BLOGS: Womble Commercial Real Estate

Monday, June 24, 2013, 7:57 AM

A Glimpse into the Workplace of 2020. Are You Ready for Generation Y Managing Your Workplace?

I'm not.  But with my soon to be 20 year old son coming home this week from a semester in Europe, it has me thinking.  Here's an interesting blog post from ...

Generation Y – A Glimpse into Workplace of 2020

by Daneal Charney

Just wait until you grow up
What will generation Y be like as managers?  Some argue that when Generation Y becomes managers they will adapt the same behaviors and practices as the rest of us.  “Wait till they grow up and have real responsibility!.  That will teach ‘em”.  While this line of thinking seems to make sense because GenerationY will be in the same life stage (married, kids, etc) as the managers before them, it doesn’t take into account the tremendous shifts in the world of work.

First off, there is a shifting mix of employment/entrepreneurial/freelancing opportunities.  Gone are the days when you were told to “do your time” as you began your career.  This has shifted the leverage and attraction that big companies once had.  In fact I would go as far as to question the talent shortage that we keep talking about.  Perhaps there is no talent shortage, just a shortage of millennials who want to work in unprogressive organizations.  But I digress…

The second shift in the workplace will be the centre of power.  By 2020 Generation Y will outnumber the Boomers and many will be in decision-making roles.  Generation Y will be poised to create the workplace they have always wanted.
Gen Y Deal Breakers
In Bill Jenson’s Ten Year Report, he states that 20% of organizations have already adopted Work 2.0 environments.  By the time Generation Y become managers, this number will increase markedly.  The strong preferences of generation Y towards practices like peer2peer collaboration, results-only work environments, empowering technologies and real-time feedback will push us quickly towards Work 2.0.  Here is what a workplace run by Generation Y will look like.

Peer2Peer Value

Peer2Peer collaboration will be driven by the introduction of more empowering technologies & a preference for collaboration.  More and more organizations will adapt a Google mentality – encouraging collisions and cross-pollinations between people for the sake of innovation! This will mean managers will focus away from managing individuals and towards getting more peer2peer value.  Collaboration across the organization and with customers and suppliers will become the norm not the exception.  This will mean that innovation and new ideas will come from everyone, regardless of your job box or title.

My Work, My Way

We will stop talking about work-life balance and flextime and move towards work-life integration.  Generation Y managers will allow people to personalize the way they work to get things done (as long as the customer experience isn’t compromised). This philosophy is driven by Gen Y strong preference to have this control and autonomy of the way they work too. They don’t buy into “facetime”, seniority and other antiquated work concepts. If you can work anywhere, anytime then why should workplaces count the minutes.  Plus technology will make it easy to get work done productively anywhere. The idea of standard office hours will become passé.  People will be measured on providing a great customer experience, demonstrating personal productivity, efficiency and agility - all leading indicators to getting good results.   If you can take off a day without impacting your clients, who cares.  The organization saves money and you get what you want.  No vacation policies common in start-ups will become common in large organizations.

Technology workarounds

Generation Y will not put up with systems that slow them down. The smartphones, apps, social networks, the cloud will all be brought into the workplace.  This generation will find ways to work around Legacy systems or get rid of them where possible.  As managers they will bring in more agile tools that make it simple to be productive.  On the HR side, the use of video interviewing (Kira Talent), real-time  performance systems (, social networking platforms (Yammer), company-sponsored learning channels (You Tube) and virtual and collaborative team meetings (Google Hangout) will become commonplace.

Good, bad and the ugly

In 2020 we will no long be sitting down for our annual performance appraisals (as least not in most organizations).  Instead we will be used to constant, transparent feedback and recognition from our internal and external customers.  Feedback will go up and down and all around if we follow the example of HCL Technologies where you give everyone feedback even your boss.

I am personally looking forward to being managed by a younger generation.  Enjoy a glimpse into the workplace of the future where autonomy, service and just doing it creates excellence.

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Friday, June 21, 2013, 4:39 PM

Stop Making Sense

This isn't healthcare real estate related ... but it's a Friday, so roll with it.

I was sitting here at work, stressing about a project and waiting on completion of a task that was out of my control.  To take my mind off the stress I glanced through the Charlotte Business Journal and saw an article (by Erik Spanberg) about former Talking Heads frontman David Byrne visiting the NASCAR Hall of Fame during his last visit to Charlotte.  Byrne blogged about the visit to the HOF and also about some NASCAR recollections of his bandmates (alas, no longer Talking Heads, but "Love This Giant").

The thought of David Byrne touring the NASCAR Hall of Fame in his big grey suit was more than enough to ease my project deadline anxieties ... at least for a few minutes.

Anyway, here's the article, in case you are interested ...

David Byrne at NASCAR hall: How did I get here?

The NASCAR museum attracted notable visitors this week: David Byrne, the former lead singer of Talking Heads, and his bandmates from Love This Giant.
Finally, the NASCAR Hall of Fame lands the New Wave endorsement it has always needed. David Byrne, the eclectic former frontman of the Talking Heads, blogged about his recent visit to the NASCAR museum while in town this week for a show at the Blumenthal.

Byrne and St. Vincent, a singer-songwriter described as an “indie ingénue” by Rolling Stone, performed here as part of a collaboration called Love This Giant. The duo’s tour journal online includes a diary posting for the Charlotte visit, complimenting the cycling greenway but lamenting its limited length and lack of connections. Band members also ate at Harvest Moon and offered a rave review.

As for the $200 million NASCAR museum, Byrne includes photos snapped of a stock car and a driver’s suit covered in sponsor logos from the displays.

“Would that every politician, artist or entity of any kind with corporate sponsorship revealed his or her backers so honestly and blatantly,” Byrne says. He also notes the assumed relationship between NASCAR and Chiquita because both companies’ logos adorn the NASCAR Plaza office tower uptown. Byrne notes he never knew the companies were related, and there is a good reason for that: They aren’t.

