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BUILDING CONTRACT AND CONTRACT DOCUMENTS The work on drawings, specifications and legal documents must proceed simultaneously. When they are complete in every respect and are accepted, the governing board calls for bids for construction. While advertising a contract, an established form is used which has by its continued usage become almost legal in nature. For this reason it is advisable for the hospital's legal adviser to approve the advertisement before it is released to the newspapers. The…




The work on drawings, specifications and legal documents must proceed simultaneously. When they are complete in every respect and are accepted, the governing board calls for bids for construction. While advertising a contract, an established form is used which has by its continued usage become almost legal in nature. For this reason it is advisable for the hospital's legal adviser to approve the advertisement before it is released to the newspapers. The plans and specifications which form the basis for bidding are secured from the architect, but the bids are delivered directly to the owners. A definite day and time is set after which no bid is accepted, and none opened before that set time.

The bids must quote definite prices for the authorized plans and specifications. If they are not made on this basis, they are not considered. A contractor may, however, propose alternatives in a separate proposal. On the basis of these bids, the contract is let. It is generally the accepted practice — can be a legal requirement in some instances — that the contract is awarded to the lowest bidder unless there are strong, sufficient and justifiable reasons to the contrary. It is not unusual for the owners to invite a few leading and responsible contractors to bid instead of floating open tenders through newspapers.

Once the contractor is selected, the governing board enters into a formal and legal agreement with him. The docunient should be carefully drawn by the legal adviser and should contain all the necessary ingredients. Building contracts vary from place to place, but they all have certain similar features and conditions. By and large, the contract document provides for the following.

• It .binds the ..contractor to construct the building according to authorized plans ant; specifications.

• It sets a time limit by which the contractor is to complete the building and turn it over to the owners.

• It provides for penalties to be paid by the contractor if the building is not completed by the stipulated time. The owners on their part may provide for payment of incentives or rewards if the work is completed before the time limit set in the contract.

• It places the contractor directly under the supervision of the architect far as  construction  according to plans and specifications is concerned.

• It provides for changes that may become necessary during construction. The costs of changes as approved are over and above the contract price. (Major changes should be formally approved by the governing board.)

The contract provides for part payments at specified stages of cbnstruccion on certification the architect. The final payment is, however, deferred for protection against possible liabili; or lien.

• It specifies the amount of insurance char the contractor should carry. (The owners must ensu that the necessary insurance is carried at all times; and when it expires, the policy must renewed in time. One way of safeguarding this is for the owners to keep the policy documen in their custody.)

• It provides scope for correction of work performed by the contractor. The cost of removir and correcting all work rejected by the architect as being defective is borne by the contractc

• It defines the circumstances under which the owners or the contractor may legally termina the contract before the project is completed.

• Lastly, the contract provides for the completion of the building and its being taken over the owners.

The last clause can lead to a tricky situation which the owners must watch out. The clause short be examined and written carefully. In a new hospital, the owners will find it necessary to commen installation of equipment and furnishings before the building is completed. Some contracts provi, that occupation of any portion of the building constitutes acceptance of the whole. Even if there no such stipulation, in case of a dispute between the owners and the contractor, a serious situati may arise. There must be good understanding and some kind of agreement between the two parri to obviate this problem. The agreement should be in writing and signed by the representatives the owners and the contractor. The furnishing and equipping of the hospital should in no w interfere with the work of the contractor.

On completion of the construction work, the building is formally taken over by the owners, al notice of completion is filed by their legal adviser or attorney. The notice of completion is necessa to protect the owners and the subcontractors. At the expiration of the lien period, the legal advi: has to examine if there are any encumbrances against the contractor. If the contract is completed the satisfaction of the architect, he certifies to the owners that final payment may be made to c contractor.

Following the award of the contract, the successful bidder commences work on the project. I may subcontract much of the work to other contractors. However, the overall responsibility re with the main contractor.

The "General Conditions" of the contract for construction prescribe the methods of administeri the contract and the responsibilities of the owners and the contractor regarding such import' matters as time schedule of payments to the contractor and bonds to be furnished by him, insurar to be carried and for what amount, protection of the owners against liens if the contractor fails pay his bills, and other legal provisions.

While in smaller projects, the architect himself may supervise the construction through frequi visits, in larger projects it is advisable that the owners employ a superintending engineer (proj executive) and several subordinate supervising engineers working whole-time on the project um the direct supervision of the architect. In view of the complexity of mechanical equipment in hospi construction, it is also desirable that a mechanical engineer is employed to be on the site full-time under the supervision of the architect to oversee installation of mechanical equipment.



