Redefining Medical Office Building
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Redefining Medical Office Building

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Presented to the Building Owners and Managers Association (Minneapolis Chapter) in 2008.

Presented to the Building Owners and Managers Association (Minneapolis Chapter) in 2008.

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    Redefining Medical Office Building Redefining Medical Office Building Presentation Transcript

    • RE+DEFINING THE MEDICAL OFFICE BUILDING PRESENTED BY: Scott Helmes AIA RSP Architects Director of Health & Life Science Mike Lyner AIA RSP i_SPACE Principal
    • Collaborative Creation of a New Medical Office Building (MOB) :TODAY’S GOAL & OVERVIEW STARTING POINT: DEFINING THE Medical Office Building + WHY: Growth By Market Demand Location vs Destination Practitioner’s vs Patience Convinience HOW: ‘Healthy’ Building Healthy Environment Sustainable Economy Healing Energy WHAT: Owner’s Issues Structure Data Real Estate TO CONCLUDE: THE FUTURE OF THE Medical Office Building TRENDS Technology Free Standing ER Collaboration Team Treatment Non-traditional care facilities Collaborative Creation of a New Medical Office Building (MOB) :DISCUSSION POINTS
    • "Medical Office Buildings; a very loosely defined entity in REDEFINING THE concept; may not be living up to their potential both as MEDICAL centers for health and as profitable investments. This may result in missed opportunities to serve an increasingly OFFICE larger segment of the service-seeking public, which grows BUILDING savvier as healthcare options abound. A solution to the possible hindrance in the growth of MOBs would be the + understanding of the possibilities and the potential benefit to the care-seeking public as well as to owners and operators of freestanding medical facilities."
    • A Medical Mall A Retail Clinic An Urgent Care Clinic A Medical Office Building + A facility offering + Convenient Care + Similar to a Retail + An MOB usually has comprehensive Clinics (CCCs) are Clinic in that both provide a number of different ambulatory medical health care clinics extended hours, view specialty practitioners services (as primary and located in retail patients as a customer, in the same building secondary care, diagnostic stores, supermarkets and are organized to along with pharmacy and procedures, outpatient and pharmacies, that provide unscheduled other specialty services surgery and rehabilitation) treat routine family episodic care. (radiology, physical and most services found illnesses and provide An increasing number of therapy etc). Tenants in in a hospital, excluding preventative health Urgent Care Clinics are an MOB don’t necessarily overnight beds. care services. They are now also dispensing pre- compliment each other’s sometimes referred to packaged, point-of-care services. + A complex of facilities as “retail-based clinics” pharmacy products. Both offering medical services or “walk-in medical benefit from consumer such as diagnostics, clinics.” They are backlash over long primary and outpatient usually staffed by nurse waits for primary care care, therapy and practitioners (NPs) or appointments. pharmacy under the physician assistants same roof as banks, dry (PAs). Some CCCs, cleaners, and restaurants however, are staffed by for patients and their physicians. families. DEFINITIONS
    • Growth by Market Demand Demand for medical office space continues to be driven by several factors, including the migration of more procedures from hospitals to an outpatient setting, the expansion of existing practices and the increasing obsolescence of aging assets. Additionally, the growing trend of hospitals expanding to offer medical services at off-campus satellite facilities is expected to accelerate in the future as medical practitioners and hospitals continue to seek out methods to reduce cost structures. The principal force, however, remains the shift of baby boomers into later stages in life, as the number of those ages 55 and older is forecast to expand by nearly 11 million individuals through 2012. More importantly, as the population in general is physically active longer, the number of physicians’ office visits among this key cohort is rising, necessitating the demand for more doctors, and consequently more office space. - Marcus & Millichap Medical Office Research Report - Midyear 2008 MEDICAL OFFICE ASSETS RESISTANT TO AILING ECONOMY
    • The Headlines.... “Medical Office Building buck trend of oversupply in market” Sacramento Business Journal - September 2008 “In a Sickly Market, a Healthier Asset” NY Times - November 2, 2008 “Medical properties hold up amid office weakness” Financial Week - November 9, 2008 “Healthy Prognosis For Medical Buildings Market” NuWire Investor - November 17, 2008 “Medical Office Sector Bucks The Cycle” National Real Estate Investor - November 20, 2008
    • TRADITIONAL Medical Office Building: A Location
    • NEW Medical Office Building A Destination
    • NEW MedicalOfficeBuilding: A Destination
    • The MN Version A Destination
    • From strip mall shops to health care center How does a Location become a Destination?
