circulates chilled water through the facility. Why is it important? That's how we, again, control temperature and humidity. So for each asset, whether it's a an air handler, a pump, an expansion tank, a chiller, a boiler, etcetera, look for ways to construct a value chain so that we, again, focus on the impact and how and the alignment of that infrastructure. I like to say this. Every asset was installed for a reason. We didn't put pumps in buildings that don't serve critical needs. So why was that asset put in a building in the first place? And follow the chain and hopefully create that business outcome discussion. As we start to wrap up, looking at benchmark data, there are numerous benchmarks in the industry. ASHI has published guidelines. For example, I think it's one FTE for every thirty one thousand square feet. Excuse me. IFMA just released a new health care benchmarking article that you can access. There are a lot of consultants that are offering benchmarking. And I always say this, benchmarking is an answer. It's not the answer. If you're asking an external consultant or you're ex you're looking at ASHI data or IFMA data and you want somebody outside of your organization Because without context, benchmark because without context, benchmarking will raise more questions than it solves. I've heard of countless times when when somebody got a hold of a benchmark. Every facility is different. Results obtained from your benchmark information will not necessarily be repeatable for other facilities. Right? Even within a health system, every hospital is different. So my point here, follow the six steps. Validate your inventory. It is imperative that you understand your own data first. Benchmark yourself before you start comparing yourself to other sites or published benchmark information. You'll save yourself a lot of trouble on the back end. So kind of to wrap this up, when we talk about what we're trying to do, I love these basic questions. And these came to me not isn't my content. This is a friend of mine who manages a facility down in in the southern part of the United States. And we were talking about this, and he said, it's really simple, Mark. What assets do you have? How old are they? How are they performing over time? How much are you spending to maintain those assets? What is the risk or criticality if they fail? What's the impact of that failure? How much will it cost to replace them proactively versus reactively? And then how much energy? Right? Now the punch line of this is what he said to me. If you're going to the big table, if you're going to ask for money, if you're going to ask for increased operational budget or increased capital budget, and you can't answer these basic questions, then you deserve to get thrown out of the room. Now that's a harsh statement, and I'm not trying to be overly dramatic, But I love the gravity of that and saying, if I can answer all of these questions, then I am properly managing my facility. I may not get the money that I need. The answer may still be no, but at least I am presenting the full business case to my nonfacility leadership so that they can make a more informed decision. Now, obviously, we'd like to see, we'd like to move away from Excel and PDF and paper and analog records, right, and leverage strategic asset management capabilities. Let's leverage the technology that we have available today to compile this data and present it in a more efficient manner. And so I come back to these national standards and this national data that we're holding. And then I share with you an example of a and this is a fictitious name and location, but this is a real customer dataset. In this case, we're looking at a three point three million square foot portfolio. It's a main hospital with some rural locations. Sixty five percent deferred. So in this particular case, with for seventeen or eighteen hundred assets, we can now sit down and have a dialogue with the nonfacility leadership and say, sixty five percent deferred. Now people ask me, what is the right percentage? And my answer is, in typical consulting fashion, it depends. I can't tell you what's the right level of risk for your organization. But what I can tell you is it's most important to understand which assets are in this sixty five percent deferred. If it's known that these are noncritical assets and we're choosing to run to fail, maybe it's not so bad. But if I see fire and life safety assets, fire alarms that are no longer supported by manufacturers, right, then we have a real issue. So it's the combination of deferred maintenance, risk and criticality so that we understand what's in that deferred maintenance. So, again, we can articulate with data. So three impacts as we wrap up. I think I've hammered this enough. Criticality and risk. Right? We we're tying our facility operations to revenue, patient care, and life safety. Planned and preventive maintenance completion, and this is the the performance of regularly scheduled maintenance activities. There is value in properly and proactively maintaining equipment. It extends the life of equipment. The more operational money we spend today actually reduces our long term capital needs by, again, extending the life and the quality of that equipment. That can be used to defend FTE justification or FTE and operational budgets. And then finally, looking at energy and operational efficiency, understanding where we're spending our money and why and and and what efficiency gains can we make. And I again, this is where I tie it right back to ESG or decarbonization. Using these different levers to to redefine the business need for, infrastructure investment is so, so critical. And I'll wrap up this with this little quote, I love it, from this gentleman, former CEO at Netscape. Some of you may have CF no's or CFOs or CEOs or COOs that you've ran into this. But I love this quote because what he's saying is if we have data, let's look at the data. If all we have are opinions, then let's go with mine. My point here is, folks, if we bring the data to the table, whether it's deferred maintenance, decarbonization, energy, revenue, patient safety. If we can defend our requests with data, we stand a much better chance of building that relationship. So in in wrapping this up, I also, want to take just a moment, inform the group. I am running, as Regina mentioned, I am running for the ASHI National Advisory Board. Would very much love your support in that regard. All of the topics that we've talked about in this webinar, and if you've heard me speak at conferences in the past, this is absolutely the reason why I wanna be part of the board. I believe that ASHI itself can do, more work in the industry to not just educate our membership and work within the ASHI membership, but to advocate for financial improvements, in in our industry, engagement with the American Hospital Association, engagement with the American College of Health Care executives, and so on and so forth. When we look at the strategic goals for ASHI, I'm not gonna read through all of these, but we're talking about optimizing facilities, member inclusion, workforce planning, capital planning, sustainability. All of the ASHI strategic initiatives we're pursuing require the cultural and financial support of the organizations and the communities that we serve. We know how to run our facilities. We have the technology and the capability and the expertise. But if we don't get the proper financing, if we don't get the proper support from our administrators, executives, and c suite, executives. It's very it will be very difficult