By Jordan Miller, Contributing Writer

Facilities managers play a vital role in identifying the infrastructure needs of the healthcare system and ensuring facilities are aligned with current and future healthcare demands. Tapping into a facilities manager’s deep understanding of building conditions, operational requirements and future needs can help public healthcare system leaders navigate the challenges of rising costs, changing demographics and technological advances while ensuring infrastructure investments align with current and future healthcare demands.

Having the ability to develop comprehensive infrastructure plans and effectively evaluate funding options enables healthcare organizations’ leaders to make more informed decisions about project prioritization and resource allocation.

Government funding

Healthcare systems — particularly government-run or affiliated ones — rely heavily on public funding to support operations and capital expenditures, so facilities managers must be familiar with the programs and policies. Because government funding is often tied to compliance with specific regulations, such as Medicare, Medicaid and Affordable Care Act provisions, managers must ensure all infrastructure projects meet these regulatory requirements, which directly affects the organization’s eligibility for funding.

Facilities managers also need to look at the opportunities for funding from municipal, state and federal grants because they are often earmarked for healthcare infrastructure improvements, particularly in underserved areas, and are a reliable source of funding.

Outside of government budgets, other government-driven funding options are available for public healthcare systems to leverage. Municipal bonds allow public health systems to secure large amounts of funding upfront for capital projects, and some municipalities implement special levies or sales taxes to directly support their public health systems. Some local governments also use property tax revenues to support infrastructure projects.

Often, having facilities managers engage with the community or local government bodies to educate and inform these stakeholders about the need for infrastructure funding can be an effective strategy to garner financial support for a project.

Alternative financing options

Public healthcare systems are getting more creative in finding funding resources for infrastructure projects. In recent years, public-private partnerships have emerged as an innovative approach to healthcare funding. These arrangements allow private entities to invest in public healthcare infrastructure, often in exchange for operational rights or a share of future revenues. The partnerships can provide much-needed capital for large-scale projects while leveraging private-sector facility management and operational expertise.

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Healthcare systems also can leverage revenue bonds as another financing tool. Unlike general obligation bonds, which are backed by government tax revenue, revenue bonds are repaid through a healthcare facility’s future income. Using that approach, an organization can undertake major capital projects without placing an additional burden on taxpayers.

Though public healthcare systems often operate on thin margins, allocating part of any operational budget surplus for capital expenditures is also an option. Healthcare systems sometimes set aside capital reserves to build a fund to finance large construction projects over time.

Another alternative financing option is to embark on philanthropic and capital campaigns. Many hospital systems establish foundations to actively engage in fundraising efforts, tapping into the goodwill of individuals, corporations and charitable organizations to support capital improvements and other infrastructure projects.

State and federal resources

State and federal agencies that work with public healthcare systems offer various health-specific funding options. It pays to become familiar with these programs and the way they can support a healthcare system. Low-interest loans from the U.S. Department of Housing and Urban Development or special programs like the U.S. Department of Agriculture’s Rural Development program offer financing options, particularly for underserved areas.

Government healthcare programs are another source of funding. For example, the Affordable Care Act provides opportunities to secure loans to expand public health infrastructure. Medicare and Medicaid funds are another option, and they can be allocated toward capital improvements, especially if the projects contribute directly to patient care.

Importance of infrastructure investment

Investing in healthcare infrastructure is important far beyond a healthcare system's revenue potential. Modern, well-maintained facilities are essential for delivering high-quality patient care, attracting top medical talent and adapting to rapidly evolving medical technologies.

Since outdated or poorly maintained facilities can negatively affect patient care, facilities managers must focus on improving infrastructure to reduce risks such as infection rates, equipment failure and patient safety. Their efforts in modernizing facilities can lead to better patient outcomes, which is a key focus of infrastructure investments.

Neglecting infrastructure investments can have negative financial implications in the long run. Aging facilities often incur higher maintenance and operational costs, which can lead to lower reimbursement rates due to poor patient outcomes and satisfaction scores, creating financial challenges for organizations.

Funding public healthcare system projects is complex and requires a multifaceted approach, combining traditional government support with innovative financing methods and community engagement. Healthcare systems increasingly seek to forge stronger partnerships with their communities.

For any funding to succeed, facilities managers must ensure that investments in infrastructure are sustainable operationally and financially. This involves selecting cost-effective, energy-efficient solutions and managing long-term operational costs, such as maintenance and repairs, to avoid future financial strain. Prioritizing sustainable funding and strategic infrastructure investments will ensure that healthcare systems remain robust, resilient and ready to meet the evolving needs of patients for generations to come.

Jordan Miller is associate principal and resident manager with Rider Levett Bucknall’s Denver office.