Furnishing and equipping a hospital is an extensive undertaking — almost as extensive as planning and construction. Although the amount of money involved is not as much (except perhaps in high–tech hospitals), the degree and variety of technical knowledge required to accomplish this task are great. Almost every area is beset with problems — from the ordinary furnishings to the semi-technical equipment of the laundry, kitchen, electrical section and similar departments to the highly sophisticated and complex medical equipment. In addition there are innumerable expendable articles which should be procured and stocked in sufficient quantities.

In an existing hospital, purchasing new equipment presents no particular problem, except perhaps financial. Besides a purchasing department, there are well set mechanisms and procedures for establishing a need for an item of equipment in a department and for preparing specifications and purchasing. The hospital administrator, generally an experienced man, and his purchasing officer will easily accomplish this cask. It is not so in a new hospital. The problem is compounded by the timing of delivery, warehousing, unpacking, assembling and installing of equipment. These are as important as selection and purchase. If the equipment is to be imported, the procedure will be even more complex. There are approvals and licenses to be obtained, and bureaucratic hurdles to be crossed. The lead time will be longer. Lakhs and lakhs of rupees may be wasted, operating efficiency impaired and standards of patient care severely affected by not planning and executing any one of these phases properly and adequately.

It devolves upon the hospital consultant or, in his absence, the hospital adMinistrator who will have been engaged early in the planning stage, to determine all the items of equipment necessary for the hospital, to write or secure specifications wherever necessary, to call for and receive bids and to purchase or recommend purchases according to the policy of the hospital organization.

Equipment needed for a new hospital can be classified into the following three groups based on the usual methods of acquisition and on suggested accounting practices in regard to despreciation.

1. Built–in Equipment This is usually included in the construction contracts. Examples are cabinets and counters in pharmacy, laboratory and other parts of the hospital, fixed kitchen equipment, laundry (linen) chutes, elevators, dumb waiters, boilers, incinerator, cold rooms/walk–in coolers, deep freezers, fixed sterilizing equipment and surgical lighting. The planning and design c fixed equipment built into the hospital facility is the architect's responsibility.

2. Depreciable Equipment Equipment that has a life of five years or more is not normally purchase' through construction contracts. These large items of furniture and equipment have a reasonabl fixed location in the hospital building but are capable of being moved. Examples are surgia apparatus, diagnostic and therapeutic equipment, laboratory and pharmacy equipment, offic equipment, etc.

3. Non—depreciable Equipment Equipment having less than five years' life span is purchased throug other than construction contracts. These are generally small items of low unit cost under di control of the storeroom. Examples are kitchen utensils, chinaware, tableware, surgia instruments, catheters, linen, sheets, blankets, lamps, waste baskets, etc.

The consultant must prepare a list of all the items of equipment under groups 2 and 3 give above. The first step in preparing this list is to consider each room as a separate entity in the pla and prepare a comprehensive room by room equipment list which should include additional item that may be required for the hospital. Detailed specifications must be given. This task must b undertaken during the design stage itself. Working in close association with the architect, th consultant should test the space needed for each item of equipment on the list.

The selection of technical, scientific and medical equipment requires careful analysis of the need of each department and conscientious study that will result in the selection of equipment that wil best meet the needs of the department. The present day high-tech medical equipment is so min. boggling even to medical experts that the consultant or the administrator, being an unwary laymar may be easily stumped in the selection process. Department heads and staff members should be full satisfied with the type and quality of the equipment. For this reason, they should be consulted befot purchase. his not unusual, particularly in a new hospital, that a consultant has selected equipmen for a department only to find the chief user of the department rejecting it as unsuitable. Surve should also be made to ascertain as to how a particular piece of equipment is performing in odic places. Money often gets wasted by purchasing equipment that is either not utilized, or not full utilized, or is of inferior quality. All those who are involved in the selection and purchase equipment should exercise extreme caution and avoid procurement of equipment that will be a la or liability to the hospital.

Consultation with the architect early in the design stage is necessary so that the facilities planned al of sufficient size to accommodate the equipment. Instances of having to break the wall, door or window to let the equipment into the room are not uncommon. In one case, when it was found that the elevaa shaft was too small for a bed elevator to be installed, it was too late to take any remedial action.

