Why This Health System Leases Space To Donut Shops

Various health systems nationwide are embracing the “retail opportunity,” allowing restaurants, pharmacies and clothiers to lease ample space within their hospitals and outpatient buildings.
That’s the case at Chicago-based Northwestern Memorial HealthCare, according to Gina Weldy, vice president of operations and real estate at the health system. But Northwestern’s approach may strike some other systems as odd, given that Northwestern also leases space to “unhealthy” places, like donut shops.
Northwestern is a seven-hospital health system located in the Chicagoland area. The health system currently has more than 100 outpatient sites and about 70,000 square feet of retail space—all of which looks similarly to how “a normal retail environment might look,” Weldy said.
Usually, Northwestern leases to “fresh, healthy concepts,” Weldy explained—but not always. And the strategy has worked out marvelously for the health system.
In general it’s been incredibly successful,” Weldy said during a panel discussion at BOMA International’s recent 2017 Medical Office Buildings and Healthcare Real Estate Conference in Denver. “We have seen the return that we anticipated.”

Respite and Amenitites

When originally deciding how to approach retail, Northwestern had a lot to consider.

“We had a lot of really rigorous conversations about what we could align with, and what would be successful,” Weldy explained.

The health system wanted its retail tenants to provide a respite for hospital patients, but also “an important amenity for [hospital] employees, who may only have 30 minutes at lunch to get things done,” Weldy said.
Luckily, convincing retail partners to come on board wasn’t very difficult, as Northwestern’s downtown Chicago campus offers them the density of midtown Manhattan.

“While you may not perceive yourselves as being in a dense environment like we are, if you actually measure the density within your buildings, there’s a significant retail capture opportunity,” Weldy explained.

Northwestern knew that nobody really desires to go into a hospital to “have a retail experience,” so it cut doors in the outer walls of its buildings to lease to places like restaurants and a full-service Walgreen’s, Weldy added. This further helped Northwestern’s 5-block campus blend into the larger Chicago neighborhood.

“We helped the neighborhood forget our size,” Weldy said.

Employees reacted so well to the new retail spots that Northwestern ended up closing its “heavily subsidized” employee cafeteria at its downtown Chicago hospital and replaced it with four healthy restaurants.
Northwestern also leases space to a couple of donut shops, though leaders feel justified in this decision.

“If a family is going through chemotherapy with their 3-year-old, they don’t really care right now about the healthfulness of the food—they’re going to give the child whatever makes them comfortable that day,” Weldy said.

Source: Medical Office News
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Proton Therapy Center Lands $81 Million Financing For Delray Beach Facility

proton therapy center rendering

For years, hospitals and physician groups have proposed building a proton therapy center in Palm Beach County. Those plans never panned out, presumably because the cancer-treatment centers are prohibitively expensive.
But a plan for a proton therapy center at Tenet Healthcare’s Delray Medical Center remains on track. Proton International of Louisville, Kentucky, this month closed on an $81.3 million bond issue that will pay for the 40,000-square-foot facility, according to a mortgage.
The facility will be open for photon patients in 2018 and proton patients in 2019, Proton International said.
With proton therapy, doctors aim a high-speed stream of positively charged particles at a cancerous tumor. Unlike chemotherapy, which bombards a patient’s body with radiation, protons release more of their energy into the tumor and nowhere else, thus saving healthy tissue.
Seen as a safer alternative to chemotherapy, protons are used to treat tumors of the brain and central nervous system, spine, head and neck, lung, prostate, liver, gastrointestinal tract and colon, and some breast tumors. Because children are especially sensitive to radiation therapy, doctors often use protons to treat juvenile cancer.
In early 2012, Boca Raton Regional Hospital said it would spend $120 million to build a proton center on Glades Road. At the same time, South Florida Radiation Oncology was scouting locations for its own proton facility. Neither project was built.
Source: Palm Beach Post
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We’re In the ‘Sweet Spot’ For Medical Office Investments

It’s a great time to be in the medical office sector, according to several seasoned experts.