    • CONVENIENCE Practitioner’s vs Patient’s
    • Collaborative Creation of a New Medical Office Building (MOB) :TODAY’S GOAL & OVERVIEW STARTING POINT: DEFINING THE Medical Office Building WHY: Growth By Market Demand Location vs Destination Practitioner’s vs Patience Convinience + HOW: ‘Healthy’ Building Healthy Environment Sustainable Economy Healing Energy WHAT: Owner’s Issues Structure Data Real Estate TO CONCLUDE: THE FUTURE OF THE Medical Office Building TRENDS Technology Free Standing ER Collaboration Team Treatment Non-traditional care facilities Collaborative Creation of a New Medical Office Building (MOB) :DISCUSSION POINTS
    • ‘Healthy’ Environment vs. Infection Control What are the differences between a hospital (recovery) and a clinic (diagnosis/maintenance)? 2 million Americans acquire an infection while they are in the hospital. 90,000 die of that infection. - U.S Center for Disease Control
    • Healthy Environment Signage & Wayfinding How do we set the tone?
    • Healing Energy - Transition Space Evidence-based & LEAN Design
    • Healing Energy - Support & Family Evidence-based & LEAN Design
    • Healing Energy - Stress Reduction The Infamous “Healing Garden” Air, Water, Natural light, Living elements (fish, fire, foliage) Climate & maintenance consideration? How do you measure success?
    • Collaborative Creation of a New Medical Office Building (MOB) :TODAY’S GOAL & OVERVIEW STARTING POINT: DEFINING THE Medical Office Building WHY: Growth By Market Demand Location vs Destination Practitioner’s vs Patience Convinience HOW: ‘Healthy’ Building Healthy Environment Sustainable Economy Healing Energy + WHAT: Owner’s Issues Structure Data Real Estate TO CONCLUDE: THE FUTURE OF THE Medical Office Building TRENDS Technology Free Standing ER Collaboration Team Treatment Non-traditional care facilities Collaborative Creation of a New Medical Office Building (MOB) :DISCUSSION POINTS
    • Structure: Construction
    • Structure: Maintenance
    • Data Security & Privacy New information technologies allow for a system that is: • Integrated • Accessible • Safe • Limitless How secure is our data?
    • Real Estate - MOB Ownership MOB: Third Party Developed/Owned MOB: Doctor- Owned Third party owners of an MOB can often manage the Direct cash equity property with greater efficiency and success. This can free • Contributions during planning or after construction up the hospital to concentrate on their acute-care services • Risk is limited to the amount of the doctor(s) investment while maintaining an ownership interest. • More investment=more risks/ more gain Other benefits: Rent-amortization • Financing resources • Doctor(s) equity increases over the term of the doctor(s) lease • Design and construction expertise • Efficient leasing and management No equity ownership • Doctors participate in cash flow without any contribution EXAMPLE: • Often a fixed percentage of the MOB in return for a long term ASCs (Ambulatory Surgery Centers) lease * • Hospitals in partnerhips with doctors and/or a third party • More common as outpatient surgery becomes prevalent • Often the anchor tenant in many MOBs * * Source: Joseph Malone (Southern Maine Commercial Real Estate)
    • Real Estate - Net Present Value Strategy Due to the current credit crunch, health organizations cannot rely on complex plans that require the cooperation of the market THEREFORE.... Project Prioritization has to be based on investments with greater inflows than outflows (NPV) OR... Analyse, Strategize, Optimize. for example: If you are from a hospital and thinking of expanding your MOB... What are you doing to also expand the core vision, culture, and communicate those to your new MOB users? What needs are you addressing and how/when is that going to evolve? Are your resources better spent optimizing and improving current assets to provide better (quality, not quantity) care? Which resources could be better used and how could you determine that? (Buxton customer analytics/ Map Info) That being said....
