BLOGS: Womble Commercial Real Estate

Wednesday, July 31, 2013, 10:35 AM

Medical Office Space and Repurposing (but this time, it’s not what you think)

We’ve covered the repurposing of properties (mainly retail) into healthcare real estate, but we haven’t seen this before – repurposing medical office space into a non-healthcare use.  You can read about this anomaly here:  “Kingston celebrates new city hall, a former medical office building”.

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Friday, July 26, 2013, 10:20 AM

Medical Office Today Talks Timeshares With Girardeau And McDermott

The lure of timesharing a medical office can be a compelling one, but attorneys Jill Girardeau and Gary McDermott talk with Medical Office Today about why it can be a complicated endeavor.

In the article, online here, Girardeau and McDermott explain that while there are certainly advantages to using a timeshare office, such as lower overhead and expanding services, the contract and logistics must be carefully thought out.

"I think the trickiest issue is protecting yourself against violations of kickback laws and the Stark Law,” McDermott said. “What might seem reasonable in a typical landlord-tenant scenario can get you in hot water when medical practices are concerned."


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Tuesday, July 23, 2013, 5:59 PM

Healthcare Real Estate, 2013 - How Is It Shaping Up?

With just over half of the year under our belts, it's a good time to look back and evaluate the year thus far.  This can be a valuable exercise – it can help us better understand where we’re headed.  (To look back beyond that, click here for Healthcare Real Estate Insights' review of top trends in healthcare real estate from 2003 to 2012.)

Some predicted that 2013 would be the year that “we become the health care (sic) nation”, with health care being the largest issue that the USA would face in 2013 (Fortune/CNN Money). Although some will not agree with the “largest issue” prediction has been the case, I believe that we can all agree that healthcare and healthcare real estate have been major players in 2013’s economy.

Generally speaking, the reviews thus far this year regarding healthcare real estate have been  overwhelmingly positive, if not outright celebratory, using those terms developers love such as “booming”, “growing”, and “heating up” (see e.g., Construction of Medical Buildings Booming on South Shore (Enterprise News), Demand Accelerates for Medical Office Buildings (NBI Properties), Demand for MOBs Greater Than Ever (,  and Construction Booming in Medical Office Building Market (American Medical News)).

Looking back on the first half of 2013, the articles and reports are overwhelming positive.  In making my rounds lately, listening to investors, developers and lenders, their outlook on healthcare real estate is a bit more cautious than much of what I read, but it is still very positive.  And most telling of all?  They are in the game, investing time, money, and effort in healthcare real estate.  In other words, they are looking forward….

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Tuesday, July 16, 2013, 3:03 PM

An Ounce of Prevention (and a Dash of Technology, and a Sprig of Innovative Design)

As evidenced by previous posts, innovation in healthcare is rapid, whether it be in the arena of real estate design, apps, or a focus on wellness and prevention.  Here’s an interesting article about a “prototype medical practice of the future”, which incorporates several areas of healthcare innovation.

MD Revolution Offers Blueprint for “Health Management” Practice
By Bruce V. Bigelow

On the seventh floor of a medical office building near Scripps Memorial Hospital La Jolla, Dr. Samir Damani has established a prototype medical practice of the future.

The suite looks more like a spa than a doctor’s office, with modern art mounted on chalk white walls and white-washed wooden floors that bespeak understated elegance and calm. Subtle lighting illuminates enough MacBooks, iPads, and desktop monitors to stock an Apple store, and the shelves display a host of wireless health devices, including a Digifit heart rate monitor, MyFitnessPal calorie counter, and Fitbit activity tracker.

In a whirlwind tour, Damani explains the suite is both a clinical lab and a medical practice that brings together a variety of health and fitness monitoring technologies. As both a practicing cardiologist and researcher, Damani says he came to The Scripps Research Institute to complete a master’s degree in clinical investigation; he was focusing on genomics and the biomarkers of disease when he saw that cardiovascular disease was reaching epidemic proportions among older Americans. Instead of waiting for patients to develop chronic illnesses—and using medical interventions and pharmaceuticals to treat them (at a projected cost of $500 billion by 2015)—Damani says he realized he should be working to help patients improve their metabolism and cardiovascular fitness.