“Right now we’re in the sweet spot for medical office,” Matthew Johnson, a managing director in Morgan Stanley’s Investment Banking division, said during a presentation at BOMA International’s 2017 Medical Office Buildings and Healthcare Real Estate Conference in Denver on May 11.

The medical office sector has “really outperformed” in the last five to 10 years, Johnson explained, noting that the performance is being driven in part by strong headwinds in other sectors.
There’s “significant development” in senior housing, for instance, and a lot of Medicare-related pressures in the skilled nursing sector, Johnson said.

“That puts medical office—a true, steady asset class—on the forefront of predictable,” he explained.

More Competition Ahead

The attractiveness of medical office sector is only going to make the space more competitive for all investors, according to Ryan Severino, JLL’s chief economist.

“You’re dealing in a globalized world with competitive capital sources that are looking for attractive investment opportunities,” Severino said during the BOMA presentation. “It’s certainly going to start to make the landscape more competitive.”

Foreign capital sources are beginning to set their sights on medical office assets in the U.S., Severino said. Many of these capital sources are from Asian countries.

“You’ve definitely seen, from China, probably a surprising amount of investments, certainly in recent periods,” Severino explained.

Additionally, health care real estate has “significantly matured” in the public markets—and that’s likely to continue.

“The opportunity is really compelling in medical office, and the perception of it being sort of a riskier property type or one that doesn’t quite have some of the key distinguishing elements that investors like about some of the major property types—maybe that’s not the right thesis to have,” Severino concluded.

Source: Medical Office News
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Strengthening The Hospital/Real Estate Bond


By Jay Johnson, Transwestern

Hospitals and healthcare systems share a common challenge when it comes to including real estate considerations in corporate planning. After all, real estate administrators typically come from careers in property management, leasing or facilities operations, without direct experience in the delivery of patient care.
Likewise, the top leaders in a given hospital system usually ascended the ranks on the healthcare side, with little exposure to real estate contracts, maintenance or property management. Both groups are strongly dedicated to the healthcare mission, but are not always able to create the proper alignment between business strategy and real estate.
This common state of affairs puts the healthcare organization at a disadvantage, however. Real estate has the potential to increase patient access, generate cash flow, increase efficiency and drive growth. A key to unlocking that potential is managing real estate as a portfolio rather than a series of individual properties.
With the right processes and technology, the real estate team can provide valuable insight on a per-property and per-square-foot basis. For example, tracking may reveal that a fully occupied clinic has half as many physicians per square foot as other assets in the portfolio. This hidden vacancy is an opportunity to add doctors—and business—without the expense of acquiring new space, or disposing of costly excess space.
When an organization decides to buy, lease or construct new space, the real estate team may be called in after business planning is far along. However, by including real estate experts in strategy meetings before a site search begins, healthcare executives can make a more informed site selection, especially in regard to patient access, and more accurately project its construction and operating costs, which are significant components of the overall business case for the expansion. Property managers also can help determine whether existing building teams can handle the new location, or if additional managers, engineers and housekeeping staff will be required.
More broadly, the real estate team can address the property component of planning hospital mergers or acquisitions of physician practices. Too often, the team inherits these properties with no idea why a site was acquired, its long-term role, or how to service it with existing resources.
Engineers can predict whether existing utilities, HVAC and parking will adequately serve a new building on campus, or be prone to failure by the added strain. And if the organization is correlating its real estate to its tracking of physicians, patients and other indicators of hospital operations, it will have a clearer understanding of whether it really needs a new building, or if there is already capacity in the portfolio to serve its needs.
When a healthcare system integrates real estate in measuring overall operational performance, the need for including portfolio management in business planning quickly becomes apparent. And the data and analyses generated through this inclusive approach will provide a common ground that speaks to both real estate managers and hospital executives, bridging the gap that all too often divides them.

Source:  GlobeSt.