Elsewhere, some of the band members share what they know about stock-car racing.
“Our drummer said that yes, the thunderous roar of a race is pretty gut wrenching — he also remembers leaving the track with the insides of his nostrils coated with rubber dust,” Byrne writes. “Someone else remembered going and thinking they had gotten really good seats for a surprisingly reasonable price — they were in the second row. They soon found out why those seats were cheaper than those higher up — as soon as the first group of cars zoomed by, they got pelted by bits of rubber and were awash in diesel fumes.”

If Byrne adds “I Can’t Drive 55” to his set — I can’t even finish that sentence.

Which, it must be said, represents NASCAR’s version of “Burning Down the House.” Oh, come on, you would have taken the same cheap pun, too. Admit it.

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Wednesday, June 19, 2013, 4:43 PM

Stand-Alone Hospitals: to Merge or Not to Merge ... is THAT the question?

 Some interesting points to consider here, in this article from Becker's ...

To Merge or Not to Merge: Benefits, Challenges and the Future for Stand-Alone Hospitals

In an executive panel discussion at the Healthcare Financial Management Association Annual National Institute in Orlando on Nov. 17, four healthcare financial leaders of stand-alone hospitals discussed their perspectives on mergers and partnerships and how the current healthcare environment is impacting partnership decisions.

Jim Landman, director of thought leadership initiatives at HFMA, who served as moderator of the session, began by discussing some of the challenges that face stand-alone hospitals, including financial pressures, lack of scale and resources. However, he then turned the discussion to some of the benefits of stand-alone facilities.

The panelists, who are all members of HMFA's cohort of stand-alone financial leaders, shared three key benefits of facilities that are not part of larger organizations.



Local access to care  
Harold Dupper, vice president of finance at Platte Valley Medical Center in Brighton, Colo., explained that one of the guiding principles of PVMC is to maintain access to care in his community, which is just outside Denver. "Our organization is looking mostly at how do we meet the clinical needs of the community and provide clinical offerings within the community…so people don't have to travel outside the community to get that higher level of care," he said.

However, maintaining depth of service in a small community can be a challenge. In particular, physician recruiting for more specialized services is difficult because more physicians prefer living in metropolitan areas. In order to maintain the depth of certain service lines, the hospital has had to enter into clinical affiliations with other healthcare providers.

Strong bonds to the community
Stand-alone hospitals also generally are more tightly knit with their communities than larger tertiary care centers. Michael Allen, CFO of Winona (Minn.) Health said that his organization's deep roots in the community positions it well to take on population health. While Winona Health may not have the scope and scale to handle total risk or capitated payments, he said the health system does see a role in partnering with payers in new models of care.

"Part of the reason is [payers] don’t deliver the care. They don’t have the relationship with the patient and the community, but we do," said Mr. Allen. "Someone is going to get a capitated payment, and we’re going to contract with them," adding that his system will focus on providing high-quality, low-cost care in order to remain attractive.

Stand-alone hospitals are generally more agile than larger systems due to fewer levels of approval required to bring about change. Mr. Allen said he has found his system to be more nimble than larger systems regarding ability to meet meaningful use and participation in health information exchange.


Size, scope
The panelists then discussed the biggest challenges facing their ability to stay independent. James Doyle, executive vice president and CFO of Elmhurst (Ill.) Memorial Healthcarel, which is just weeks away from completing a merger with Edward Hospital in Naperville, Ill., said in the Chicago market, hospitals "need to be bigger" and "cover more population with single solutions" in order to remain competitive.

"We are chum for the big systems," he said.

Mr. Allen also said independent hospitals' lack of size and scope can make staying independent difficult. "One of our biggest challenges is our competitors have lots of resources," he said.

Access to capital, which many believe to be a challenge to stand-alone facilities, is "oversold" as a concern, according to Mr. Allen. "I think if your operations are poor, then your access to capital will suffer. We’ll pay a little bit more for capital, but that differential isn’t going to make a difference."

Physician recruiting
"Really the challenge is around physician development, medical staff development, having the right depth in that area because it takes a certain amount of critical mass of patient population to really keep certain levels of specialty in place," said Mr. Dupper of Platte Valley Medical Center.

Mr. Dupper explained PVMC has affiliated with other providers to bring in clinicians from other facilities to "round out" its medical staff in certain specialties. "We are working hard at that; however, it continues to be a challenge."

Myron Machula, CFO of Enloe Medical Center in Chico, Calif., agreed physician recruitment is a challenge, explaining that in his home state of California, the prohibition of the corporate practice of medicine gives larger system an advantage. "A [physician] foundation is expensive to create and maintain," he said.

Mr. Allen said much of the difficulty in recruitment is linked to taking call. When there is only a small group of physicians in a certain specialty, the demand for call coverage increases.  "It’s a handful of specialists in certain specialties where it’s hard to attract them when talking about call," he explained. "99.9 percent of revenue requires a physician order. We’re not going to do well if we don’t do well there."


How can stand-alone facilities remain successful?

Most panelists agreed that strong partnerships are key to keeping their facilities sustainable in the next several years. Elmhurst chose to pursue a full merger, but many other types of partnerships outside of full mergers are available to stand-alone facilities.

"I don’t think we can avoid looking at associations, short of full mergers," said Mr. Machula of Enloe Medical Center. "Over time, you have to decide will that association will go to something larger, [but] having that experience of time will help to make a better decision if and when that event may arise."

Mr. Allen has begun to explore partnerships with vendors to pursue what he refers to as "virtual integration." Winona has entered into partnerships with vendors for IT and facility services and is exploring partnerships in other areas. "I'm becoming part of a larger organization that has larger scale and talent."

Mr. Doyle of Elmhurst summarized the need to achieve scale, at least in the Chicago market as a business imperative. "We can exist and thrive, but we can't really compete,” he said. “The game is getting bigger, at least in Chicago."

Increasingly, the panelists agreed, payers will look to contract with organizations that provide access to an "adequate" network of healthcare providers in a market, unless the organization is in a geographically isolated area. However, Mr. Machula asked an intriguing questions that never received an answer: "What the heck is a market today?"

