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Piedmont Growth Spurt Less About Competition Than Being Near Patients

Piedmont Healthcare’s recent spate of growth throughout the state has less to do with gaining market share over its competition than it does pushing closer to its patients’ households, according to the hospital system's top real estate executive.

Colliers Senior Vice President Josh Gregory, Page Senior Principal Kimberly Stanley, Piedmont Healthcare Director of Corporate Leasing Keishia Niblack, Children's Healthcare of Atlanta Director Gerard Smith and Bryan Cave Leighton Paisner Partner Angela Hsu.

After taking over University Health Care System facilities last year, including University Hospital in Augusta, Piedmont has become one of the largest hospital operators in Georgia, eclipsing Emory Healthcare and Wellstar Health System, according to Rough Draft Atlanta.

But Keishia Niblack, the director of corporate leasing and real estate management for Piedmont, said at a Bisnow healthcare event last week held at the Atlanta Marriott Buckhead Hotel, that the health system didn't concern itself with where its competitors were located when choosing new hospitals.

“I think all the healthcare systems' goals are the same, which is to provide a continuum of care in the region and markets that they choose to operate,” Niblack said. “At least for Piedmont, it is less about competition and more about going where we need to go in order to serve the population that needs healthcare. We’re not necessarily looking for where’s Wellstar? Where’s Northside? That’s not the point. The point is where is the deficit? Where can we fill the gap?”

Niblack was part of, a larger roundup of commercial real estate and medical industry professionals who highlighted Tuesday how healthcare and life sciences are investing in real estate and development to address growth, including Center for Global Health Innovation CEO Maria Thacker Goethe; Emory University Managing Executive Director Gayathri Srinivasan; Gerard Smith, Children’s Healthcare of Atlanta's planning, design and construction director; and Tony Zivalich, Georgia Insitute of Technology's real estate executive director.

Hospital systems have begun a surge in new facility construction across the state in recent years. Children’s Healthcare of Atlanta has been developing a new hospital campus just off Interstate 85 and North Druid Hills Road, just north of the city.

Northside Hospital is expanding its Gwinnett Medical Center campus, adding a second patient tower that would establish the facility as the second-largest hospital by bed count in the state.

Late last year, the Northeast Georgia Health System embarked on a more than $1B program to develop three new hospitals in the state: in Dahlonega, Braselton and Gainesville, Daily Commercial News reported.

Niback said the hybrid work model that’s being cemented in corporate America in the aftermath of the pandemic means fewer people have to travel into the heart of the Metro Atlanta area to work daily. As a result, Piedmont’s patients are seeking care farther outside the metro area, pushing the hospital system to expand its real estate footprint.

“Because people don’t need to live five minutes from the office anymore, or they have the opportunity to come in one day or two days a week or whatever the case may be — or just be fully remote — we have definitely seen a huge push for rooftops moving outside of the city, and not always just in the Metro Atlanta area,” she said. “We follow the rooftops. So if residential developers are going to different markets like Macon or Brunswick … we need to be there as well. You want to make sure that you don’t have to drive 50 miles for care.”

But construction costs and a lack of labor — both for the construction and for the medical industry — are complicating this expansion, panelists said, which is forcing some to scale back their design ambitions. 

“We're seeing, of course, a huge increase in real estate costs and construction costs. That's a pretty big deal and it's influencing our clients' opinions about what value means to them,” said Kimberly Stanley, the healthcare sector leader and senior principal at the design firm Page. 

A labor shortage among both physicians and nurses in the nation is straining hospital and medical systems’ abilities to expand, Stanley said. The Association of American Medical Colleges is projecting a shortage of 48,000 primary care doctors by 2034. And nursing staff continue to shrink due both to an aging workforce and burnout from long hours, which has prompted healthcare systems to rely more on telehealth and robotics to help cover labor needs.

Stanley cited a health system in Florida that scrapped plans for a new hospital over concerns it would be unable to find enough physicians and workers to staff it and forcing these systems to use real estate alternatives to address growth.

JE Dunn Project Director Christopher Rampton, Center for Global Health Innovation CEO Maria Thacker Goethe, Emory University Managing Executive Director Gayathri Srinivasan, HKS Principal Don Bush and Metro Atlanta Chamber of Commerce Senior Manager Edward Lai.

“All of our clients are talking about the labor shortage in healthcare. [They are] very concerned about how they’re caring for patients with fewer people,” Stanley said, adding that they are moving “to areas where the cost is lower. So everything from, I would say, retail to specialized medical office buildings and even some wellness-focused healthcare villages. There’s a huge innovation in this space.”

But hospital system growth doesn’t necessarily have to be purely brick-and-mortar, Children’s Smith said. As the hospital system grows, Smith said Children’s and others are relying more on technology to make up for the labor shortages, including telehealth and robotics.

For new construction of rural ambulatory outpatient facilities, Children’s also is leaning into prefabrication, Smith said.

“With patient-facing robots, with just technology-enabled buildings, that eventually is going to really help with the staffing shortage,” Stanley said. “I believe it's going to have to be more innovative in how we're delivering care.”

But with the new technology, especially with robots that interact with patients, comes new real estate challenges, especially as construction costs are expected to continue to rise due to persistent labor shortages in the construction industry, JE Dunn Project Director Christopher Rampton said. That can complicate project costs for developers of life sciences facilities, particularly those who are building on spec. Lab users tend to need things like utility pathways or vibration buffers that ordinary hospitals or medical office buildings don’t need.

“There’s an equal or even greater problem on the construction side,” Rampton said. “That can be a huge challenge if you don’t know who your tenants are. That potentially means spending money upfront that you ultimately may not need, depending on who moves in.”