The Demand For More Healthcare Is Huge. The Amount Of Available Real Estate Is Not.

As the DC area population continues to expand, healthcare facilities are scrambling to keep up with growth needs while planning for the future. It’s a tough balancing act for healthcare professionals and developers. But that’s what a panel of experts will attempt to do at the Mid-Atlantic Healthcare Real Estate Forum on Thursday, May 19, at the Four Seasons.

Photo credit: Virginia Hospital Center

“Demographics are another big driver in healthcare growth,” says Amir Nekoumand, project executive at DPR Construction.

So, too, is competition for healthcare dollars, which has led healthcare systems to expand their services, everything from labor/delivery to geriatrics.

“As demographics continue to evolve, but also grow and expand, so does the level of services to make sure you can capture the strategic amount of market share in that area,” Amir explains.

Nowhere is that confluence of current and future patient demands, demographics and geography more apparent than at the Virginia Hospital Center in Arlington, above (longtime area residents will remember it as simply Arlington Hospital).

The hospital became an acute care facility renamed VHC to meet the county’s growing and diverse population, especially in obstetrics and pediatrics, says Adrian Stanton, the hospital’s VP and chief marketing officer. By adding those services, VHC now ranks second in the state behind Inova Fairfax Hospital in the number of births annually.

The new demographics also called for the addition of other specialties—cardiology, vascular care, neurosurgery, orthopedics and urology. That meant buying new equipment and hiring physician specialists and other staff.

Unlike suburban hospitals, VHC is in a residential area and has little room to expand either outward into the neighboring community or upward, where county height restrictions apply.

“We are maxed out on our site," Adrian says. "Even if we had buildings that could support another floor, we can’t put on another floor.”

VHC, however, is negotiating with the county to purchase a five-acre plot just north of the hospital. Once the deal is completed, he adds, VHC will have to create a master plan for the land that will meet the needs of the hospital and the community over the next five to 10 years.

Photo credit: Kaiser Permanente

It’s not just hospitals that are experiencing growing pains and competition. So too are other healthcare providers, including Kaiser Permanente, one of the nation’s largest not-for-profit health plans, serving 10.2 million members.

 “We’ve got our footprint pretty solid in DC. Northern Virginia is an area that we’re experiencing a huge amount of growth,” says Clayton Mitchell, Kaiser Permanente’s executive director of National Facilities Services in the Mid-Atlantic region, and another panelist for us next week.

He says the Affordable Care Act has added to the demand for more services and increased access points to healthcare.

Creating those access points and finding the facilities and infrastructure to provide those services in new and emerging markets is a challenge, he acknowledges.

“We’re increasingly finding it more difficult to identify real estate to meet our purposes” due to “pretty tough” competition, especially because much of the population growth is centered around transportation hubs.

The search is even tougher for larger facilities that can range from 100k SF to 200k SF, Mitchell says. “It’s not that we’re not finding opportunities, but it is increasingly getting tougher from a real estate standpoint.”

“Ideally we like to be near main thoroughfares, we like to have good visibility from highways and major arteries," Clayton says. Proximity to public transit, parking for up to a thousand cars, and the possibility of expansion are also key needs.

“We typically shy away from multi-tenant opportunities,” he says. But being a single tenant “is really hard” to do, especially in crowded areas like Alexandria.

Kaiser Permanente’s current expansion targets include Northern Virginia, where the company is negotiating for four unidentified sites; and it's in the process of replacing its facility in Prince George’s County.

Learn more at the Mid-Atlantic Healthcare Real Estate Forum on Thursday, May 19, at the Four Seasons. Register here.

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