The timing of the purchase order and of delivery is exceedingly important. Delivery instructior should be keyed to building completion schedules. If delay in construction is anticipated, supplies of equipment should be notified to defer supplies accordingly. Adequate arrangements for storai of equipment on the site should be made. These arrangements, while providing for protection again: weather, theft and damage, should also not interfere with the construction work. The deliver schedules should allow ample time to unpack, check and assemble the equipment and to install it properly in the finished building. Tens of lakhs of rupees will be wasted if this schedule goes haywire.





When the construction work is going on, concomitantly, the administrator and his team, with the assistance of the hospital consultant, if necessary, must. develop a written programme covering numerous documents, activities, policies, procedures, rules and regulations aimed at keeping the hospital in readiness to operate when it opens its doors to the general public. This will ensure smooth start and effective utilization of the hospital facilities. We list here some of the major items that should be included in the programme.

• Statement of mission and philosophy of the hospital.

• Organizational pattern of the hospital — governance and management structures —organizational chart.

• Administrative policies, rules and regulations for the proper operation of the hospital — policy manual.

• Organization of internal functions through appropriate departmentalization and delegation of duties.

• Establishment of proper relationships throughout the hospital including all major departments, and indicating them on the organizational chart.

• Medical staff organization, medical staff bye—laws, rules and regulations.

• Delineation of privileges of medical staff who are not hospital-based, full-time, salaried doctors.

• Employees' service rules, administrative standing orders.

• Qualifications and experience for all posts — medical staff, non-medical staff and employees.

• Terms and conditions of service, and policies on hours of work, overtime, holidays, absenteeism, tardiness, etc. Development of leave rules.

• Administrative responsibilities after regular working hours, on Sundays and other holidays

 • Remuneration pattern for medical staff.

• Emoluments — salary schedule and allowances for all staff members and employees.

• Statement on employee benefits — hospitalization benefits, provident fund, gratuity scheme, subsidized food and housing, free coffee and other amenities.

• Position descriptions, clear delineation of duties and responsibilities for managerial staff, and job descriptions for all other positions.

• Orientation programme, training programmes including in-service training programmes.

• Policies and procedure manuals for all departments.

 •Performance evaluation programme and preparation of evaluation forms for various categc of staff.

• Management review programme for managerial staff.

• Grievance procedure.

• Disciplinary action procedure — domestic enquiry.

• Development of a manual for supervisory staff.

• An effective appointment order form.

• Arrangements for a good and effective graphics and signage system.

• Obtaining necessary licenses, permits and documents — registration, tax-exemption certifi (if applicable), pharmacy license, blood bank license, narcotic and alcohol permits, boi inspection certificate, motor vehicles and ambulance registration, fire and safety inspec certification, no objection certificate (if applicable), licenses, approvals for x-ray radiotherapy departments.

• Arrangements for maintenance contracts for medical and other equipment, elevators, etc.

• Contracts for the supply of food items, milk, eggs, meat, drugs, fuel, x-ray films, linen, c hospital supplies, etc. and arrangement for laundry, garbage disposal, etc.

• With the assistance of medical staff/medical director, preparation of a hospital formulary

• Establishment of a disaster plan and procedure to follow in case of fire and bomb th Organize simulated drills.

• Establish public relations with civic bodies, organizations, news media, etc.

• Establish procedures for emergency room, admitting and discharge and for outpatient inpatient billing.

• Preparation and printing of hospital forms — medical and business forms — %/al outpatient, inpatient, medical record forms, prescription, doctors' order forms, and other fc

• Preparation of policy on visiting hours, patients, attendants and children visiting inpatii

• Arrangement for insurance — building, equipment, vehicles, etc. against fire, damage, t etc. and malpractice insurance.

• Schedule of rates and hospital charges for all hospital services, doctors' services, food se department, etc.

• Method of maintaining vital statistics for the preparation of records.and reports. • Establishment of accounting system and records.

• Arrangement for safe keeping of patients' valuables and hospital's cash.

• Establishment of banking procedures and a bank extension counter in the hospital.

• Institute internal audit and internal control systems.

• Planning and preparing a hospital budget showing expected receipts and expenditure.

• Development of a need based human resources position plan.

• Preparation of a good employment application form.

• Establishment of employment policies.

• Procurement of personnel files or file folders and identification cards.

• Develop external and internal newsletters.

• Organize a volunteer programme.

