A healthcare provider’s quest for profitability has become increasingly difficult. But between shrinking revenues and tightening budgets, the last thing a practice wants to consider is an expiring medical office lease. It does so at its own peril, writes Chad Gunter, SVP of healthcare advisory services for Transwestern.
In this commentary for GlobeSt.com, Gunter explains why some aggressive planning, along with a deeper look at the practice, can help make the new lease much less an area for risk.
The ability to control occupancy costs is becoming a pivotal factor in a healthcare provider’s survival. Too many practices ignore a pending lease expiration until it becomes a crisis, gambling that a last-minute search will produce suitable and affordable space. But the stakes are perilously high.
Most physician groups have tightened budget controls to maintain profitability in the face of shrinking revenues. The forces hampering income streams are many, from decreased reimbursements paid for patient care by government programs, to heightened competition pressuring down prices, declining hospital admission rates, and hesitancy by some patients with high insurance deductibles to seek care. Physicians leaving private practices to join large healthcare systems underscore the challenge for practitioners to turn a profit.
Firms that take an aggressive approach to their medical office leasing will enjoy improved financial health by eliminating excess square footage and associated expenses. But they must start early to gain the most benefit.
Begin preparations for a medical office search at least a year before the current lease expires, starting with a self-assessment to identify features in the current space that help or hinder the business. Consider working with an architect experienced in healthcare design or a workplace optimization specialist to plan a cost-effective layout that doesn’t sacrifice function. Look beyond square footage to evaluate how well caregivers and patients are able to move through the space and use specific rooms, fixtures and machines.
Any practice that has been in place for 15 years or more is due for streamlining and modernization: For example, the shift to electronic records, as well as technological advances that have reduced the footprint of imaging machines and other equipment, have slashed space requirements.
Has the client base shifted to a different submarket? What locations would best serve patients?
With a shortlist of suitable spaces, consider tenant-improvement allowances and “overages,” or the expense the tenant must pay to cover the remaining bill for building out shell space for medical use. Will the landlord amortize the tenant’s build-out cost over the life of the lease?
Landlords will often increase the tenant allowance in exchange for additional years added to the lease. Long lease terms provide more predictable occupancy costs, too, with the opportunity to define periodic rent increases and renewal options ahead.
While negotiating term, request separate utility metering. Shared electric bills in a building that contains imaging labs or other high-usage activities increase utility costs for all tenants, so seek billing for actual usage where possible.
Even tenants that begin their search a few months away from a lease maturity shouldn’t lose hope, as favorable leasing options may exist. Some landlords offer turnkey spaces with reception desks, examination rooms and offices ready for use by tenants willing to forego their own finish-out. However, allowing sufficient time to locate, design and build out a space typically yields a better work environment for a healthcare practice, and may well reduce operating expenses in the process.
The views expressed are the author’s own.
Source: GlobeSt.

The future of the American healthcare system may be uncertain, but employers still have a vested interest in keeping their workers in top shape.
As such, some have taken it upon themselves to make getting adequate care easier — financially and logistically – by providing their employees with free or low-cost medical services at or nearby their office. This goes for construction companies as well, with some setting up temporary clinics at their job sites or hiring healthcare providers to address the range of injuries common among workers in the industry.
Depending on the company, benefits might include standard health screenings, yearly physicals, primary care and physical therapy necessary for a recovering worker’s rehab. Some organizations even extend a variety of such services to their employees’ families.
For example, medical device company Arthrex provides free on-site medical care at each of its locations, and automotive company JM Family Enterprises also makes available a 24/7 medical hotline for its employees, according to Fortune. The goal for these companies and others is to break down the barriers between workers and the healthcare they need by allowing them to view it in a different way.

“Healthcare has been reactive and is now trying to move toward a proactive strategy,” said Scott Goren, director of operations for Mount Laurel, NJ–based Onsite Innovations, a third-party provider of workplace medical service programs and clinics.

A Healthier Job Site

Having medical staff on site, and therefore familiar, could help those uneasy about the prospect of a physical exam feel more comfortable and therefore more likely to schedule a visit.