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Under Construction: A New Resource to Target Health Disparities

research building 2

Along Virginia Avenue, toward main campus, you’ll find the steel skeleton of a new research building under construction. This is Research Building 2 (RB2), a precious resource and a vehicle for the University of Kentucky to reduce the health disparities that most impact Kentucky.
This building will house researchers that focus on the following disparities: cancer, obesity, diabetes, cardiovascular diseases including stroke, and substance abuse. These conditions have a major adverse impact on the health of Kentuckians, contributing to death rates from each disease that rank within the top 11 states in the nation.
RB2 will enable multidisciplinary research that approaches these disparities from numerous fields and perspectives—health care researchers (both basic and clinical), public health, behavioral sciences, agriculture outreach and extension, economics and engineering—working in close proximity and collaboratively to develop solutions to these complex problems.
This $265 million building (funded half from the state of Kentucky, half from university resources, including private gifts) is scheduled to open in summer of 2018.
The design of this modern research facility embodies a lifestyle that reduces health disparities, including a healthy food choice restaurant, a room to house bicycles for travel to and from the facility, and prominent staircases to encourage physical activity.
Within the laboratories, the design and focus comes with a specific scientific underpinning: much of discovery today, whether at the cellular or community level, happens at the intersection of disciplines. This facility, by placing investigators together in “neighborhoods,” is designed to foster discovery and collaboration so that what happens in the course of basic research can be translated to answers and solutions at the community level.
By placing people, who are working on the same problem—say, cancer—but from different angles (economics, biomedicine, public health), next to each other in a single building facilitates communication and promotes new avenues for problem solving. Through this design, the project will improve the lives of Kentuckians by providing modern space that lends itself to multidisciplinary research that is needed to address entrenched health problems.
While each of these major diseases influence citizens across the Commonwealth, they are of immense concern to our citizens residing in rural Appalachia, a region with some of the most pronounced rates of chronic diseases in the country. A recent report from the University of Washington showed rates of death from cancer in the United States dropped by 20 percent between 1980 and 2014. However, these gains were not distributed equally across the country. Clusters of high mortality were found in many states, including Kentucky. Four main factors are thought to drive these disparities: socioeconomic status, access to health care, quality of health care available, and prevalence of risk factors, such as smoking, obesity and lack of physical activity. The Appalachian region of Kentucky experiences a perfect storm of these factors driving disparities. A primary focus of research within the new building will be determining factors that drive more disease risk and burden in Appalachia, and developing preventive and therapeutic approaches that are optimized to have greater benefit to those living in this region.
RB2, the Biological Biomedical Research Building (BBSRB) and the Lee T. Todd Jr. Building will be linked in complex, to further foster collaborative and multidisciplinary research. The connecting conduit building, serving as the spine of the complex, has been named the Appalachian Translational Trail, as it will house the nucleus of translational researchers who bring together all disciplines.
The real power of research is realized in bringing different groups of experts together, and in order to tap into that power, we applied a multidisciplinary approach to the planning of this new building. We began by aligning our work with the goals of the 2015-2020 Strategic Plan. These are invest in UK’s existing strengths and areas of growth in selected focus areas that benefit and enrich the lives of the citizens of the Commonwealth; recruit and retain outstanding faculty, staff and students; improve the quality of the research infrastructure across campus; and strengthen engagement efforts and translation of research. The planning and implementation of RB2 touches on each of these goals.
The health disparities we are targeting are, indeed, areas of current UK strength in research and health care. We have strong individual investigators across all colleges at UK, as well as existing collaborative research centers that can bring intensified focus in these areas. We’ve tapped these experts, based on thematic areas in each of these health disparities, to use data (i.e. grant funding, expenditures, research space) to evaluate our current resources, and identify areas in which we could strategically invest to expand resources and hire new investigators, who will most likely be housed within RB2, to make the biggest impact for Kentucky.
By growing our research enterprise to focus on the most critical health needs of Kentucky, we can translate basic science findings to clinical practice and to the community to fight these devastating health disparities and improve the quality of life for Kentuckians. We thank Kentucky legislators for their support of RB2, and we will do everything in our power through this precious resource to make that difference.
Source: UK Now
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