Hospitals' No. 1 Priority
Location. (Not tongue depressors, silly.) And competition is hotter than ever for prime outpatient sites, which is why we’re excited to host Bisnow’s 3rd Annual Chicago Healthcare Real Estate Summit next week.
ESD VP Craig Kos, one of our panelists (second from right, with some of the team), says new ground-up hospitals are in decline, as hospital systems focus more on outpatient facilities, both ambulatory and medical office. It frees up EDs and patient beds for the more acutely ill and injured, while getting a hospital's brand out into the community, he says. The development of an outpatient network (primary care, imaging centers, immediate care, surgical facilities, etc.) allows the system to provide the appropriate level and continuity of care for each patient at the lowest cost, Craig says. And it has become a turf battle among the systems to open their facilities at the most demographically desirable locations first, and they’re even paying a premium to upgrade well-located existing buildings that don’t have the infrastructure to support what they’re trying to do.
What’s the premium for? Depends on the use. Could be increased electrical service for imaging (above), or boosted water service for dialysis. “Hospitals are saying 'Let me look at my lifecycle cost here,'” Craig says, “Even if it’s a stretch, they’ll probably still go with it.” And some facilities are going up right across the street from each other. (It makes for an awkward lunch hour.) The challenge going forward for hospitals will be figuring out how changing reimbursements and business plans will affect the delivery of these spaces, he tells us. A major system Craig is working with has done everything from buying buildings (even spec), engaging a developer to build new, and fitting out leased space in an existing property.
New outpatient spaces have also changed with the retailization of healthcare, Craig says. He recently repurposed a Borders in Evanston (above) into an immediate care and specialty clinic facility, along with a bank in River North into an immediate care center. Looking ahead, he expects the trend of ramped-up imaging facilities to continue, since that’s a highly reimbursable service for hospitals, and people would much prefer to walk down the block for an MRI (versus schlepping to the hospital). Outside of the office, Craig’s thrilled to watch his seven-year-old son knock ‘em out of the park on his first baseball team. (He’s dabbling in third-base coaching.) Register for our event here.