“When it is convenient and a known and trusted party, you break down a lot of barriers,” Goren said.

There are other benefits. Harvard Medical School researchers noted in a 2015 report that the average doctor’s visit lasts 121 minutes, including travel and wait time, and it costs employees $43 in lost time, which isn’t always compensated. On the flip side is the productivity loss for employers. The study found that only 20 minutes of that 121-minute experience is actually spent in consultation with a physician, so it follows that employers would try to recoup some of that lost time.
As with many enterprise-scale investments, large companies are the ones that will see the payback from having a staffed medical clinic on site, according to Marc Lion, partner at New York City–based accounting and consulting firm Mazars. But those companies shouldn’t expect to make a profit on the clinic. Rather, he said, it serves as an additional benefit for employees, and one that could lead to increased productivity.
State rules governing healthcare also factor in. New York, for example, lets employers own clinic space and equipment, but a licensed physician must own the actual health practice, meaning companies can’t run the clinic themselves, Lion said.
The ability to provide employees with a hassle-free experience, he said, is what makes third-party providers so attractive to many employers.

“There are all sorts of compliance regulations and rules. It’s easy to get caught up or overlook something you need to address. [A company] should engage healthcare professionals who do this often.”

Knowing The Laws

Understanding the rules and regulations is particularly important when treating workers’ compensation injuries, an area of medical practice on which third-party providers like Onsite Innovations focus. For example, Onsite Innovations has a worksite presence on construction projects ranging from $75 million to $25 billion in value, and its staff can treat injured workers or refer them to specialists and then make sure they’re following the medical professional’s orders when they return to the job.
Some states forbid employers from deciding where an employee can seek medical attention for an injury, said Julian Alexander, chairman and CEO of Onsite Physio, a Jacksonville, FL–based provider of worksite wellness services. According to Alexander, the U.S. is almost evenly split between states that allow employer-directed care and those that do not.
The on-site aspect makes physical therapy services like those provided by Onsite Physio attractive to injured employees, Alexander said. The company provides patient services at the workplace, a convenience for those who have returned to the job but still require treatment. It also makes home visits to those whose injuries prevent them from resuming work.
Goren and Alexander each set aside private space for workplace clinics or one-off appointments. And both companies, as must all licensed healthcare providers, comply with state and local health and building regulations, as well as the Health Insurance Portability and Accountability Act (HIPAA), which requires most medical information to be treated as confidential.

Improving Job-Site Training

Even while paying mind to privacy, on-site medical providers are able to share general information based on the injuries they see and suggest updates to a company’s training program or expectations, Alexander said. For example, if the clinic notices a high percentage of similar injuries originating from the loading dock, it could recommend to managers that additional training be offered on lifting correctly. This information could also present an opportunity for the employer to put together a post-job-offer physical testing program to make sure employees can meet the requirements of the position.
Such information also comes in handy during physical therapy. The therapist will review common job tasks with the injured employee and show him or her how to carry out those duties safely, Alexander said. While on the job, the therapist also might take time out to show other employees, who are not currently injured, the safest way to carry out their duties.
Medical professionals working in construction site clinics in particular are positioned to observe employee injuries that might otherwise go unnoticed. “They sometimes don’t want to report [an injury] because they want to continue working,” said Chris Maiello, a division manager for Onsite Innovations.
Being more transparent about workplace injuries and their treatment can benefit the entire project team. “Employer and employee best interests are not mutually exclusive,” Goren said.

 

Source: ConstructionDive

Finding doctors still in private practice is getting harder.
From the way they get paid, to reporting procedures and outcomes, especially for Medicare, more physicians are opting out of running a private family practice to join larger organizations that take care of administrative burdens.

“Why is everybody flocking to bigger organizations? Income guarantees, job security, fixed work hours, and less regulation work. Nobody wants to be an independent physician anymore. Everybody wants to join some place where the hours are good, the pay is good and it’s like a job instead of a profession. That’s a big difference, and I see that happening,” said Keith Chamberlin, president and board chair of Meritage Medical Network Accountable Care Organization, which has about 250 physician members across Marin, Napa, and Sonoma counties.

