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Healthcare: The Cure for What Ails CRE

Dallas-Ft. Worth
Healthcare: The Cure for What Ails CRE
Despite the rolling blackouts this morning with the lighting complications, interest in medical real estate was still a bright spot. That's what we heard from the experts with about 600 of you, who joined us at the Hyatt Regency for the Bisnow Dallas Healthcare Real Estate Summit.
 
crowd of 600
Prognosis on healthcare projects: Really good. But before delivering to you up-to-the-second news coverage, we'd like to extend a big thanks to our sponsors for their generous support: Haynes and Boone, Moore Commercial Landscape Management, Walker & Dunlop, Coppermark Bank, Perkins+Will, Elite Facility Services,Healthcare Realty Trust, Lincoln Harris, Camelot Facility Management Solutions, Stream Data Centers, City of Colleyville Economic Development, Multivista Construction Documentation,Healthcare Art Consulting, and the Neal Richards Group.
Steve Jenkins and Wes Huff
Pre-event, we snapped panel moderator Haynes and Boone partnerSteve Jenkins with panelist Wes Huff, Baylor Healthcare System real estate VP. Wes says there's a move at Baylor (and across many healthcare providers like Parkland) to take the pressure off emergency departments by adding satellite clinics. ?It's enormously expensive to care for everyone and the indigent inside the emergency department is an enormous problem. People won't be turned away from hospitals,? he says. One effort underway is toeducate people on the availability of services instead of going to the most expensive place (the ER) within the system to get care. Wes also says he anticipates consolidation of health systemsbecause the healthcare reform requirements will be too costly for smaller systems to pay for IT upgrades to meet the mandates.
Sheila Lucas, Walter Jones, Jr. and Lita Lucas.
We caught up with The Collins Co Realtor Sheila Lucas, Parkland Health & Hospital System SVP for facilities Walter Jones Jr., and Alphabet Commercial Lending commercial financial rep Lita Lucas. Lita tells us she's seeing more new doctors leasing medical equipment for their offices instead of shelling out $30k in capital expenditures. Other doctors in smaller offices are choosing toupgrade existing equipment, too, instead of buying. (It might have something to do with the economy.) Walter tells us the new Parkland construction project (cost: $1.3B for the 862-bed hospital and medical campus) is the largest construction project in the US for a replacement hospital. The hospital alone is doubling in size from 1M SF to 2M SF (about the size of the Bank of America building downtown). When you toss in the ancillary uses, the new campus will be 2.5M SF.
Michael Arvin
Methodist Health System chief development officer Michael Arvin(pictured) says growth in outlying areas with specialty hospitals has included a Greenfield project in Mansfield back in 2006 with a new facility, as well as new 100k SF sites in McKinney and Addison. Methodist is looking to expand in Richardson, too, he says. Primary care clinics are being added while all opportunities are being explored as modeling and reimbursement systems continue changing. Tenet Healthcare Corp real estate development VP Nicholas Bonrepossays when it comes to working with MOBs and healthcare properties, it helps to speak the language. ?In this industry, we don't have people moving for 25 cents a foot," he says. "Once they're on the campus of the hospital, they don't want to have to re-educate their patients about where they are and they like being close to the hospital.? The key is to understand how you can provide a service to that physician tenant beyond keeping the lights on and the offices clean, he adds.
Holly Ragan
UT Southwestern Medical Center director of planning and designHolly Ragan (between Walter and Steve) says UTSW?s academic orientation has unique challenges in providing space for patient care, research, and clinical uses because it's hard to build a lab on a patient floor. She says bulldozers begin demolishing two existing clinical buildings next month as construction starts on the new University Hospital. In all, UTSW has a total of about 11.2M SF in facilities. Down the road (literally), Walter says Parkland is expected to provide care in the most efficient way possible using tax dollars: "If our goal is to decompress the emergency department by providing more community clinics, we will need to build or lease more facilities to do that.?
Rich Couturier, Derrick Evers, Pamela Perkins, and Jeff Jones
Our second panel featured Duke Realty healthcare development VPRich Couturier, Neal Richards Group managing partner/CEO Derrick Evers, Healthcare Realty Trust senior leasing director for North Texas Pam Perkins, and Walker & Dunlop VP Jeff Jones. Jeff says patient record-sharing technologies can create some staggeringly high IT bills. Owners may want to consider refinancing their properties to pull in the IT bill and purchase needed equipment.
 
Pam Perkins
Pam says MOB developers need to put more emphasis on way finding in facilities to make them patient-friendly. ?As a developer/owner, we don't often understand that. We need to putrocks in our shoes, cotton in our ears and Vaseline on our glasses. Then, get a cane and go to parking garage and trying to find our way into the building, up the elevator and to an office." (We might actually try that.) Partnering with Baylor, she says, has proved successful in improving the way finding efforts. At Baylor Plano, for instance, she says an electronic directory was used and the development team thought it was fabulous. But, the patients—many whom are elderly or simply don't get out of the house often—didn't know how to work it. So, the traditional directory was returned to the lobby.
 
Rich Couturier and Derrick Evers
Rich says medical facility leasing picked up in Q2 '10 as doctors (like most consumers) began to feel more confident in making major decisions. Many were waiting to see what was going to happen with healthcare reform and how it would impact their business operations. With more understanding of the business model, there's been more interest in leasing, a trend he sees continuing this year. Rental ratesare actually one of the lowest concerns for physician tenant prospects, he says. And prior to reform, physician investment in hospitals provided a good ROI, but now there are caveats to consider. With a skilled nursing component in the hospital, not only can inpatient stays be reduce, patients can also be moved into the skilled nursing facility to lower costs, making it easier to get returns on physician investments. Despite healthcare reform measures that prevent doctors from owning hospitals, Derrick says thinking outside the box helps gets projects done. A good example is his latest venture: the $83M, 50-bed physician-owned Forest Park Medical Center at Frisco.
 
Mark Bisnow and Don Morgan
Bisnow founder and big wig, Mark Bisnow, with Moore Commercial Landscape Management's Don Morgan. Don says the company recently expanded its services beyond residential to include the comprehensive management of commercial landscapes, too. The organically based organization also boasts some 90 years of experience.
 
Mechele Rittenberry, Jan Lewinksi, Jerry Joyner, and Linda Berry.
Post-event, we caught up with TerraCORE?s Mechele Rittenberry, Healthcare Art Consulting?s Jan Lewinksi and Jerry Joyner, and Hawa?s Linda Barry. Jerry tells us his firm works solely with healthcare properties to select the artistic components. ?We look at things from a patients? point of view,? he says (they even surveyed patients to get their input on art selection, no one asked our opinion). The latest project for the firm is the new Baylor Cancer Center, which opens March 26. And, don't fret if you didn't get enough information on our event: We'll have more coverage in our national issue tomorrow and into next week, same time, same channel.