When one of Boston’s most prominent hospitals was falling on difficult times, an enterprising developer approached with a plan to build a large lab building on adjacent land. The initial reaction was knee-jerk: The hospital would lobby to negotiate down the size of the project and the developer would strive to build every inch of height and space possible.

But what happened when hospital and developer decided to work together? The developer got a better building footprint and a second phase of development not previously anticipated. The hospital was able to replace its dated parking facility, relocate its laboratory program into state-of-the-art space, and improve its cash position by millions of dollars.

Here’s how they did it. The hospital added value to the development parcel by combining it with adjacent surplus land the institution owned. It sold the surplus land to the developer, supported the new development at optimal floor area and height, and cut a deal that paid the hospital based on the amount of additional area the developer realized from the expanded footprint. The hospital then signed a lease to consolidate and expand its existing institutional lab program into the new building adjacent to its clinical core.

In a second bold move, the hospital sold its aging above-ground parking facility and the land beneath it to the same developer for a second lab complex. The hospital again supported additional building area and height and realized additional financial benefit for the expanded building area. The hospital then leased back parking spaces to replace those associated with the old above-grade parking garage

The lesson is one of recognizing and leveraging missed opportunities. Rarely is income analysis part of capital planning, or capital planning viewed as a revenue generator. But large institutions need to leverage their existing assets, and to use new opportunities derived from successful capital planning to support programmatic ventures.

Instead of becoming preoccupied with the physicality of capital planning, the hospital took a financial approach — and was able to realize significant revenue from the sale of a surplus asset it didn’t realize it had. But for many institutions, large and small unfound and unleveraged assets sit idle when they could be realized to help fund programs that are not only self-sustaining, but a key part of the organization’s mission.

Maximize Unused Assets

In another case, a retirement community north of Boston knew it needed specialized dementia care to support its mission, even though such a program is rarely if ever profitable. So, it leveraged and marketed its pastoral setting by constructing independent living cottages with access to its related assisted-living units, as well as onsite social amenities and healthcare services. The sale of these cottages generated the revenues necessary to construct a new dementia unit and advance the community’s mission.

Nearly all institutions have valuable, unused assets, such as land or air rights. Too often, when hospitals need more beds to serve their communities, they simply have an architect design striking renderings which they then take to donors to raise money to build more beds. If the funds can’t be raised, the plans get shelved.

A strategic financial assessment puts economic realities first, determines what the market can bear and the client can afford, and creatively leverages the capital planning and project management process as a revenue generator to support and expand the overall mission of the organization. And isn’t that what it’s all about?

Joe Naughton is principal and chief operating officer of RFWalsh Collaborative Partners, jnaughton@rfwcp.com