Meeting the needs of an evolving healthcare industry

February 18, 2014  |  Dan Rafter  |  Print Article  |  Email this Article

St. Clare Medical Office Building in Baraboo, Wis.

St. Clare Medical Office Building in Baraboo, Wis.

The way patients seek medical care has evolved. And the way hospitals, doctors and other medical professionals deliver it has changed, too. Midwest Real Estate News recently spoke with Dan Cowell, vice president and healthcare market manager with the Milwaukee office of Irgens, about how these changes have impacted those commercial real estate firms that work in the healthcare field.

Midwest Real Estate News: Are you seeing a lot of healthcare development activity in Milwaukee and Madison today?
Dan Cowell: Healthcare development activity in the Milwaukee and Madison markets is currently steady.  Annual population growth in Wisconsin remains less than 1 percent.  Health providers are not expanding to capture new population.  Instead, health providers in this region are expanding to grab market share by deploying facilities into the community to provide more convenient access and additional service lines for existing patients.  This strategy will continue into the foreseeable future as population growth forecasts show only moderate population growth in the state.

MREN: What types of facilities are being developed in the Madison and Milwaukee markets?
Cowell: Projects of varying types are occurring in these markets – new inpatient facilities, inpatient expansions/renovations, centers of excellence, regional outpatient centers and community based ambulatory care centers.  Irgens’ focus remains primarily on strategic ambulatory care facilities for hospitals and health systems.  With many health systems in these markets having already undergone major physician employment integration, real estate owners are typically working with health systems in lieu of smaller private physician practices.

Multi-tenant medical offices designed to accommodate smaller physician practices are in decline.  This trend was evident in Irgens’ recent medical office development in Baraboo, Wis., where the tenant was originally Dean Health – one of Wisconsin’s largest physician groups.  Before the end of the project, Dean Health had been acquired by SSM – one of the country’s largest Catholic health systems.  Health systems, not individual physicians, will be the major user of outpatient facilities in the future.

As for the future, demand will continue in the Milwaukee and Madison markets for strategic health system-sponsored outpatient hubs as health providers expand market share, deploy primary-care and low-acuity specialty care into the community and shift patient care to the lower-cost outpatient setting.

MREN: What kind of amenities are patients looking for today in new healthcare centers?
Cowell: Amenities have shifted from the amenities traditionally seen in outpatient centers.  Patients today are focused on access, convenience, cost and quality.  There is a dramatic shift to place healthcare facilities in easy-to-find locations closer to the patient’s home.  Today’s community-based ambulatory care centers allow patients to conveniently attain the highest-quality healthcare from the best health systems right in their own neighborhood.  These community-based ambulatory care centers provide parking close to the front door with convenient check-in and check-out processes enhancing the patient-centered care model supported by the provider.

Mokena Medical Commons in Mokena, Ill.

Mokena Medical Commons in Mokena, Ill.

These amenities bring a new level of ease-of-patient access and convenience to the industry.  Outpatient care facilities are trending to warm and inviting with human-scale entries and comforting interior design palettes.  However, there is a large shift away from high-touch features within healthcare facilities as health providers strive to demonstrate they are good stewards of their patients’ dollars.  Irgens’ recent outpatient development for Banner Health in Goodyear, Ariz., is a prime example of accessibility and convenience.  Irgens partnered with Banner Health to bring healthcare to Estrella Mountain Ranch where a population of approximately 15,000 residents had to drive 13 miles for their healthcare.  This previously unserved population now has the highest quality care right in its own community.

MREN: How has the changing way patients seek care changed the development and planning of  healthcare centers?
Cowell: Patients are involved in their healthcare choices more today than ever before.  This is attributable to high-deductible health insurance plans, patients self-paying and a recent national focus on the cost of healthcare in the United States.  A slow-moving shift toward wellness in lieu of sick care is also helping change the way patients view healthcare.

These shifts have affected the way healthcare centers are developed and planned.  Health providers knowingly have a need to be a resource to patients as patients slowly turn their focus to well care.  Therefore, health providers are deploying outpatient network strategies to place care providers and associated facilities close to the patient for accessibility and convenience.  Interestingly, this trend is also extending to the patients’ workplace.  This is not only for patient access/convenience but also as a means to attract employers to health system-sponsored health insurance plans often leading with the patient-centered medical home model.

Medically based health and wellness centers will continue to increase in popularity as the United States continues to undergo a shift in its healthcare paradigm.  The wellness buzz will not become the norm until health providers and payers (i.e. insurance companies) are truly aligned and patient population management outweighs our current pay-for-service health system.  This shift will take many years.  Until then, value will be the underlying theme in healthcare real estate development.

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