Ana Pacheco-Clark practices family medicine at Sutter Santa Rosa Regional Hospital. After 17 years of private practice she joined with Sutter Health in 2007, along with three other partners. A fourth partner went to Kaiser Permanente.

“It was getting more and more difficult to deal with all the (technical and administrative) changes. Financially, it was more and more difficult to stay on top of those things, and be able to offer benefits and salaries to staff,” she said.

More recently adding to the headaches, doctors say, is the Medicare Access & Chip Reauthorization act (MACRA). Passed in 2015, it changed the way the U.S. evaluates and pays for health care. The law does many things including establishing new ways to pay physicians for Medicare patients.
Two-thirds of health care providers (64 percent) report that they feel “unprepared” for managing and executing MACRA initiatives, according to a survey from Pittsburgh-based Stoltenberg Consulting Inc., a healthcare information technology consulting firm.
Marcy Norenius is director of strategy, network, and growth at Meritage. She fields questions every day from doctors about the reporting requirements.

“I have this same conversation over and over and over because it’s confusing. It’s overwhelming,” she said.

From 2013 to 2015, the number of physicians in groups of less than 10 dropped from 40 percent to 35 percent in the U.S., while the proportion of physicians practicing in groups of more than 100 grew from 30 percent to 35 percent, according to the Healthcare Financial Management Association, a membership organization for health care finance leaders.
The migration to larger practices was greater among primary care physicians than specialists.
From 2012-2015, 32,000 physician practices were acquired by hospital/health systems, an increase of 86 percent, according to a study by Physicians Advocacy Institute, a nonprofit health care advocacy organization, and Avalere Health, a healthcare consulting firm.

Medicare Reimbursement Changes

MACRA is shifting from a fee-for-service payment system that pays doctors according to the number of services provided, to a “value-based system that rewards improved healthcare outcomes,” according to the Centers for Medicare and Medicaid Services (CMS).
Those changes, which bring more reporting for doctors, went into effect Jan. 1, and the program will evolve over the next few years.

“The size of your payment adjustment will depend both on how much data you submit and your quality results. Medicare payments will be adjusted up, down, or not at all,” the CMS states.

The Quality Payment Program, as it is called, is the latest in a series of steps the CMS said it has taken to incentivize quality of care over quantity.
That’s a problem, said Meritage executive Chamberlin.

“How do you define value and quality? Is it always seeing the doctor or is it OK to see the nurse practitioner? Are you getting every test in the book or is it ok to get a couple? This is where a lot of argument comes in,” he said.

And, how do you report quality metrics to the government?

“It’s the worst thing (for a doctor) to have to report a gazillion things. This is one of the things that’s going to drive people out of private practice. That alone, in time and expense (of all the reporting) can kill a practice,” Chamberlin said.

Curtis Robinson has had a primary care practice in Mill Valley since 2005. The trend of doctors joining larger groups can be traced back to 1945 and the formation of Kaiser Permanente, he said, but the acceleration now can be attributed at least in part because of external pressure and expectations from the government.

“Many levels of reporting (to the government) and (new) technology are interfering with everyday life,” Robinson said.

One set of Medicare reporting, the Merit-Based Incentive Payment System (MIPS), will take him three full business days to complete, he said.

“And that’s just on one issue.”

Doctors work long hours and have a lot of responsibility, and piling more work on them takes them away from their primary duty — their patients, he said.

“Administrations and the government add work without the best intention of the physician,” he said. “They need to put the physician first.”

Source: NBBJ

A recent survey of the most technology-advanced hospital in the United States recognized Nicklaus Children’s Hospital as one of the “most wired” in the nation.
The 19th annual survey by the American Hospital Association’s Health Forum recognized the U.S. facilities that are taking the most advantage of tech and innovation to deliver care to patients.

“Most Wired” hospitals are using smartphones, telehealth and remote monitoring tools to create more ways for patients to access services and for administrators to gather information, according to the survey.

“The Most Wired hospital … are investing in new delivery models in order to improve quality, provide access and control costs,” said AHA president and CEO Rick Pollack.

