Development Magazine Spring 2019

Marketing - Leasing

The New Health Shop on the Block

Deborah Aschheim’s works are among the art installations that have been displayed at the University of California San Francisco Mission Bay Hospital’s “Art at the MacMAC,” an acronym for the hospital’s Memory and Aging Center.
Elizabeth Fall for UCSF

Wellness programs housed in medical office buildings or near hospitals can engage the local community and entice potential customers.

Those with chronic and acute medical conditions are defying stereotypes thanks to patient-outreach programs that stretch beyond the traditional hospital bed.

Today’s medical offices and hospitals use ancillary wellness programs that engage the local community and serve as a gateway to traditional inpatient programs.

A Growing Need Spurs Unconventional Settings

Wellness programs are, in part, a response to the demographics of an aging population and rising health care expenses. The U.S. Census Bureau estimates that by 2030, one-fifth of Americans will be retirement age; by 2035, people 65 years and older will outnumber those under the age of 18 for the first time in our country’s history. At the same time, the long arc of rising health care costs has placed pressure on the industry to lower expenses. Hospitals and medical buildings now focus on ambulatory care to address burgeoning demand in more efficient settings than conventional inpatient facilities. Shopping malls, vacant retail storefronts and development on lots adjacent to hospitals — they’re all fair game for a health care approach that dissuades patients from making unnecessary and costly emergency room visits. (See related story.)

Dubbed the “new retail,” health care has expanded into brick-and-mortar spaces that have been shuttered because of the growing success of e-commerce options. Convenient parking, accessibility, reduced waiting times and some neighboring stores — what’s not to like?

At Bisnow’s National Midwest event in November 2018, developers alluded to “accordion-style” flexibility, where retail space might be repurposed as a health care facility (although demand for large office buildings with heavy medical infrastructure remains, too). Panel speakers acknowledged that filling former retail spaces might result in reduced building costs while reusing real estate in an efficient way.

Going Beyond Medical Care

Proximate wellness centers lure a captive audience with programs that create a front door to the health system. As an example, the University of California San Francisco’s Mission Bay campus hosts “Art at the MAC,” an acronym for the hospital’s Memory and Aging Center. Interestingly, patients who lose cognitive function such as language sometimes develop new artistic skills. So by opening art galleries and funding visiting artists such as the theatrical monologist who uses improvisation to create comedic shows “that often deal with very serious subjects,” according to the center, families learn about hospital resources. Caregivers may come for the show, but they stay for all sorts of aging care services.

At Mills Peninsula Hospital in Burlingame, California, the outpatient services read less like a hospital and more like an upscale spa. Although the therapy offerings include cardiac care, they also offer aquatic classes and hand treatment with therapeutic massage. And this isn’t your grandmother’s waiting room. Instead, living green planted walls and dramatic glass entries envelop waiting and treatment areas.

Conversely, other outpatient programs help patients avoid the hospital entirely. At California’s Stanford Hospital, the Community Partnership Program targets lifestyle choices that play a role in chronic illnesses such as obesity and diabetes, infectious diseases and behavioral health. Stanford takes it outdoors with classes such as “Equine-imity: Stress Reduction in the Company of Horses.” Using techniques from medical qigong (a gentle movement-based yoga), participants focus on “observing, meeting, touching and breathing” with a herd of 10 to 14 horses. The program’s director, Beverly Kane, suggests that humans can learn from a horse’s nearly immediate ability to return to grazing after a stressful event. And at 40 heartbeats per minute, horses encourage lower heart rates in companions. While an equestrian center on the adjacent university campus makes such a class possible, Stanford reports that most people — even large-city dwellers — live within 30 minutes of backyard horses, facilities or teaching centers. Participants in the eco-therapy class enjoy the much-documented sense of well-being when humans connect with nature.

A Boost For the Bottom Line

Regardless of creative programming, the underlying model for ambulatory centers is as profit and referral centers. Studies by the Medical Fitness Association suggest wellness center construction offers returns on investment between 6 and 10 percent. While profit varies depending on operational decisions and limits imposed by insurance companies, there’s a national trend of increased outpatient revenue. Also, hospitals offer wellness centers for their own employees as well as for nearby employers, sometimes resulting in cost savings because of the in-house (or next-to-house) provider.

Whether as gateway to the hospital, an expanded community footprint or as preventative program, health care’s evolving outpatient model continues to change lives, as well as impact commercial real estate.

 

Alice Devine is the author of "Suite Deal: the Smart Landlord’s Guide to Leasing Real Estate," which was published in February 2019.

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