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Monday, June 17, 2013, 6:15 PM

Hospitals and Healthcare Systems Continue to Monetize Real Estate Assets

Here's a good article from HealthLeaders Media about this ...

A Cash-Raising Healthcare Real Estate Strategy

Rene Letourneau, for HealthLeaders Media

Some enterprising hospitals and health systems are reevaluating their real estate strategies and selling medical office buildings as a way of accessing capital.
Hospitals have many competing priorities for where to spend their capital dollars: building renovations, construction projects, healthcare IT initiatives, equipment upgrades, and physician alignment strategies, just to name a few. While there is no lack of opportunity to spend the money, raising it is another story.

Some enterprising hospitals and health systems are reevaluating their real estate strategies and selling medical office buildings as a way of accessing capital.

On April 4, Truman Medical Centers in Kansas City, MO announced that it will sell four buildings, which currently house medical and administrative personnel, to neighboring Children's Mercy Hospitals and Clinics.

The 380-bed TMC system reached the decision to sell its buildings during the course of discussions with Children's Mercy about growth strategies, says Mitzi Cardenas, TMC's senior vice president of strategy, business development, and performance integration and its CIO.

"Children's needed the space, and we were looking to renovate a building on our campus for a call center. We are selling them four buildings over a 26-month period, and the capital will be used for that project," says Cardenas.

In addition to the building renovation, TMC will use the proceeds from the sale to consolidate its IT and call center staff into one building, and any remaining funds will be used toward the potential consolidation of its outpatient surgery services. The amount of the sale has not been disclosed.

"It is a win-win for both of us," Cardenas says of the sale. "It solved some immediate capital needs that we had and the space needs that Children's had… This was good timing on both sides. We are excited by the opportunities it provides both of us."

While Cardenas says TMC does not have plans to sell other buildings as part of its long-term capital strategy, she adds, "You can never say never."

Hospitals more often sell medical office buildings to healthcare real estate investment trusts (REIT) rather than to directly to another hospital. In this arrangement, the seller typically leases some of the space back from the REIT so that the physician practices housed within can remain in place.

In 2008, Charlotte, N.C.-based Carolinas HealthCare System, an integrated system with 7,460 licensed beds and an annual budget exceeding $7.7 billion, sold several buildings to Healthcare Realty Trust, a Nashville-based REIT.

"We went through a process that involved all the stakeholders and carefully selected which properties to monetize," says Greg Gombar, Carolina's executive vice president and CFO. "… [We] monetized 15 medical office buildings in a tough real estate market, providing over $160 million."

"The capital raised was not specifically assigned, but went to fund the overall capital budget," he added, noting that some of the money went toward IT initiatives and building renovation projects.
Carolinas HealthCare does not have immediate plans to sell more buildings to generate capital, due in part, to the proposal for a new lease accounting standard issued by the Financial Accounting Standards Board and the International Accounting Standards Board in mid-May.

If it stands, the new rule would require businesses to declare leased properties as assets and liabilities on their balance sheets. The boards are accepting comments through Sept 13, and will likely issue a final rule in 2014, if they decide to proceed with the accounting changes.

"We have put on hold our strategy of monetizing future properties as we evaluate the new proposed lease accounting rules and determine if there are any other structures that get us to the same place as did [this] monetization," Gombar says.

Jeff Calk, a partner at Nashville-based law firm Waller, says hospitals are smart to look at selling office buildings as a way of accessing capital.

"They could do something better with that money than let it sit in real estate… It's a good chunk of change that they could reinvest in their business," he says. "They can use that money to pay debt or invest in one of their core businesses. They take the money out of a low-yield asset to invest in a higher-yielding asset."

The biggest downside to selling a medical office building is the loss of control over the structure, which is a concern for many hospitals when their outpatient physician practices remain in place as tenants, Calk says.

"A lot of hospitals are nervous that the third-party investor won't be as sensitive as they are to the needs of the physicians renting the space. For example, if the power goes out, the new owner might not rush to fix the problem… Once you sell a building, you don't have the control that you once had."

Calk says hospitals can assuage this fear by cautiously selecting the buyer and designing a contract that lets them retain some power over the building.

"Obviously, prior to selling its medical office buildings, a hospital has to get comfortable with the fact that it is entrusting the care of its physician tenants to the new owner of the MOBs," he says. "The hospital system interviews and vets its chosen buyer very carefully and picks a buyer that it feels will be the best real estate partner—not just the buyer offering the best and highest price."
"Hospital systems [also] attempt to impose a variety of restrictions on the new owner that the hospital believes will cultivate or maintain a tenant-friendly environment… such as a cap on the rate at which rent can escalate in the building or a requirement that the building owner only use a specific approved lease form that is tenant-friendly and approved by hospital," Calk adds, noting that restrictions that benefit referring physician tenants should be imposed only when they are in compliance with government regulations.

Despite these concerns, Calk believes hospitals should take a hard look at their real estate holdings to identify buildings for potential sale.

"At the hospitals that are being very well run, folks are really using their capital wisely, including their real estate," he says.

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Thursday, June 13, 2013, 7:54 AM

There's an App for That!!

... but should there be?  The following article from HealthLeaders Media points out that having an app for your hospital or healthcare provider is a good idea only if it actually does something of value for the users.  I agree.  I know I've downloaded apps (usually something golf related) that look cool ... but don't really do anything.  Eventually I delete them altogether.

Hospital Apps Must Be Problem Solvers

Jacqueline Fellows, for HealthLeaders Media             

"There's no reason to have [a smartphone] app unless it's meaningful for the user," says a former vice president of marketing for a three-hospital nonprofit community health system.

By now, you've heard the ubiquitous phrase, "There's an app for that!" And it's likely true, from teaching toddlers their shapes, to measuring your heart rate, to recording what you say in your sleep. There is mobile application for almost everything.