For one, Miami Children’s Health System, the parent organization of Nicklaus Children’s Hospital, announced in April that it will build on its existing telehealth platform MCH Anywhere through a partnership with TytoCare, a New York City-based startup.
The deal aims to improve care delivered by doctors within the Miami Children’s health system, particularly when it comes to post-operative patients or those with complex or more acute medical needs and conditions.

“We believe [telehealth] can dramatically improve the quality of our care and extend our reach beyond our facilities,” said Edward Martinez, senior vice president and chief information officer of Miami Children’s Health System.

Source: SFBJ


In some ways, designing and building healthcare facilities is almost as challenging as keeping the systems running efficiently and effectively, according to the speakers at our recent Seattle Healthcare event. Making projects pencil and providing the best possible design once they do are certainly no easy tasks in a time when uncertainty is the new norm in the healthcare industry.

Right out of the gate, our Healthcare Paradigms panelists took up the question: What is having the largest impact on healthcare design and construction?

In Seattle, California and other markets, construction costs are climbing — mostly because of the cost of labor, the speakers said. Subcontractors can be selective about the projects they undertake. That is a complete turnaround from seven or eight years ago.

It is good that Seattle is a booming market, but that puts even more pressure on developers to contain construction costs. For developers and designers of healthcare facilities, that is especially true, since healthcare space is so specialized and its construction is more labor-intensive than other property types.

Some of the projects on the books do not pencil anymore, the speakers said. No one is going to pursue a project with negative return on investment, certainly not hospital organizations. Some of the healthcare developments that might have made sense only two or three years ago are on hold.

New projects will be built in the Seattle area. The demand is there, and developers will find ways to provide supply. But that is really only the beginning of the challenge.

The way facilities are built influences the way service is provided in healthcare, the speakers said. Newer designs will encourage a more collaborative atmosphere among the healthcare professionals who work there. But that is going to be hard to replicate in legacy facilities still in use, because healthcare facilities are hard to change once they are built, unless flexibility is built into the structure.

There is disagreement about what flexibility means in a healthcare setting, and whether it is even possible to use flexibility to future-proof a healthcare facility. There is also the question of how design can promote efficiencies, because providing care to patients in the most efficient way possible, without compromising the quality of care, is of the utmost urgency considering the current economics of healthcare.

Even a facility’s finishes — the way it looks and feels to patients — has a profound impact on healthcare delivery. A facility that feels harsh and unfriendly has a negative impact. It makes patients feel more anxious at a time when they need to be less anxious, and that complicates their interactions with healthcare providers, often for the worse.

Also, healthcare specialists need to design facilities to take care of the staff who work there. They need to be comfortable in their surroundings, or patient care will suffer.

The speakers on our Providers Perspective panel offered their take on providing healthcare in the current climate. The short answer: tough but doable, especially for healthcare systems always looking to provide better patient-centric care.

Virginia Mason Medical Center President Suzanne Anderson said Virginia Mason has established very aggressive goals regarding patient experience and quality of care in recent decades. She said the health system will focus on doing healthcare differently, constantly evaluating its processes to find areas to improve care, which is at the heart of the Virginia Mason Production System, a process for patient care modeled after the Toyota Production System.

The system extends to all of the Virginia Mason facilities. That includes the hospital of that name, a network of regional medical centers in the Seattle area, and the Virginia Mason Institute, providing training for the Virginia Mason Production System.

Swedish Health Services CEO R. Guy Hudson said it is important that patients receive the same high-quality care wherever they enter the system. One goal is to keep people out of the hospital by focusing on primary care and wellness and prevention. One of the system’s main strategic objectives, he said, is lowering the overall cost of care.

Swedish Health Services has five hospitals, two freestanding emergency departments, and more than 180 primary and specialty clinics throughout the Puget Sound.

The economics of healthcare is challenging, both speakers said. Of special concern right now is the possibility that the expansion of Medicaid under the Affordable Care Act will be rolled back. People newly covered in recent years will be out of the system again, and less likely to access preventive care, and thus cost the system more when they become very sick and seek treatment at emergency rooms.

 

Source: Bisnow