DOLLARS AND SENSE

August 16, 2011 | 8:00 am ET Staff Reporter

Those are the two things to keep in mind when helping a hospital campus renovate or rebuild. Rush University Medical Center CEO Dr.Larry Goodman shared them with our audience at Bisnow'sHealthcare Real Estate Summit this morning.

Dr. Goodman, here with HSA Primecare's John Wilson, says understanding that a healthcare client needs to focus on the continuum of care is crucial to new hospital construction. Rush, for example, wants to continue to focus on complex care, so it needs bigger rooms to hold more people and machinery to perform minimally invasive surgeries. The center also focused on building a bigger ER and has capabilities for biopreparedness (meaning the center could wash down 300 patients an hour in the case of a biological attack or outbreak). But in the end, medicine is still a cash-hungry business, he says, so Rush is focusing on methods that take its medicine to the next level rather than marginal improvement. Another jump: The hospital is going for LEED Gold, with green roofs on several buildings and green building materials and waste management.

More than 275 of you showing your bright and shining faces this morning at our shindig. We hope you enjoyed the views, the coffee, and the knowledge-sharing (not to mention the fantastic chandeliers at the MidAmerica Club).

PricewaterhouseCoopers' Thomas Koulouris moderated the panel and says physicians in private practice have decreased from 65% to somewhere in the low 50% area over the last few years. With fewer reimbursements coming in from insurance, doctors benefit more from being part of a medical group, which means more are looking to locate in larger, healthcare-focused buildings. Physicians and hospital groups are also benefiting from having multi-specialty facilities near another hospital, thus sharing patients that might have gone to the ER if they couldn't get less acute care.

HSA Primecare's John Wilson, who was hoarding all the water bottles, is seeing a barbell market with physician groups and hospitals looking for either larger centers of 80k to 120k SF or 10k to 20k SF. Increasingly, his tenants are using evidence-based design created by recommendations from the doctors and nurses working in the building. He's also seeing several hospitals or physician groups trying to decide whether they want to own or lease their MOB, especially with new FASB regulations potentially affecting their balance sheet.

Hospitals are looking for designers and contractors who know their needs, says Children's Memorial's Bruce Komiske. He recommends volunteering to be on a hospital's board of directors to get to know these needs and position yourself well to get to know the business. Real estate is just 4% to 5% of a hospital's operational cost, but hospitals are still relying on philanthropy for amenities like healing gardens, Bruce says. This is especially important to the new 1.2M SF hospital building Children's is building in Streeterville, which will be large enough so patients' parents can stay with them in the room and learn about their care.

CBRE's Julie Ford is seeing increasing numbers of independent doctors and groups being acquired by hospital groups. With this, there is more branding and combining of uses into one building for acute care, imaging, and pharmacy. While the new healthcare bill means there will be more insured patients, it doesn't necessarily mean they're just using one healthcare system.

Trammell Crow's Jud Jacobs tells us that RNs and hospital admins are spending more time working on medical records and clerical work, so having a good IT system and clerical workers has taken up an increasing amount of hospital budgets. Also, healthcare is getting a smaller slice of the pie from some government budgets—in Jud's native Texas, hospitals are getting 17% less from the state government after an 8% budget reduction. He says the same could happen as the federal government reduces the debt ceiling.

DOLLARS AND SENSE

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