for us to achieve these objectives. So with that, I'll turn it over. We've got some minutes left. Regina, if we have any questions from the group, I'd be happy to receive those. Any questions or comments, please. Hi, Mark. Thank you so much. We do have a couple of questions, and I just wanna wanna take the time to remind those that are on here with us. If you do have a question, feel free to use the q and a, box at the bottom there on your toolbar, and, hopefully, we'll be able to get it to it today. And if we're not, we can definitely get that answer to you. Alright. So, Mark, the first question I have is you spent a lot of time on risk ranking. Our organization has struggled to get that done consistently. Do you have any recommendations on where the best place is to start? That's a a great question. So I've seen this in in many, many, situations. The best analogy I can use is something I heard from from an old, a friend who formerly served in the military. And he used a quote and said, we're here to defend democracy, not to practice it, as he's was speaking about his time in the service. And and I I I hope that analogy works here. A lot of organizations like to do and should do consensus based risk ranking, meaning, let's get all the stakeholders in the room. Let's get everybody's ideas on the table. But what often happens is designing risk ranking by committee by committee has some downsides. So, absolutely, include all of your stakeholders, but at some point, there needs to be some clear leadership to define where are we going to start. It's not so critical to have the most complex and perfect risk ranking framework from day one. I actually encourage more of a crawl, walk, run. Let's do our basic risk ranking first. Let's make sure that we're following NFPA ninety nine two thousand twelve standards. Let's start with that. And then we progress. Again, as we validate our inventory, as we deploy and use the risk ranking, we can always add additional factors over time, because the worst thing we can do is have a risk ranking policy that's written to perfection but never actually gets deployed. So that would be my advice there. Start simple and then grow into it as your organization comes on board. Great question. Perfect. Thank you. I do have another question. Mhmm. This one talks about organization, which I'm sure you've heard before. So in your experience, what is the right level of detail in organizing a CMS where we, like, where we currently have over thirty thousand assets in our system? Like, where's the best way to start with that organization of that? So at a minimum, of course, we have to track data at a level required from a compliance perspective. So that's very clearly defined, for life safety assets, the tracking of life safety components, fire alarm components, and so on. But beyond that, I would encourage, great question, by the way, I would encourage an organization to go to the level of resolution at which you're going to manage the facility. Now an example of that, I have seen I heard the number thirty thousand. I have seen organizations that are, you know, five hundred thousand square feet or less and literally are tracking twenty, thirty, forty thousand individual assets, putting asset tags on everything. I spoke with a facility leader one time, and they had every garbage disposal in the kitchen was an asset in the CMMS system. But they weren't doing preventive maintenance, and they really weren't performing work orders. If the garbage disposal failed, they just went and got a new one and put it in. So choosing a level of resolution that you're manage that you're able to manage is where I would stop. Another example, if you're going to dispatch one technician to do all the PMs on an air handler, then treat the air handler as an asset. Now is there a coil? Yes. Are there VFDs and fan walls? Yes. Of course. There are components, but I would configure the CMMS to the level that your management team and your technicians can efficiently respond. That will increase efficiency of the system. It will increase usage of the system. So we won't be overburdening our technicians with unnecessary detail, and it should then reduce the overall asset count to be more reflective of, again, how we wanna manage the facility. That's an awesome question. So thank you, Regina. Alright. Thank you. Thank you, whoever asked it. I think we have time for one more. Sure. Currently spending well below the capital numbers that you mentioned on a square foot basis. How is the best way to tee this up with my leadership? So I'm gonna go back again to the inventory. I think focusing on the amount without talking about the detail is probably not gonna change the game. So I would first talk about what what projects are in flight, how have those been prioritized. But the way I would tee it up and and I'll I'll get I guess I'll give you a quick quick story. So I was working with a customer some years ago, and they asked me a question. They said looking at the data in in the system. I have a cooling tower that's known to be deficient, and I have a generator that seems to be running fine, but is is fifty years old. I know I'm not gonna get money for both. How do I prioritize that? How do I communicate that? And the obvious answer is, well, if you know the cooling tower is deficient, that's that's a very high high there's a high probability that's a failure node in the in the facility, so we have to address that. But what I would do in presenting the capital project to focus on the cooling tower, I would also communicate at that same time with your leadership. We have this generator. It seems to be doing fine. The testing suggests that we're in good shape, but we really should consider this for replacement. I'm notifying you, mister or missus CFO. We're choosing, in this case, to request project funds for this cooling tower. But I also want you to know that we have potential issues with this generator or this ATS that we should address. I found that communicating objectively with leadership on deferred maintenance and sometimes it's what you're not asking for that will resonate more than what you are asking for. But in any case, what you're demonstrating is a management skill that you've already prioritized the investment, and you're presenting the data to the leadership. And you might, along the way, say, you know what? I do recommend not maybe full replacement of the generator, but let's spend a little bit of money, hire a service prior provider to come in and do a rebuild or or additional testing to make sure that we're not increasing risk. So, again, it's all in the data. That's a specific example, but communicating objectively, is the best way to to go. One of my mentors years ago told me in in dealing with difficult situations, always tell the truth. It's easy to remember, and it'll always stand up to scrutiny. And if you have data in hand, hopefully, that discussion, truthful and difficult, is objective, and will still be well received because now both people are looking at the same information. Long answer to the question, Regina, but I love the way that was framed up. So thank you. Well, thank you. And I do wanna just give a big thank you to you being our speaker for today. Before we conclude pleasure. I want oh, thank you. Before we conclude, I I wanna remind everyone that a recording with the webinar will be available soon. So just look out for that follow-up email with the information on the viewing of the recording, to come shortly. Thank you again, everyone, for attending today's webinar, and have a great day. Thank you.