Facing constant reductions in payor reimbursement rates, regional and community healthcare systems actively seek ways to improve margins and enhance their effectiveness. To achieve this, hospitals are thinking lean: less cost, fewer employees and less cumbersome processes. At the same time, healthcare providers are working toward enhancing the overall patient experience, ease of access, meaningful outcomes and greater market share.
Bill Mooney, Executive Vice President, Bremner Healthcare Real Estate.
With this perspective in mind, an increasing number of health systems are expanding their footprint and geographic reach utilizing creative ambulatory strategies that increasingly focus on deploying the right facilities in strategic locations. In the current competitive healthcare landscape, many of the larger players have found that smaller, more efficient facilities located closer to the populations they are looking to serve that incorporate a branded appearance and programmatic design will quickly build brand awareness with the consumer and provide speed to market resulting in increased market share. Whether it is an offensive or defensive play, this tactic has proven successful in the retail world, and it translates very well to the delivery of healthcare. However, research and trustworthy partnerships are the key to the successful implementation of this strategy. After all, anyone can develop and build a new facility. Building the right facility in the right location is the critical factor for success, and this is no easy task.
The recent success of ambulatory surgery centers (ASCs), urgent care outposts and freestanding emergency departments (FSEDs) are convincing more and more healthcare administrators to grow their market share without having to invest in larger and economically draining healthcare facilities. Offering patients the convenience of having surgeries and procedures performed safely outside the hospital setting has been gaining traction for years. Since this model was introduced, ASCs have shown an exceptional ability to provide the patient with improved quality, ease of access and customer service all at a reduced cost for the services provided.
There continues to be a surge of activity in this space because patients and payors alike are increasingly unwilling to pay for the high rates associated with procedures performed in a hospital, and there is increased comfort with preforming minor and routine surgeries in outpatient settings. Health systems and physicians have found success in opening ASCs where lower acuity procedures can be performed much more efficiently and cost effectively. In addition, the development of a de novo facility might also present an opportunity for the health system to offer the surgeons working in these facilities the ability to invest in the facility itself, therein providing the health system with a useful tool in the recruitment and retention of top surgical talent.
FSEDs are another model that offers strategic growth potential for hospital systems. FSEDs can be strategically placed in suburban settings to capture patient volume from areas that might be on the fringe of a hospital’s geographic reach. They establish a place for suburban and rural residents to receive routine and emergency health care, expanding their patient base, and, when necessary, higher acuity services can then be directed to the main hospital of the system, which would otherwise be too far to travel for basic services. With changing population and demographics, it is possible that a properly branded FSED coupled with some ancillary service lines could be all that is necessary in a growing submarket. Alternatively, an FSED could potentially replace an aging hospital in a declining market that no longer has a critical mass of patient volume or has become too costly to continue operating.
Hospital administrations must build and depend on trusted relationships as they launch into any new development. It is critical to assemble the right team of designer, engineer and construction manager. Enlisting the help of a developer or development manager with specific experience in healthcare real estate on a local as well as national level will ensure that the right strategy is implemented. It is also imperative to fully understand the changing demographics and service line needs of a growing or evolving market as these metrics can help a hospital system improve services and develop the right strategy for growth and efficiency.
It is paramount to the success of a development to engage a trusted development partner that understands all the required metrics. That partner must have the knowledge of the differing components of inpatient and outpatient systems and building types as well as the ability to collaborate simultaneously with consultants and vendors in multiple jurisdictions. In addition, that partner needs to be independent, ethical and able to confidentially deliver the system’s mission into each respective market while at the same time leveraging the knowledge and expertise of the hospital staff and administrative team. The team at Bremner Healthcare Real Estate has learned over the past 35 years that serving its clients in this capacity is crucial to the success of any new development.
The healthcare landscape is increasingly competitive. Hospital systems are being forced to do more with less resources, and when it comes to adding new facilities, speed to market is usually at the top of the list of priorities. Navigating the chaos of healthcare facilities development can be particularly overwhelming, so having a research-driven strategy with dependable partners will ensure the smoothest path from concept to completion.
Bill Mooney is Executive Vice President, Partner, at Bremner Healthcare Real Estate in Indianapolis. For over 30 years, Mooney has been involved in the development and construction of major projects across the country, and as a partner with CEO Jim Bremner for over 20 years. His ability to listen and provide creative solutions to complex healthcare real estate issues as well as identify critical project hurdles are welcomed and respected on any development.
