Retailers have long learned how to function and adapt to meet their customers’ needs. Competition is fierce and there’s no room for error when it comes to achieving success. Consumers are more informed, connected and empowered than ever before. Thus, retailers have perfected key traits such as branding, standards, speed-to- market, advertising, convenience and site selection. Healthcare systems have much to learn from retail. While they have been laser-focused on delivering exceptional patient care on their primary campuses, they face an onslaught of new challenges as they embrace a retail strategy to expand outpatient services and their ambulatory network.
As healthcare systems add retail locations to improve access, retailers view them as competitors only from a real estate perspective. Traditionally, retailers considered healthcare systems symbiotic partners that could potentially direct new customers to their store. However, in today’s market, retailers are beginning to compete directly with healthcare providers as they add health services to improve access and reach a broader base. Walmart, Target, CVS and Walgreens are just a few that are adding services such as urgent care, lab specimen collection, and even imaging at both new and existing locations. Retail fitness centers are also providing preventive and wellness care to maximize their membership base.
These major retail stores and chains are often found in prime well-established locations with built-in traffic flow and volumes required to succeed. Healthcare systems are now competing with retailers to secure premium locations (i.e., the new corner of Main & Main) where before they only focused on their primary campus and immediate service areas. Competition is coming from all sides and in many ways.
COST OF ENTRY
Ambulatory locations, and more specifically primary care locations, are typically a loss-leader for healthcare systems and have been a vehicle to open new market doors and drive downstream specialty revenue and inpatient referrals. As such, business plans are extremely tight as healthcare systems look to minimize losses across ambulatory networks. Outpatient centers have traditionally been developed within medical office buildings (MOBs) or spaces dominated by other healthcare services. MOBs typically have an abundant supply of available space within any given real estate market. This fosters favorable real estate economics and lowers operational costs for the development of new healthcare space.
However, MOBs do not offer the best patient convenience and overall experience when compared to other retail options. Therefore, recent trends have seen healthcare systems focusing on ground floor space, shopping centers, strip malls and even pad sites for single-use facilities to provide an easily accessible and convenient retail experience. Unfortunately, these alternatives often come with a major price tag. An internal CBRE study across three major metropolitan markets shows prime retail space lease rates coming in, on average, 20% to 30% higher than comparable space within an MOB.
The required capital to develop this new space is also higher. Tenant improvement allowances are typically 15% to 20% lower and less core infrastructure is provided when compared to an MOB. These factors have a negative impact on new ambulatory business plans and increase the overall cost of entry as well as long-term operational costs.
PRICE SHOPPING
Price point matters for consumers in the retail world and it continues to evolve in healthcare as well. The emergence of price shopping and transparency for insurance by consumers, whether through public or private exchanges or traditional products, is having an impact on how consumers are paying for and using healthcare. The most recent signals from the federal government indicate that shopping for insurance is on the rise. Also, dual working households are evaluating cost when deciding which spouse will carry the insurance for the family.
his is not necessarily a new trend, but with the increase in high-deductible plans, families have a choice and are scrutinizing insurance packages more closely. This is driving consumers’ willingness to pay out of pocket and shop for insurance products that will balance out-of- pocket expenses with premiums. Price competition is making healthcare providers focus on efficiencies within their cost model or offer additional services that make up any revenue differences.
DATA-DRIVEN ANALYTICS MUST DRIVE STRATEGY
Retailers rely on robust analytic platforms to understand consumer behaviors, trends, patterns and opportunities. More data has been created in the past two years than in the entire previous history of the human race. According to SINTEF, 90% of the data in the world today was created over a two-year period and continues to evolve. Understanding how to use and apply this information is an even bigger challenge. Partnering with a healthcare data firm to mine consumer traits such as origin, demographics, payer mix and utilization rates is a key first step to any successful retail strategy.
However, the data alone is not the answer. The true value comes in its application. Healthcare systems must be able to incorporate analytic research into both their overall healthcare strategy AND their real estate strategy (short term and long term). This is where healthcare systems have a significant leg up on their new retail competitors. Retailers cannot rely on downstream revenue sources to support new healthcare endeavors, and they’re slowly learning how complex and challenging healthcare delivery can be.
DECISION MAKING & STANDARDS
Standards and prototypes must be developed and implemented to ensure speed to market. Successful healthcare retailers cannot afford to second guess their strategic plan once it has been implemented. Don’t get caught in the trap of customizing each location to appease provider preferences. Competition will quickly take advantage of any lost momentum and capture whatever remaining market share still exists. The best locations will disappear, consumers and patients will find alternate sources for care, and development opportunities will quickly be lost. Discipline is required. There’s a reason that retail outlets are designed and branded in a specific way.