But some hospital and health system marketers may be tired of hearing the phrase because every time it's uttered, they are reminded that their organization hasn't yet developed an app.
But that might not be a bad thing. Jim Rattray, who developed a smartphone app for New Bedford, MA–based Southcoast Health System when he was vice president of marketing for the three-hospital nonprofit community health system, says an app needs to solve a specific problem.

As an admitted early adopter of technology, he wanted Southcoast to jump on the app bandwagon with the iPhone's debut back in 2007. "On one hand I thought, 'Wouldn't it be cool if we had an app?' but, on the other hand, I didn't want to just put something out there," he says. "There's no reason to have an app unless it's meaningful for the user."

Now an independent consultant, Rattray says if hospitals approach the decision process with how the patient can and will use the app, then it becomes a tool that can not only solve a problem, but it can also enhance patient engagement.

"One of our biggest issues was medication reconciliation. It dawned on me when I was taking my mother to the doctor that she had a tattered list of her medications, some were even out of date," says Rattray.
"There were a lot of apps to keep track of your medication. We wanted to combine that with information about Southcoast."
So, in 2011, Southcoast introduced its free app to iPhone users. Called, SouthcoastMyHealth, it's a prescription tracker that allows users to keep up with medication for multiple people. In addition to the prescription name and dosage, there are also reminders as well as a field to enter in the prescribing doctor, pharmacy, phone number, and other key health information, such as allergies. It's like a mini-medical record for the user.

It sounds simple, but it solves a complex problem, one I lived through with an ailing grandfather who was in and out of the hospital. Every time he came home, his prescriptions changed, as did the dosages and frequency. I was also just one of several people helping to take care of him. Rattray, who was experiencing a similar issue with his mother during the app's development keyed in on this and thought his solution would be helpful.

"There is a built-in sharing function. You can email the list of medications and key health information [to others]," he says. "For example, I would go to the doctor with my mother, and when the doctor changed the dosage on a medication, I could change it and email my sister. More and more people have smartphones. We decided the sharing function would be the one feature that would incent people to keep the app on their phone."

It sure sounds better than the ad hoc Post-It note schedule we laid out on my grandmother's kitchen counter.

"This isn't the most powerful app in the world," says Rattray. "But it does one thing really well."
The app got to 1,000 downloads in six months. Two years later, it's been downloaded 10,000 times.
"Most apps might get 500–1,000 downloads, so when we went over a 1,000 I was ecstatic, when we went over 5,000, I was over the moon," Rattray says.

Giving a patient a tool that helps them solve a specific problem gives them a reason to actively engage with your health system. In some ways, SouthcoastMyHealth is similar to a physician locator, which many hospitals focus on as part of their website and app, but the Southcoast app digs deeper, though there is also a physician finder and a news feed, but that's not the app's focus.
The app simply attempts to have prescription information in an easily accessible place that can be shared with others who need to be informed.

But, don't let its simplicity app fool you. There was very careful planning about who specifically the user was likely to be. Knowing that women control most healthcare decisions, Rattray says the app was developed for the mom, the caretaker, and the spouse.

"We are about 65–70 % Medicare/Medicaid. I wasn't expecting everyone on Medicare to carry the iPhone, but I thought their children might. So we developed the app for a female, aged 30–50."
As a person who is a spouse, mother, and former caretaker (my grandfather passed away late last year), I know that when I want a new doctor, I employ several sources, such as word of mouth referrals, online ratings, and network coverage. So, the availability of an app may figure into my decision about which doctor to choose, but maybe not.

However, when I need a solution to a specific problem, like letting my grandmother know that my grandfather's doctor changed dosages on one of his prescriptions, I do what works quickest, hence the Post-It note solution. Had the hospital he frequented offered some sort of app, it's likely we would have used it.

Another issue that was solved for Southcoast was getting patients used to technology without creating privacy issues. "SouthCoast has no access to the data," says Rattray. "The patient puts their information in, and it is stored in their phone. There is no privacy issue at all."
Apps now do not have the novelty they once did, but with smartphones seen as a must-have instead of a nice-to-have, a well-designed app that helps patients solve a specific problem may be the first step toward having them think of a hospital or health system as a partner instead of a place.

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Wednesday, June 12, 2013, 8:28 AM

Just What the Doctor Ordered: Building a Strong MOB Landlord/Tenant Relationship

A strong, ongoing landlord/tenant relationship benefits everyone in the medical office context, as this article from Medical Office Today discusses ...

Building a Strong Relationship with Your Landlord

A strong relationship between a medical office tenant and a landlord/owner can be beneficial to both parties. But all too often, the relationship between the two is almost non-existent. At worst, it may be strained because of distrust and miscommunication.

Establishing a good relationship takes time and effort, but the payoff is worth it, according to both healthcare and real estate professionals.

"During these tough economic times, I think it’s essential to have a good relationship with your landlord because things could change very quickly and drastically," says Dr. Steven Moss, a vice president with Malo Health Group in Rutherford, N.J.

Here, Medical Office Today outlines the benefits of a good tenant/landlord relationship and how to go about building one.

Mutually beneficial

At the very basic level, the relationship between the landlord/owner and medical office tenant is financial. You, as a medical office tenant, pay rent to your landlord on a monthly basis. But the relationship can go beyond that and be much deeper, Moss says. "At the heart of the relationship is a payor and payee, but when viewed from both sides as mutually beneficial, it becomes synergistic," he notes.

Moss speaks from personal experience: Malo Health Group signed a 15-year lease for more than 52,238 square feet in a 12-story building owned by Onyx Equities LLC. The group uses the space for one-stop health and wellness center that includes an oral surgery clinic and an ambulatory surgery center.

"For us, it’s important to have a good relationship with Onyx," Moss says. "We’re going to be here for 15 years, and a 15-year relationship is one that we want to be mutually beneficial and productive. We’ve always viewed the relationship as a partnership."

