Why Facility Master Plans Are Shelved

A shelf full of outdated facility master plans used to be a common sight in the facility manager’s office of a large medical center. These are often very thick documents with beautiful graphics that explain in great detail the phased stages of a multi-year building project. There are many reasons why these plans may not have been implemented but the planning process itself is a major factor.


Facility master plans first became popular in the era of cost-based reimbursement and when the acute care hospital was the primary setting for patient care. With unbounded growth projected, every hospital needed a master plan to ensure that the next building wing to be constructed did not preclude subsequent expansion options in the future — thus preventing the site from becoming landlocked. The traditional process focused on evaluating architectural options and prescribing a multi-phased solution to prevent disruption of critical hospital operations and to align with the availability of capital dollars. A 20-year planning horizon was not unusual.

Stack of reportsOver time, the development of a long-range facility master plan has become a lot more complicated. The evolution of multi-hospital health systems, continuing shift of outpatient care to lower-cost offsite settings, and the deteriorating financial condition of many hospitals are key factors. According to the American Hospital Association, over two-thirds of all community hospitals are now part of a healthcare system (AHA 2023). It is rare today for a facility master plan to be developed for a single hospital campus without considering the marketing plan, clinical service integration initiatives, physician recruiting, and various other strategies of the healthcare system as a whole. In addition, each campus must not only compete for dollars for facility upgrading and expansion, but hospital management must evaluate the trade-offs between investing in bricks and mortar versus new medical equipment, information technology, acquisition of physician practices, and the like. Expansion of services may not always result in new construction but may involve leasing space, creative partnerships or joint ventures with physicians, or investing in new technology that enables care to be delivered in non-traditional settings.

With tightly managed care, reduced reimbursement, and losses from providing uncompensated services, most U.S. hospitals lost money delivering patient care before the pandemic. According to the American Hospital Association (AHA), 2022 was the most financially difficult year for America’s hospitals and health systems since the start of the pandemic — with more than two-thirds of hospitals operating at a financial loss. Many expect these financial challenges will extend into 2023 and beyond and patient workloads are not expected to return to 2019 levels for several years (AHA 2023). This results in dwindling financial resources for investment in facilities. The AHA also reports that the median average age of the physical plant for all U.S. hospitals continues to increase. The lack of ongoing maintenance and investment in infrastructure often results in sticker shock when the hospital leadership is faced with mitigating code non-compliances — leaving little money left for renewal or expansion of existing space.


In the traditional facility master planning process, estimates of current and future space requirements were often translated directly into facility options that were represented by architectural drawings. A preferred design solution was subsequently selected. Renovation or construction cost estimates and a phased construction schedule were developed as individual projects were identified for funding approval. As part of the implementation of the facility master plan, the design architect was then commissioned to provide more detailed architectural drawings and to prepare construction documents.

Drawing of Hospital Master PlanThe problem with this approach is that alternative operational concepts are often evaluated (if evaluated at all) based on an architectural rendering rather than sound business principles and consistency with specific strategic planning and operational improvement objectives. This kind of facility master planning process where the planning team jumps prematurely into design, with the sole output being an architectural block drawing of planned future department locations, is no longer relevant given the dynamic nature of the healthcare industry. If market conditions change and workload projections do not come to fruition, resulting in one or more projects proving infeasible, or if department leadership changes, the entire plan is deemed outdated and shelved.

The gap between the identification of facility deficiencies and future needs, and the search for subsequent architectural solutions, should be bridged with a thorough evaluation of priorities and capital investment trade-offs. Consensus on the resulting capital investment strategy allows the planning team to begin a phased implementation of the facility master plan with confidence. They can readily alter their course as needed to reflect unanticipated changes in the market, reimbursement, regulations, and technology.

A long-range facility investment strategy provides a road map to guide renovation and construction (capital investment) over a defined planning horizon. It helps senior leadership to understand key facility issues and priorities facing the organization and to reach consensus on capital investment goals and objectives. It also aligns facility investments with the organization’s strategic business plan, operational improvement initiatives, planned information technology investments (IT strategic plan), and financial resources. Documentation of an agreed-upon facility investment strategy helps to educate physicians, employees, and other stakeholders relative to long-range planning goals and priorities. Unlike the traditional facility master plan, adherence to defined strategies allows for a dynamic process that does not become obsolete if one or more individual projects are derailed.


For example, a healthcare system may have an overall goal to provide additional physician office space on a specific hospital campus to enhance physician recruiting efforts, co-locate specialists who are currently dispersed, and improve customer convenience. The corresponding strategy may be to develop 40,000 gross square feet of new medical office space in a single location on the campus with flexible time-share space. The action (tactic) — or architectural solution — may be to acquire an adjacent property and construct a new medical office building with contiguous customer parking. If the planned architectural solution is derailed — for example, the acquisition of the specific property falls through — then another architectural solution can be evaluated to achieve the same goal.

A goal is a general outcome. A strategy is the approach you take to achieve a goal and an objective is a measurable step as part of achieving a strategy. An action or tactic is a tool you use in pursuing your strategy.

Many facility master plans do not clearly document the current facility issues and the agreed-upon priorities of senior leadership. The absence of defined goals and strategies, that drive the specific actions necessary to achieve each specific goal, makes it difficult to understand the rationale behind the architectural solution.


In today’s dynamic environment, ten years is the typical planning horizon for a long-range capital investment plan and it should be reevaluated and updated every couple of years — particularly when there is a change in leadership or when unforeseen factors occur. Buy-in from key stakeholders — the executive team, board members, physician and nursing leadership, and facility management — is also mandatory if the facility master plan is to be a dynamic document.


There are always unforeseen factors that can legitimately derail a facility master plan. Reimbursement and legislative changes can have a significant impact on capital investment decisions — such as the uncertainly today with the Affordable Care Act subsidies and Medicaid expansion. Priorities may also suddenly shift when a competitor launches a new initiative that could impact the organization’s market share (and revenue). Likewise, the closure of a competitor hospital may present a new opportunity. The emergence of a private donor who wishes to contribute a significant amount of money for a pet project can also be a challenge and derail priorities.


Now as a result of COVID-19, many projects in the planning or design stage have been put on hold while existing facilities are being used for functions for which they were never imagined. The American Hospital Association predicts that COVID-19 will usher in a new era of healthcare preparedness and change the way healthcare services are delivered permanently — including the expansion of telehealth, rethinking the emergency department, creating surge bed capacity, reevaluating just-in-time materials management, and altering circulation patterns to provide a safer environment for patients, staff, and the public.

Reference: American Hospital Association. 2023. Environmental Scan 2023. Washington, DC: American Hospital Association.

See related posts:

Consolidating Healthcare Facilities Requires a Unique Facility Planning Process 

Private Donors Continue to be a Challenge

Out of Space and Money? Creative Ways to Improve Space Utilization

This article is an update of a previous post.