CREATIVE ADVERTISING & SOCIAL MEDIA
To compete in the retail space, healthcare systems must expand their traditional advertising channels to include social media. Increasing brand awareness and acceptance is more than just a Facebook page. Out-of- the-box thinking must be applied. More and more patients are relying on advice gleaned from the internet for everything, including their health. According to Software Advice, 77% of patients surveyed used online reviews as their first step in finding a new doctor. New healthcare apps and wearable devices are hitting the market every day. Wellness has become trendy as devices have become mainstream and social media has impacted how people track and promote a healthy lifestyle. Systems must ensure their retail strategies encompass solutions geared toward wellness as well as episodic care when ill or injured.
BRANDING & CUSTOMER SATISFACTION
Even though price point matters, retailers have learned that consumers are very loyal if they’re provided with exceptional services and superior outcomes. Studies have shown that 86% of consumers are willing to pay more for a better experience. And given that consumers are likely to have 65 times more retail encounters than healthcare encounters over the course of a calendar year and eight times more outpatient encounters than inpatient encounters, it’s imperative for healthcare systems to invest heavily in customer experience and ensure consistency at all ambulatory and retail locations. Each positive customer experience will firmly reinforce the new retail brand and magnify downstream revenue opportunities.
VIRTUAL COMPETITION
And don’t forget about virtual healthcare. It should also have a place in a system’s strategic plan. Telehealth applications are beginning to impact consumer utilization and spending habits, similar to the effect of online shopping over the past decade. By 2018, it’s estimated the number of patients using telehealth services will rise to 7 million. While virtual visits may not be covered by insurance, many consumers are opting for this route, regardless of the cost, due to convenience or access to care. An increasing
number of patients are also finding that telehealth visits aid in managing chronic conditions and assist in reducing readmission rates.
CONCLUSION
As healthcare continues to move away from the central hospital and systems expand their footprint, organization leaders must embrace new technologies and approaches to care delivery. Unheard of in the past, patients are becoming savvy consumers that evaluate service, outcomes and price prior to selecting a provider. And, all the while, competition continues to grow. To remain viable, strategies must be creative, consistent and deliberate. Look to other industries and identify best practices that can be replicated in healthcare. Retail was just the first step. We can only imagine what lies ahead.
Source: BDC
We’ve all been to health care facilities and probably seen the same general scenario: a cold, sterile environment where no one wants to stay for long.
The role of health care facilities, however, have begun to change in the community, providing some exciting new opportunities to master plan, design and develop for the next generation of doctors, nurses, visitors and patients. In Georgia alone, we are seeing ground-up construction of new facilities, expansions and complete renovations; not to mention the two largest health care projects in the state’s history were recently announced.
At HGOR, we are seeing three emerging trends in the health care sector:
-Health care facilities are seeking a stronger connection to their surrounding communities.
-The walkability of campuses is finally being seen as an advantage for visitors and employees.
-Facilities are looking to increase the areas of respite on site.
These trends ultimately focus on providing a greater design for the people interacting with these built environments, which can make health care facilities more enjoyable places for everyone.
Whether urban or suburban, a strong connection to the surrounding community has been a driving force of development, as health care facilities are considering their importance to the neighborhood fabric. At one of our Atlanta projects, Piedmont Hospital’s build-out of the new Marcus Tower, we are working with Piedmont to add several features to its campus that will provide more connectivity to the neighborhood and surrounding commercial zone. Its main campus sits on busy Peachtree Street, but it has no real interaction with the street, both from a visual aspect and as a pedestrian connection.
With our project, both Peachtree and the cross street, Collier Road, will have new broad sidewalks lined with shade trees, which will provide a pleasant walking experience along both arteries. A new multilevel plaza space will provide direct connectivity between the hospital lobby and the new expanded sidewalks. The plaza can also be enjoyed by the public or provide breakout space after lectures in the new auditorium. An active-use facility—think food venue—is proposed adjacent to the plaza, which will add life to the hospital street frontage. These additions will create a much stronger connection to Piedmont Hospital’s front door from Peachtree Street.
Incorporating walkability into health care campuses is beneficial to anyone who interacts with the hospital. This is further strengthened by many facilities’ increased offerings of wellness programs, which are strongly promoted by the Affordable Care Act. Facilities are looking at how they can better serve the community by proactively encouraging healthy behavior, such as daily exercise, eating properly and putting a conscious focus on walkability.
At our project with Northeast Georgia Medical Center – Braselton, we’ve helped make the campus more accessible. Plans are also in place to create a walking trail around the entire 100-acre campus. Employees and adjacent communities may benefit most from these improvements since they will offer jogging/walking paths throughout natural areas, such as along a nearby river, which may eventually connect to other trails in the area. Presenting opportunities for employees to connect with nature in a walkable environment—versus walking laps in parking lots during their breaks—will ultimately offer a physical, as well as psychological, respite to potentially stressful days.