    • Even though: • MOBs require oversized plumbing infrastructure, more sophisticated building control systems and often require extra sanitary capibility. • MOB design-builds cost an average of $80 per square foot compared to $60 for an average class A office building • MOBs should have a ratio of 5 parking spots-to-1,000 rentable square feet The U.S. is in the middle of a MOB building boom. Why? • A concurrent Hospital construction boom ($23.7 billion in 2005) • Overall, new buildings average an 80 percent vacancy, MOBs average 13.7 • MOBs have long-term tenants with a renewal rate of close to 100% • More and more procedures are migrating out of the hospital and into an outpatient setting
    • Collaborative Creation of a New Medical Office Building (MOB) :TODAY’S GOAL & OVERVIEW STARTING POINT: DEFINING THE Medical Office Building WHY: Growth By Market Demand Location vs Destination Practitioner’s vs Patience Convinience HOW: ‘Healthy’ Building Healthy Environment Sustainable Economy Healing Energy WHAT: Owner’s Issues Structure Data Real Estate TO CONCLUDE: THE FUTURE OF THE Medical Office Building + TRENDS Technology Free Standing ER Collaboration Team Treatment Non-traditional care facilities Collaborative Creation of a New Medical Office Building (MOB) :DISCUSSION POINTS
    • Trends By 2015, acute care facilities will no longer try to be all things to all patients. They will specialize and build their competencies around targeted conditions and treatments. And, non-urgent acute conditions, such as strep throat, sinusitis, and otitis media, will be treated from home, via the use of telemedicine or at retail settings that provide low cost, good quality, and convenience, for example. - IBM Global Business Services 2006
    • Non-traditional Care Facilities MinuteClinic (Minneapolis-St Paul 2000) Small retail health care clinics (200-500sqf), open 7 days a week with evening and holiday hours and available to patients on a walk-in basis. There were approximately 1000 clinics in 2006. Pre-fab Downtown Minneapolis Skyway Clinic
    • Express Care Center
    • Non-traditional Care Facilities Retail Clinics Immature & risky market Private-equity backers experiencing longer start-up periods Closures due to lack of capital to sustain operations: SmartCare - 15 Early Solution Clinics - 6 InstaClinic - 2 ReadyCare - 1
    • Technology & Remote Virtual Collaboration “The Future of Healthcare in Virtual Worlds” Moderator: Dave Taylor, Imperial College London
    • Hybrid Ambulatory Center
    • Collaborative Creation of a New Medical Office Building (MOB) :TODAY’S GOAL & OVERVIEW STARTING POINT: DEFINING THE Medical Office Building WHY: Growth By Market Demand Location vs Destination Practitioner’s vs Patience Convinience HOW: ‘Healthy’ Building Healthy Environment Sustainable Economy Healing Energy WHAT: Owner’s Issues Structure Data Real Estate TO CONCLUDE: THE FUTURE OF THE Medical Office Building TRENDS Technology Free Standing ER Collaboration Team Treatment Non-traditional care facilities Collaborative Creation of a New Medical Office Building (MOB) :DISCUSSION POINTS +
    • “In medicine, our task is to cope with illness and to enable every human Discussion Points 1 being to lead a life as long and free of frailty as science will allow. The steps are often uncertain. The knowledge to be mastered is both vast and incomplete.” Three core requirements for success in medicine - or any endevour that involves risk and responsibility: 1. DILIGENCE The necessity of giving sufficient attention to detail to avoid error and prevail against obstacles. 2. TO DO RIGHT + Medicine is fundamentally human profession. It is therefore forever What are some issues troubled by human failings, failings like avarice, arrogance, insecurity, misunderstanding. or concerns about these fundamentals 3. INGENUITY that fit into our new Thinking anew. It’s not a matter of superior intelligence but of character. definition of what a It demands more than anything a willingness to recognize failure. It arises from deliberate, even obsessive, reflection on failure and a Medical Office Building constant searching for new solutions. should be? -Atul Gawande - “Better”
    • Discussion Points 2 CONSIDERATIONS: Market demand Appropriate operating business model Physicians feedback Available financial resources + Design and construction requirements Turning some of your Real Estate Portfolio Technical coordinations into a medical/ Time period healthcare purpose, Services needed what are the pros and Community served cons?
    • THANK YOU!
    • Presentation created by: Lulu Petrina RSP Dreambox, Minneapolis, MN © 2008