Making the relationship a priority

The relationship between medical office tenants and landlords/owners begins well before the lease is even signed. But, once that lease is signed, many medical office tenants choose not to pursue a relationship with their landlord or invest in the one that has barely had time to take root.

Most physicians don’t make it a priority to build a relationship with the landlord or the property manager. Likewise, administrative professionals such as practice managers take their cues from physicians and tend to neglect the relationship.

"I don’t think it’s very common for physicians to seek out the landlord – they don’t see the benefits of having a good relationship," Moss notes. "When the landlord approaches the tenant to have a friendly relationship, a lot of physicians probably think ’What do they want now?’ They’re suspicious, and they just don’t get that it’s not a one-way street."

Beyond lack of interest, the lack of time is perhaps the biggest hurdle to building a relationship. Moss acknowledges that healthcare professionals, like everyone else, have limited time to spend on non-healthcare-related issues. Nonetheless, he doesn’t think being pressed for time should preclude the development of a deeper, stronger relationship.

In fact, investing time in relationship building is a good investment, according to Sarah Teel, principal of MSL Investments, a San Antonio-based firm that represents medical office buildings owners.

Think about it this way, Teel encourages: "At home, you have one neighbor who goes out of her way to get to know you – you feel comfortable with her – and you have another neighbor who has never even said hello. When you make cupcakes, you’re going to want to share them with the neighbor who has built a relationship with you."

Cupcakes aside, the analogy applies to the tenant/landlord relationship, Teel contends. "I think you’ll find that landlords and their representatives are going to go out of their way to help those tenants that have made an effort to have a relationship with them," she says. "That’s not to say that landlords are not responsive to the needs of other tenant’s, but when there is a special situation, the relationship makes a difference."

When relationships make a difference

Dr. John Whitfield, a gynecologist in Fort Worth, Texas, goes out of his way to maintain a good relationship with his landlord, Healthcare Realty Trust, a Nashville, Tenn.-based company that owns millions of square feet of medical office space across the nation. He occupies about 2,500 square feet in Healthcare Realty’s medical office building on the Baylor All Saints Medical Center campus on 8th Avenue.

Jacque Flanagan and Licia Matute handle the leasing and property management for the building in which Whitfield is a tenant. "We make a point to get to know our tenants," Flanagan says. "We stop by their offices on a regular basis just to check in and to see if they need anything. I think a tenant loses out if they don’t get to know us because there are a lot of ways that we can help."

Whitfield knows that relationships make all the difference when it comes to resolving problems that pop up in the course of daily business. Before moving into his current medical office space, his relationship with a prior landlord was iffy, and that impacted his practice.

"When you have a relationship, and you’re comfortable with the people running the building, and you know you can approach them, everything is so much easier and things run more smoothly," says Whitfield, who has been a tenant in Healthcare Realty’s building since January 2009. "The relationship means that if you need a little favor, they’re more likely to help you out."

It’s important to establish a relationship with your landlord before you need something, experts agree. "Spend the time getting to know them, so that when you do need something, you’re comfortable asking for it," Teel recommends.

Above all, communication is the most important element when building a relationship between tenant and landlord, according to Matute of Healthcare Realty. "If you’re communicating regularly, being honest with each other and building trust, your relationship will grow stronger," she says. "That’s what we try to do every day, and fortunately, our physicians and their practice managers are receptive to our efforts."

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Tuesday, June 11, 2013, 11:05 AM

How the Affordable Care Act Affects Healthcare Construction

We all know that the Affordable Care Act will have a huge impact on healthcare generally ... here's an excellent article from Becker's Hospital Review that discusses how it will affect healthcare construction specifically.

How the Affordable Care Act Affects Healthcare Construction
The pace of healthcare development is on the rise again after two years of declining construction starts. The long-term trend — hospitals and healthcare networks expanding to meet the needs of an aging U.S. population — was disrupted in recent years in part by uncertainty over the fate of the Patient Protection and Affordable Care Act.  

Now that there is more clarity on the direction of healthcare delivery, hospitals and networks are back in expansion mode. But their development plans are likely to be much different than those of five to 10 years ago, when hospital design often followed hospitality industry trends. Now, as construction ramps up again, the focus is on efficiency and cost-containment.

Construction starts in the healthcare sector totaled just 63 million square feet in 2012, down from a peak of 109 million square feet in 2008, according to McGraw Hill Construction's annual outlook in November. Big developments were largely put on hold, with only 15 projects over $100 million breaking ground in the first nine months of 2012. Overall, the level of construction starts was 16 percent lower last year than in 2011, which in turn was lower than in 2010.

The poor economy was a major factor in the slowdown, but demand for healthcare services did not decline as much as for many other sectors. Another factor, arguably as important as the overall economy, was the question of what healthcare delivery would look like in the future. Even after passing Congress, the Patient Protection and Affordable Care Act — also known as Obamacare — faced political hurdles, including dozens of attempts to overturn it in Congress, a Supreme Court challenge and, ultimately, the presidential election.

With its namesake winning a second term, there was at last a general consensus that Obamacare would be implemented. Healthcare organizations now knew which strategies to put into play, and some had plans ready to go. McGraw-Hill noted that construction activity in the sector jumped 12 percent in December 2012.

For hospitals, healthcare reform is a mixed blessing. Some 30 million additional Americans will have the insurance to pay for check-ups and preventive care rather than having to resort to the emergency room. Also, insurance companies won't be able to deny coverage due to pre-existing conditions. So the upside for hospital systems is a greatly expanded customer base and fewer uncollectible bills to patients.

On the downside, PPACA sets limits on the amount that can be charged in various situations and ties Medicare reimbursement levels to performance. In addition, healthcare organizations will be increasingly responsible for encouraging wellness across the entire population of the communities it serves — programs that may cost more than they yield in direct revenue. When the pros and cons are combined, hospitals stand to make more money, but with fewer opportunities for strong profit margins.