Finally, hospitals are places where the full spectrum of emotions is felt. Often, an area of silent contemplation or reflection is needed. We’re seeing more hospitals dedicating therapeutic gardens and outdoor pockets to satisfy this need. Our project at Children’s Healthcare of Atlanta – Center for Advanced Pediatrics will include areas of prospect and refuge within the campus landscape, allowing patients and their families a chance to enjoy the wonders outside, when needed.
Another project, NGMC – Gainesville, incorporated other “surprise and delight” features, such as trickling fountains, a peace garden and even a pet park, which allow those with extended stays at the hospital to have a reunion with their favorite pet in an enclosed, safe landscape.
By incorporating these trends in health care planning and design, facilities across the country will have stronger connections with their stakeholders and surrounding communities, and will be leaders in promoting wellness alongside their tradition of healing.
Source: Commercial Property Executive
-Facilities are looking to increase the areas of respite on site.
These trends ultimately focus on providing a greater design for the people interacting with these built environments, which can make health care facilities more enjoyable places for everyone.
Whether urban or suburban, a strong connection to the surrounding community has been a driving force of development, as health care facilities are considering their importance to the neighborhood fabric. At one of our Atlanta projects, Piedmont Hospital’s build-out of the new Marcus Tower, we are working with Piedmont to add several features to its campus that will provide more connectivity to the neighborhood and surrounding commercial zone. Its main campus sits on busy Peachtree Street, but it has no real interaction with the street, both from a visual aspect and as a pedestrian connection.
With our project, both Peachtree and the cross street, Collier Road, will have new broad sidewalks lined with shade trees, which will provide a pleasant walking experience along both arteries. A new multilevel plaza space will provide direct connectivity between the hospital lobby and the new expanded sidewalks. The plaza can also be enjoyed by the public or provide breakout space after lectures in the new auditorium. An active-use facility—think food venue—is proposed adjacent to the plaza, which will add life to the hospital street frontage. These additions will create a much stronger connection to Piedmont Hospital’s front door from Peachtree Street.
Incorporating walkability into health care campuses is beneficial to anyone who interacts with the hospital. This is further strengthened by many facilities’ increased offerings of wellness programs, which are strongly promoted by the Affordable Care Act. Facilities are looking at how they can better serve the community by proactively encouraging healthy behavior, such as daily exercise, eating properly and putting a conscious focus on walkability.
At our project with Northeast Georgia Medical Center – Braselton, we’ve helped make the campus more accessible. Plans are also in place to create a walking trail around the entire 100-acre campus. Employees and adjacent communities may benefit most from these improvements since they will offer jogging/walking paths throughout natural areas, such as along a nearby river, which may eventually connect to other trails in the area. Presenting opportunities for employees to connect with nature in a walkable environment—versus walking laps in parking lots during their breaks—will ultimately offer a physical, as well as psychological, respite to potentially stressful days.
Finally, hospitals are places where the full spectrum of emotions is felt. Often, an area of silent contemplation or reflection is needed. We’re seeing more hospitals dedicating therapeutic gardens and outdoor pockets to satisfy this need. Our project at Children’s Healthcare of Atlanta – Center for Advanced Pediatrics will include areas of prospect and refuge within the campus landscape, allowing patients and their families a chance to enjoy the wonders outside, when needed.
Another project, NGMC – Gainesville, incorporated other “surprise and delight” features, such as trickling fountains, a peace garden and even a pet park, which allow those with extended stays at the hospital to have a reunion with their favorite pet in an enclosed, safe landscape.
By incorporating these trends in health care planning and design, facilities across the country will have stronger connections with their stakeholders and surrounding communities, and will be leaders in promoting wellness alongside their tradition of healing.
Source: Commercial Property Executive
In a merger that brings together two Florida real estate investment firms, Boca Raton-based Kayne Anderson Real Estate Advisors said Thursday that has agreed to acquire Sentio Healthcare Properties.
The all-cash deal has an estimated total asset value of $825 million.
Kayne Anderson, the real estate private equity arm of Kayne Anderson Capital Advisors, invests in off-campus student housing, senior housing and medical office buildings. Publicly-traded real estate investment trust Sentio, based in Orlando, has a portfolio of 34 properties including senior housing communities and medical office buildings in 16 states across the country.
Under the terms of the agreement, Sentio stockholders will receive between $14.37 to $15.22 per share in cash, depending on certain conditions, according to a release. The deal is subject to Sentio shareholders’ approval and is expected to close in the third quarter.
Source: The Real Deal