• Organize speakers' bureau from among physicians and other senior hospital staff and arrange for speaking engagements as a part of marketing and public relations strategy.

It is not difficult to see that the list which indicates areas of required activities is rather elaborate and that there is considerable detail in carrying out each one of these activities and that it requires time. While some of them will be handled by the chief executive officer himself, others may be directed or supervised by him or delegated to his associates.



When the hospital is ready to admit patients, the governing board will take steps to make formal announcement(s) of its availability to, the public. A great deal of work, however, needs to be done prior to the actual opening of the hospital.

Certain heads of departments and staff such as the medical director, director of nursing and some of the nursing supervisors and staff, chiefs of accounts, food service, housekeeping, engineering, purchase, stores and some of their staff will have been employed long before the hospital is opened to assist in getting it in operational order. Gradually, the organization of the medical staff should be completed. This should be followed by the employment of other staff and soon the hospital should be ready to function.

The formal taking'over of the hospital building by the owners is a crucial stage in the realization of their dreams of opening Apart from formalities, there are concomitant responsibilities which the owners must attend to. The engineering chief must assume responsibility for the upkeep of the building and various services. The architect must provide him a set of as-built drawings — another set should be given to the chief executive officer. The chief engineer should also have warranty details' on plant, machinery, etc. It would be advantageous if the chief engineer is the same person who has been involved in the construction process so that he is familiar with all the details and aspects of the building. The other important person who'must assume responsibility soon after the owners take over the building is the executive housekeeper who has to see that the hospital is kept clean.

The date of completion of the building is extremely important. Any delay as is so frequent, for whatever reason, either because of the contractor's or of the owners' fault, will spell economic doom. By the time the building construction is nearing completion, a fairly large investment would have Lieerunade, and if the money was borrowed from financial institutions, payment of interest and  repayment of loan would have statted There may be escalation of cost if the construetion is delayed.

When the hospital is getting ready to function there will be huge expenditure on account of consumable supplies and a large number of materials required for starting the hospital. At this time and in the immediate post-commissioning period, there will be no income, and the hospital will take some time to break even. All this may land the new hospital in a financial crisis. It is, therefore, imperative that every step is taken to complete the building well in time.

No new hospital is expected to function smoothly from the very beginning of its existence. Adjustments will have to be made in order to ensure the greatest degree of perfection in the organization and its functioning during the early period. For this, certain preliminary but essential preparatory work is necessary. The following are some of the steps that should be taken intc consideration:

• A skeleton staff is adequate at the outset. It is better for the hospital to grow and develop through meeting the increasing demand placed on it rather than by having complete staff al the beginning.

• The hospital should be brought into use gradually in a phased manner over a predeterminec period of rime. This should synchronize with the increasing patient census, occupancy anc workload. The gradual increase should be in the number of beds, personnel, clinical sessions facilities, clinical departments and services. If the building consists of several storeys, thf occupancy can move vertically which will take some time. The storeys may be finished it shell form and not furnished and equipped. As we have mentioned earlier, every departmen should be designed in such a way that future expansion is possible following the dictates o demand and available finance.

• The time of appointment of the first complement of personnel is important too — neithe too early nor too late. If this is not kept in mind, it may so happen that a whole lot o personnel are appointed and paid salary but the hospital is not ready to function, or th' hospital with all the infrastructure is ready to function, but the recruitment of personnel i not complete. Either way it will be a loss to the hospital.

• Every staff member will have to be meticulously selected. If an institution is to operas efficiently, each position must be filled by a person who is not only well qualified but als. the most suitable to fill it. Administrators often fail to appreciate the importance of carefu investment in human resources and the enormous cost resulting from poor selection practice! Every job in the hospital is important. No amount of time and attention involved in selectin, the right people can be regarded as superfluous.

• The entire staff, from top management to housekeeping, however qualified, must be give orientation — to the hospital, to the hospital's mission, philosophy and goals and to thei respective departments. They should be thoroughly trained in their respective jobs. They mu also be given training in public, patient and guest relations programmes. This is best don during the months before the opening of the hospital. The first batch of staff is indeed ke to the success of the organization.

• It is necessary to remember that personnel do not come tailor-made to suit the hospital's neec and jobs. They come from different backgrounds, and with different training and experienc. It is also necessary to remember that we do not get perfect people. Some have training an experience, others may have neither of these. Some may be completely new to their jobs an

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