To get their slice of the expanding pie, healthcare organizations need to offer more beds, more operating rooms, more outpatient and ambulatory facilities and more medical office space. But to protect profit margins, they need to keep costs to a minimum. For many, the way to balance the opposing goals of growth and constraint is to renovate existing facilities to be more efficient whenever possible, and when expansion is necessary, to carry it out in ways that minimize expense and maximize the efficiency of physicians, nurses and medical staff.

If that sounds like a tall order, it is. But it's not an entirely new mandate for the healthcare sector. In fact, the most significant effects that Obamacare will have on the market amount to acceleration of trends that were already in play.

Focus on cost controls

Minimizing expense has been a rising focus for healthcare organizations for several years. A decade or more ago, the trend was toward palatial new hospitals designed by star architects as a way to make the healthcare experience more like a luxury hospital stay. But that trend was seeing a reversal even before the economic downturn. By limiting what hospitals can charge for procedures, the PPACA merely turns up the heat on hospitals to manage expenses.

The reality is that healthcare operating margins are very low — 2 to 3 percent is considered an industry average, but many hospitals lose money. When margins are so thin, a program to boost revenue may not do much to improve an institution's financial condition, while strategies that reduce cost drop directly to the bottom line as profit.

The need to minimize cost means that hospitals want to renovate and retrofit existing buildings whenever possible. Often a hospital can be reconfigured for greater efficiency, reducing the number of steps physicians and nurses must take in getting around. Infrastructure can also be upgraded, for greater energy efficiency and new technology.

Renovations don't serve every situation, however. Hospitals that were built before digital technology changed the medical landscape often lack the ceiling clear heights to accommodate cabling and new features in today’s facilities. For example, some new hospitals include ceiling-mounted lifts over patient beds to enable nurses to lift patients without straining their own backs and potentially endangering the patient's health. Sixty-two percent of nurses report suffering from musculoskeletal pain primarily from lifting patients, and patient falls are not uncommon. Retrofitting an older hospital with overhead lifts may not be feasible.

When new construction is needed, there are many ways to minimize cost, maximize functionality and efficiency, and still end up with an appealing place for patients, their families and medical staff. The healthcare sector has taken a strong interest in new construction practices such as building information modeling, integrated project delivery and design-build processes that have generally resulted in better designed facilities completed faster and with fewer obstacles along the way. By getting project managers and contractors more involved in design specifications at the front end, IPD and design-build procurement also enable the team to identify less expensive construction materials.

Although hospital systems can save millions of dollars on new construction costs with the right team and process in place, the greater savings opportunity over time may be in the day-to-day efficiencies of new facilities. An increasing trend is for design and construction teams to talk with physicians and nurses about ways that facilities can help them to perform better, often by spending less time walking from place to place and more time serving patients. The opportunity to improve energy efficiency can also result in large-scale savings over time, while boosting the hospital's efforts toward sustainability.

Increase in outpatient centers

Another healthcare construction trend that is being fueled by Obamacare is the shift of more physician visits and surgical procedures away from major hospitals to ambulatory and outpatient centers, and even to medical office buildings.
Outpatient procedures can be done at a much lower cost than in-hospital stays, and use physicians' time more effectively. Patients often prefer outpatient facilities for procedures that need to be performed multiple times, such as cancer radiation and kidney dialysis, because these centers are often more accessible in terms of parking and walking; and there are often centers closer to the patient's home or work than the hospital is.

Today, more than 60 percent of elective surgical procedures in the U.S. are performed at ambulatory facilities, and experts expect this percentage will increase to nearly 75 percent by the end of this decade. Laser therapies and other less-invasive procedures have fueled this trend; the percentage of all surgeries that did not require an overnight stay increased from just 16 percent in 1980 to 63 percent in 2005.

This trend supports the goals of PPACA by delivering lower-cost procedures to an expanding range of patients. It makes physicians more productive by enabling them to perform procedures at times when operating rooms may not be available. And by moving more healthcare delivery away from central hospitals to more accessible centers throughout a hospital's service area, the decentralization trend also supports PPACA's mandate for population wellness. Experts agree that construction of outpatient and ambulatory centers will grow faster than the base of large, expensive hospitals in the coming years.

Effects of change

Although the emphasis on cost containment and efficiency is the main trend that will drive healthcare construction under Obamacare, other issues are likely to affect the shape of new development. For example, the ability to attract top-notch physicians is an important factor in hospitals' decisions to include state-of-the-art features in new or renovated facilities.

While reform may add up to 30 million new patients by 2015, the number of new physicians in the U.S. is expected to increase by only 50,000 in that same time. Moreover, hospitals that can attract the country's top-rated physicians in a particular area of medicine can attract patients from across the country, and can charge premium rates that result in higher profit margins.

Often, new hospitals under development are able to announce that high-profile physicians will join the hospital upon completion of the new facility, due to better equipment and an overall superior work environment. As the implementation of PPACA increases the patient-physician imbalance and ups the ante on attracting star surgeons, expect to see more physician-driven design features in new developments.

Another healthcare construction trend that's fueled by PPACA is the importance of information technology in design and development. Effective data management and 'smart' systems technology make hospitals more efficient by preventing opportunities for errors and by reducing the number of trips that nurses and orderlies must make between patients and areas where medicines and linens are kept.

Obamacare increases the importance of data management by introducing additional layers of record-keeping and, more important, by increasing the number of patients to keep track of. One result is that IT infrastructure and equipment is an increasingly important element in the design and development of new and renovated hospitals. The downside of this trend for architects and contractors is that construction initiatives and processes face greater competition from IT features and functions for limited capital improvement dollars.

Overall, the PPACA brings change to healthcare delivery that necessitates new and expanded facilities, emphasizing cost-effective construction that enables efficient operations. Firms in the construction business  that serve the healthcare sector will see strong growth opportunities in the coming years, but we must also continually raise our game to ensure low-cost delivery that meets the present and future needs of a fast-changing industry.

Michael T. Leopardo is senior vice president at Hoffman Estates, Ill.-based Leopardo Companies, Inc., one of the nation's largest construction firms and the trusted builder for 40 hospitals.

