Healthcare i Ohio

Focus on freestanding emergency departments keeps Midwest healthcare developers busy

Fifth_Third_FOB_Building_Rendering
Duke is scheduled in November of this year to wrap construction on the Fifth Third Faculty Office Building in Indianapolis.

Break your arm? Covered in poison ivy? The odds are higher than ever that you'll seek treatment at a freestanding emergency department, better known in the healthcare community as a freestanding ED.

Break your arm? Covered in poison ivy? The odds are higher than ever that you'll seek treatment at a freestanding emergency department, better known in the healthcare community as a freestanding ED.

That's because a growing number of hospitals are building freestanding EDs across the country and the Midwest. And it's a trend that those working in healthcare real estate say isn't about to slow.

"It's a way for hospitals to get into new or expanding markets," said Keith Konkoli, senior vice president of Midwest healthcare for Duke Realty. "A lot of our clients are looking at that model."

The focus on freestanding EDs is one of the trends changing the way commercial healthcare developers such as Duke are doing business. A growing number of hospitals are finding that freestanding clinics are a way for them to serve a larger population, incuding patients that might find driving miles to a central hospital too much of an inconvenience.

Because of this, many hospitals are spending more money on building off-site facilities than they are on expanding their large hospital buildings.

Duke has been a major player in this trend. And, as Konkoli says, it's not just freestanding emergency departments that have kept Duke busy. The developer is also building freestanding cancer centers, cardiology centers and medical office buildings across the country.

"We ae seeing this trend of freestanding healthcare facilities all the way from the biggest level -- freestanidng EDs -- to physician groups staking out a small presence in a neighborhood shopping center with their own medicl offices," Konkoli said. "We are seeing clients reaching into new markets in which they have historically not had a presence."

The trend seems to be one welcomed by patients. The EDs are convenient. They are often easier for patients to get to. And, just as importantly, patients don't have to wait as long to receive treatment.

According to a 2012 report by the Urgent Care Association of America, freestanding EDs treat from 35 to 40 patients a day. Hospitals treat from 100 to 150 a day. Because of this, wait times at freestanding EDs are usually lower. The same study found that patients wait an average of three hours at a traditional hospital emergency room. The average wait time falls to 60 to 90 minutes at freestanding EDs.

Hospitals like freestanding centers because not only do they give them the chance to reach more patients, they are also more lucrative. The Urgent Care Association study found that the average net revenue per patient at urgent care centers ranges from $105 to $135. That figure jumps to $350 to $500 per patient at freestanding EDs, according to the report.

For Duke, this trend has meant plenty of work. This year, Duke completed the Anderson Township TriHealth Cardiology Center in Cincinnati. The 20,636-square-foot building houses a cariology physician practice, cardiology diagnostic services, imaging, laboratory services and physician offices.

Duke is scheduled in November of this year to wrap construction on the Fifth Third Faculty Office Building in Indianapolis. This 274,000-square-foot medical office building will sit on the new 37-acre Wishard/Eskenazi Health campus in Indianapolis.

To compete in this changing healthcare environment, Duke has to be flexible, Konkoli said. And the company can't just be a builder; it must act as an advisor, helping their healthcare clients develop real estate plans that will help them meet both their financial and patient-care goals.

"We have to be in a position to help our clients from a real estate strategy standpoint," he said. "We have to help them define their entire real estate strategy so that they can make building plans that help them realize this strategy. Then we have to try to help the put this strategy into play. We have to be a partner to them across the whole spectrum of their real estate needs."

Konkoli said that he expects the healthcare real estate market -- fueled partially by new plans for freestanding centers -- to continue to grow in the coming years.

There is less certainty in this market today, now that healthcare providers know more about the Patient Protection and Affordable Care Act, Konkoli said. And that has inspired more providers to move ahead with real estate plans that they had previously put on hold.

"A couple of years ago, there were more questions about where healthcare was going," Konkoli said. "As more clarity comes to the forefront, we are beginning to understand how care will be delivered. We know more now about how to make the migration from volume-based services to value-based services. Health systems have gotten more comfortable getting more aggressive with their growth plans. They are acting on plans that they have been developming over the course of the last 24 to 32 months."