Overview. The Power of Design Build Through the Owner s Eyes. 1. Sharp HealthCare. 2. Why Design Build? 8/25/2011

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1 Overview The Power of Design Build Through the Owner s Eyes 1. Sharp HealthCare 2. Why Design Build 3. Owner Expectations 4. Sharp s Design Build Program 5. Health Care Reform? Pat Nemeth, VP Facilities, SHARP HealthCare September Sharp HealthCare Not-for-Profit Largest Health Care System in San Diego 4 Acute Care & 3 Specialty Hospitals 2 Affiliated Medical Groups, w/ 26 MOBs Full Range of Programs & Services Health Plan Largest Private Employer in San Diego 18,000 Employees 2,600 Affiliated Physicians 2,000 Volunteers 2. Why Design Build? Time is Money. Partnership beats conflict any day! Shared risks bring shared commitments. Together we solve problems better. Doing the right thing is our shared chorus. Design Build is not an alternate means of delivery. It is the superior means of delivery! 4 1

2 Design Build Built on 4 Big Ideas Becoming a Design Build Advocate 1. Work is bid to a Maximum Allowable Contract $ 2. General Contractor is responsible for the drawings and code compliance Architect works for General Contractor 3. Concurrent tasks whenever possible 4. Owner is responsible to control changes or $ 5 ct Awarded Contrac ion Demoliti tions Foundat Topping Out 1/04 1/05 1/06 1/07 1/08 9/08 2/09 Site Demo Structure Construction Commissioning Permitting Exterior Interior S. Bracing te Comple n Move In University of California, Irvine New Hospital in Orange Hensel Phelps & HOK Total Project Cost $427M ½ M SF, 19 ORs, 251 Beds 6 UCI New Hospital 3. Owner Expectations Through the Owner s eyes, let s drill down through each major phase: Bidding Permitting Construction 7 8 2

3 What does the Owner look for during Bidding? 1. Tell us more: Are you giving back more than the RFP? 2. Demonstrate your expertise: Have you done this type of work before? Has your team done Design Build? Who will do the work? Do you know infection control? 3. Be fiscally responsive: Come in under the MAC (Maximum Allowable Contract $) Identify VE items if needed Let the Owner know if there are problems 4. Be a good partner: Do you have a history delivering projects on time and within budget? Do you have a history of claims or litigation? 9 10 What does the Owner look for during Permitting? 1. Great design enables great Health Care! Be creative & know the Code 2. GC needs to manage the DB Team Use 3D & get the subs involved early Bird-dog the clock 3. Partner with the Owner on all regulatory submittals What does the Owner look for during Construction? 1. Discipline: Weekly Coordination Bulletins Milestones & Schedule Recovery Quality Control Monthly Zero Cost Claims Review 2. Partnership: Fairness & settle as we go Do the Right Thing for the Project

4 Partnership What does that really mean? The Owner sets the Terms for the Partnership Who do we think we are? How do we expect our partners to perform? What is your Leadership model? The Owner s Job 4. Sharp s Design Build Program Establish the program Make timely decisions & timely payments Select the Medical Equipment (ASE) Procure Owner Furnished Equipment on schedule & provide JIT delivery Manage & resist last minute changes that will blow the schedule and the Budget Help the project succeed with the regulatory agencies Coordinate site communications & logistics Be fair Transitioned from Traditional to Design Build in Design Build contracts awarded to date, with total construction value of ~ $120 M 1 st project completed 1/

5 The Overall Process The Bidding Process Develop Program & Business Plan Establish Budget Pre- Schematic Drawings &Cost Estimate Bid & Award Complete CDs, & Permit Construction Pre-Qualified Bidders 4 Firms will be invited to Bid Technical Proposals & blind evaluations Interviews Best Value Bid Architect Contractor Owner Best Value Bid Process Sharp s 2010 Five Year Capital Plan Step 1: Technical Evaluation + Step 2: Interview Blind 70 points 30 points = Step 3: Best Value Score Millions $173 Step 4: Max. Allowable Cost (MAC) in RFP Lump Sum Bid = Best Value Bid Total Capital Construction $407M $234 Step 5: Best Value Score Major Projects Routine Renovation & Equipment

6 Millions $100 The 2010 Five Year Plan Major Capital Projects - The Pipeline $75 $50 $25 $0 Sharp Funds for Major Capital Projects $234 M Metro Grossmont Chula Vista Coronado SRS Seismic Upgrades Central & South Tower Mary Birch Exp. 7th Fl Build Out Central Plant Column 6 Column 7 Surgery - D+T CT/Cardio Cancer Center Obs/ED Exp Inpatient Exp Downtown MOB Sorrento Mesa MOB Notes: 1. Does not include prior years of funding on projects 2. Does not include Prop G Funds Grossmont Healthcare District 21 Our Construction Pipeline Stephen Birch Build Out 7 th Fl. Beds Hensel Phelps & NBBJ Completed Mary Birch Major Remodel 5 floors Add 23 NICU beds & 14 women s Beds Swinerton & NTD Construction started in April Chula Vista ED Expansion Double size of ED Hensel Phelps & Yen Construction 60% complete 22 Our Construction Pipeline Our Construction Pipeline Memorial Hospital Chula Vista Cancer Center Design Build Finance 48,000 SF Construction started in February Makena Medical Buildings Reese / Kitchell & NTD SRS Downtown MOB 66,000 SF Construction started in June Rudolph and Sletten & AVRP 23 SRS Sorrento Mesa MOB Tenant Improvement Build Out PBG & AVRP Construction started in September South Tower Central Tower Seismic retrofit of 2 SPC-1 buildings to SPC-2 In permit review Swinerton, GKK & KPFF Construction to start in January

7 Our Design Pipeline 5. Health Care Reform &...? Metro Campus Central Energy Plant Chula Vista California On average Medicare and Medi-Cal represent 51% of the revenue stream for Hospitals Pumps, Piping & Controls Efficiency Modernization Design Build Bid in process Master Planning New Acute Care Tower of Beds, Parking & Central Plant Project on Hold Big Trends that effect demand for Beds Pay for Performance Growth in Demand Increase enrollment 31M Americans Demographic impact of aging Baby Boomers Countering Forces Proactive focus on continuum of care, stay healthy services Electronic Medical Record Medical Advances Improved Outcomes 3 Big Measurements: 1. Clinical Outcomes 2. Performance Improvements 3. Patient Satisfaction Revenue Outcomes Reimbursements tied to performance Benchmark begins this year Decrease revenue by 2% / year, up to 6% in

8 Sharp & HCR Sharp & HCR Great Head Start Malcolm Baldrige Winner (1 of only 12 award winners) Integrated Delivery System Measuring Outcomes is our middle name Patient Satisfaction is The Sharp Experience Applicant to be a Pioneer Accountable Care Organization Yet 60% of our payer mix is Medicare & Medi-Cal Decline in Capital likely Bed projects on hold MOBs assessed for higher utilization Remodels more likely than new Our challenge in the The design Power & of construction Design Build industry Through will be to the be smart, Owner s efficient, Eyes and aggressively collaborative. Pat Nemeth, VP Facilities, SHARP HealthCare February 2011 Sounds like Design Build to me! 31 8