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Monday, June 10, 2013, 1:12 PM

Renovate or Build New? Factors Healthcare Providers Need to Consider

Here's an excellent article from Medical Office Today on things to consider when evaluating whether you should renovate existing space or build new.

To Renovate or Build New: Factors to Consider

May 29, 2013

Whether you’re just starting out as a healthcare provider or are a seasoned professional, at some point the question of whether to renovate a space or build a brand-new office may arise. The bad news: there is rarely a cut-and-dried answer to this question. The good news: there are many factors to consider that will help you decide what to do.

“The renovate vs. build new question is a base starting point for any practice to consider,” says Andrew Quirk, senior vice president and national director of Skanska USA Building’s Healthcare Center of Excellence in Nashville, Tenn. “The space a practice operates within can mean the difference between a business’s healthy margins and losing money. Additionally, the physical environment has a direct impact on the practice’s brand, patient attraction and retention, employee attraction and retention and operational efficiency.”

Quirk says that if these topics are not on a practice’s radar, they need to be. “A practice really needs to ask the question of what are we trying to achieve, what are we trying to do as a practice? Sometimes the response is simply a freshening of the brand that can be achieved through new finishes and furniture; others may identify a growing practice or a need to be more efficient as the reasons for change. In either scenario, the needs will point in the right direction for either a renovation project or new construction.”

Quirk adds that larger issues like a changing patient demographic base or adding partners to a practice can also point a group in a particular direction.

Any decision to renovate an office or build a new building provides an opportunity to reinvent your practice internally and externally, says Fred Wolters, planning and design principal at EYP/BJAC, an architecture firm specializing in academic, medical, research and government clients in Raleigh and Charlotte, N.C. “These opportunities do not come along often and, given the changing world of healthcare we live in, it is more important than ever that medical practices take advantage of them.”

"Your decision also matters since it could affect the financial health of your practice for years to come," says Ken Kaplan, president of Kaplan Construction in Boston. “Depending on the work program decided upon, the project could become a major distraction for the practice for an extended period.”

Typically, practices contemplate construction to accommodate growth, which is solved with additional square footage, says Bradley Cardoso, a senior associate at Margulies Perruzzi Architects in Boston. This could be achieved with either option, but “the decision should be based on construction cost, disruption caused by construction and the quality of the final layout. Ask the question: Does the solution provide value to the patients for the cost?”

The benefits of each choice

Renovation can at times provide a “best of both worlds” result, says Quirk—lesser costs, coupled with varying degrees of solutions to basic efficiency issues and physical upgrades. He adds that renovation projects are also scalable and scope can be adjusted to meet a practice’s budget, which offers you a variety of options. With renovation, users can more easily reach the correct decisions for their practice, adds Kaplan.

“If minor changes are needed due to patient-care delivery changes, then renovation may solve the issues,” Cardoso points out. “However, that’s only if there is enough space to make the changes or there are rooms that can be converted for the new use.”

According to Tim Gaumond and Rich McClelland, architects with Larson & Darby Group in Rockford, Ill., other benefits of a renovation include:

·        Quicker build out and move-in time
·        If leasing, your landlord will take care of the common areas, exterior, etc.
·        You already are familiar with complementary practices and services in the or area
·        More flexibility in moving to a larger or smaller space when a lease expires
·        Quicker permitting, less zoning and site reviews

And Cardoso adds:

·        There’s no need to move.
·        You can save what works, therefore saving money on construction.

Building new

Building new allows a practice to correct wrongs or basically create a fresh start, says Quirk. Kaplan adds that with a new build, new technologies, growth and staffing issues in general can more easily be addressed. “A ‘new’ office might present an image of better professional and patient outcomes to the community.”

Gaumond and McClelland say the benefits of building new include:

·        Ultimate flexibility in layout and design
·        The exterior projects the image the practice wants to convey.
·        You have control of the common areas (i.e., lobby, restrooms, etc.).
·        You could lease areas of the new building that you’re not using to generate revenue.
·        You gain the benefits of a long-term real estate investment.

And Cardoso adds:

·        A shorter schedule with fewer phases
·        A new space will meet current health and building codes
·        No disruption to the current practice (i.e., noise, vibration, system shut-offs)
·        Greater efficiency because builders don’t have to work around an operating office
·        New space is more efficient and gives the practice an opportunity to evaluate and change current patient/staff flow

Wolters sums up that while in most circumstances the same goals can be achieved either through new construction or renovation, new construction typically comes with fewer built-in constraints than those related to existing building systems and structure. “Additionally, it offers the potential benefit of more or better location possibilities, which results in the ability to more publicly display or reflect the brand. More potential locations could help get the practice closer to a demographic market or professional affiliates.”

Disadvantages to each choice


One of the biggest disadvantages to renovation is the disruption it causes to a practice’s normal work flow, say the experts. Also, design solutions can be limited due to existing building details such as structure, building systems and complex phasing, says Cardoso. More-expensive after-hours construction may be needed to maintain a comfortable patient environment during business hours.

Renovation projects can also be messy, says Quirk, and Wolters says flexibility is lessened in a renovation. “If you have a custom design that does not fit the space or is needed in a different location, renovation will not be an option for you.”

Renovation may also bring up the issue of outdated wiring and structuring, or failing to meet dated code and zoning regulations—problems that building new will not have, Wolters points out.

Gaumond and McClelland list the following disadvantages to renovation:

·        Limits on the layout
·        Handicap accessibility may not be totally up to code in an older building
·        Building services, electrical, heating and cooling, and ventilation capacities may limit the function of the space
·        Retrofitting spaces to your needs may be expensive or limited
·        You may have costly removal of hazardous materials

Building new

New buildings, on the other hand, often require more square footage because of increased building- and health-code requirements, Cardoso says. Because of this, room sizes are often increased, increasing travel distance for staff and patients.

Also, construction of a new building usually comes with many more decisions, says Kaplan. “The design and construction process can be protracted getting the correct balance of design and budget.”

And, an entirely new structure means that everything used in construction will have to be purchased, and those costs can add up quickly, Wolters says. In addition, there can be costs associated with new construction that you may not be aware of, such as legal fees, transactional real estate fees and related expenses, says Quirk.

“New construction can completely respond to operational inefficiencies, but often requires a bigger cost to implement,” Quirk points out. “Starting with a blank sheet of paper can also be daunting as there can be so many variables and requires a team to help lead a practice through the process of planning and executing.”

Other disadvantages to building new that Gaumond and McClelland list include:

·        Land will have to be acquired, which may limit location
·        Construction time will typically be longer
·        Unforeseen conditions may cause additional costs to the project
·        More time and input from providers may be needed
·        Overall cost may be greater
·        You may be taking on additional responsibilities as a building owner and landlord with regard to maintenance and upkeep.

Final thoughts

Both renovations and new building projects typically take longer and cost more than what was initially estimated, say the experts. Establish a detailed and realistic budget and schedule early in the planning stages of your project, Wolters advises. “Do not fall into the trap of thinking that because you are renovating or creating a new building that you need all new furniture and equipment. Chances are that what you are using currently will continue to serve a good purpose in your new space, as well as saving the money it would cost to purchase new items and the time it would take to order and receive them.

Also, carefully and accurately estimate the time and cost of relocation for your staff and operations, as well as the time and cost associated with relocation or installation of data and communications, Wolters says. “These are easy things to underestimate and a common mistake.”

And involve your staff in the decision-making process, since it will directly affect them on a daily basis, Wolters suggests. “They can be invaluable resources and have great insight and perspective into what will be helpful and best for your business because of their firsthand knowledge of the way your organization works.”

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Friday, June 7, 2013, 10:36 AM

May Jobs Report: Healthcare is Strong Sector for Jobs Growth

... and that can only be encouraging for continued healthcare related development!

May jobs report: Cautious hiring continues

@AnnalynKurtz June 7, 2013: 9:48 AM

jobs report 060713 The U.S. economy added 175,000 jobs in May, in line with average job growth over the prior 12 months.

Employers are hiring at a restrained pace as jitters about the economy linger.

The U.S. economy added 175,000 jobs in May, according to the Department of Labor. Hiring at that rate isn't terrible, but it's unexceptional at this point. It marks a slight improvement from April, when a revised 149,000 jobs were created, but still falls in line with average job growth over the last three years.

Economists called it "lackluster," "par for the course," and "unremarkable."
"The U.S. labor market continues to recover. All in, the May report was decent but not fabulous," said Jennifer Lee, senior economist with BMO Capital Markets.
Revisions to March and April figures show that the economy added 12,000 fewer jobs than originally reported during those months.
Even so, the May report was slightly stronger than investors had expected, and stocks headed higher in morning trading. Economists surveyed by CNNMoney had expected the report to show 158,000 jobs were added in May.
Meanwhile, the unemployment rate ticked up to 7.6% from 7.5% in April. That minor rise came as 420,000 people joined the labor force -- an encouraging sign that some formerly discouraged workers may be re-starting their job searches.
What's keeping hiring at a ho-hum pace?
Businesses are citing concerns about the cost of health care reform rules, set to go into effect next year, as a major unknown keeping them on the edge.
"Fear of not knowing exactly what the rules are is holding hiring back," said John Silvia, Wells Fargo chief economist. "Once everybody knows the rules, they'll all want to play the game."
Related: Federal Reserve: Recovery still 'modest' and 'moderate'
Uncertainties also surround the broader economic impact from across-the-board government budget cuts underway now, and weakness in foreign economies like China and Europe, which is subduing demand for U.S. goods and services abroad. These concerns are leading firms to prefer temporary or part-time workers, said Scot Melland, CEO of Scot Melland, CEO of Dice Holdings (DHX), a company that runs several job search sites.
"Companies have work they still need to get done, but they don't have enough confidence in the forward-look of their business to make those full-time positions," he said.
Indeed, the monthly jobs report showed a gain of 25,600 temporary jobs in May.

Restaurants and bars added 38,000 jobs. Other strong sectors for job growth included retail, which added 28,000 jobs, and education and health services, which added 26,000 jobs.
Construction added 7,000 jobs, falling in line with other signs of an ongoing housing recovery.
Meanwhile, the federal government cut 14,000 jobs and manufacturers cut 8,000 jobs.
Related: Employment is still near a 30-year low
Overall, the U.S. economy lost 8.7 million jobs in the financial crisis, and has since gained back 6.3 million jobs. The employment-population ratio was unchanged, showing that 58.6% of adults over age 16 have a job. That rate has barely budged over the last three years -- and the last time it was hovering so low was 30 years ago.
Since job growth continued at a slow pace in May, the newest data is unlikely to change the Federal Reserve's current stimulus policies. The central bank is looking for "substantial improvement" in the job market before it starts winding down its controversial program of buying $85 billion in Treasuries and mortgage-backed securities each month. To top of page

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Thursday, June 6, 2013, 11:27 AM

"If I'm the CFO of a hospital today, this is the best time to sell"

More good news on the MOB deal front!!!  Check out this short article from Becker's Hospital Review

Hospitals Expected to Sell $2B in Medical Office Buildings This Year
Medical office building sales have increased steadily in recent years, from $1 billion in 2007 to a record $2 billion in 2012, and MOB sales should hit $2 billion again by the end of 2013, according to a Jones Lang LaSalle study cited in National Real Estate Investor.

Healthcare real estate investment trusts, or REITs, are on the prowl to buy MOB properties because supply is low and MOB tenants usually lead to stable lease revenue.

"The buyers with access to capital, mostly the REITs, are locking up more and more of the supply, and their practice is to buy and hold. The property isn't going to turn again on the market," Mindy Berman, managing director of JLL's healthcare capital markets, told National Real Estate Investor. "If I'm the CFO of a hospital today, this is the best time to sell."

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