Damani says he founded MD Revolution to manage patients’ health by using a variety of diagnostics and sensors to track the most important indicators of cardiovascular health, and to integrate good nutrition, exercise, and other healthy practices into a holistic program. “We’re not in the game of creating the sensors and hardware,” Damani says. “What we’re doing is integrating all these different platforms into a dashboard that patients can understand and use. We have to really engage people to change their behavior.”

Integrating data from heart monitors, calorie counters, and other sources into a single platform was no trivial task, and Damani says MD Revolution has invested between $500,000 and $1 million in the effort. Since the company was founded in early 2011, it has raised $2.25 million from doctors and other high net-worth individual investors, according to Camille Saltman, who joined MD Revolution in January as president and chief operating officer. She was previously president of Connect, the nonprofit group that supports technology innovation and entrepreneurship in San Diego.

“Unlike many early stage companies, we have revenues from patients, which has enabled us to reduce our burn rate and lessened the need to raise larger amounts of capital,” Saltman says. In pioneering its clinical practice in La Jolla, Saltman says MD Revolution also was able to keep its costs down by applying software developed for the practice to the design of the software platform.
Damani is set to unveil the new software platform, dubbed RevUp, in a scheduled presentation today at the Digital Health Summit in New York. The company describes RevUp as the first Web-based software platform to aggregate mobile tracking tools, genetic and metabolic assessments, and personalized coaching for employee groups, health systems, and physician practices.

In a statement, MD Revolution says, “The system creates a personalized diet and exercise regime for each individual based on health status and goals.” A team that includes two nurse practitioners, nutritionist, and exercise physiologist track each patient’s progress. Each patient can view their own personal health profile online as well—and those who lapse in their workout routine get a call from the MD Revolution team.

By collecting and monitoring such data, RevUp says it can provide the kind of information that employers need to win discounts on medical benefits and other new incentives that are being offered under the federal Affordable Care Act.

The company asserts that over 90 percent of the patients enrolled at MD Revolution “have experienced statistically significant improvements in resting metabolism, body fat, visceral fat reduction, and improvements in cardiorespiratory fitness.” Damani says the latest scientific research shows these are the most important drivers of chronic cardiovascular diseases.
At MD Revolution, he says, “We have not just built a delivery model. We’ve built a business model for a new paradigm in health care.”

Damani anticipates franchising MD Revolution throughout the country, and tells me, “I see this as a Starbucks model for health care.” But Saltman also says a more practical market may be large companies and health care systems that are self-insured—and therefore keenly interested in reducing their soaring employee health costs.

“With the changes under the Affordable Care Act, it became very cost-effective for physicians to keep their patient population as healthy as possible,” Saltman says. So far, MD Revolution counts 250 individual patients in its pilot practice in San Diego, along such corporate clients as Pharmatek and Sharp Healthcare, the San Diego nonprofit regional health care system with more than 14,000 employees and $2.7 billion in revenue last year.

That seems like a good start, although Damani says, “We expect to have 100,000 patients under management by 2017.”

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Wednesday, July 10, 2013, 1:13 PM

Want a Law Job? Learn the Health-Care Act

Check out this recent article from the Wall Street Journal ...

Want a Law Job? Learn the Health-Care Act


Some companies are warning that President Barack Obama's health-care overhaul will cost jobs. It won't be in their legal departments.

Health-care companies racing to comply with the Affordable Care Act and other rules are calling in the lawyers, sparking a mini-boom for specialist attorneys who can backstop overloaded internal teams and steer clients through an increasingly crowded regulatory minefield.

Seizing opportunity at a time when overall demand for legal services remains soft, some law firms are beefing up their health-care groups. New hires include lawyers who specialize in complex hospital mergers, for instance, or who can advise private-equity firms on potential investments in new medical technology. Other firms have carved out highly specific niches such as appealing Medicare audits or handling reimbursement disputes.

Lawyer Carolyn Metnick doesn't see demand letting up soon.

Even companies with robust in-house law departments are increasingly calling on outside lawyers who specialize in the most arcane corners of health-care law.

"You need to go to outside experts more and more because the pace of change is accelerating," said Robert Gilman, general counsel for AmeriHealth Caritas, a managed-care company that focuses on Medicaid members and other low-income populations. "There are a lot of questions that nobody knows the answers to yet."

Businesses across a wide swath of the economy will be affected by the new health-care law, particularly the employer mandate that kicks in next year, under which companies must either provide health coverage for workers who clock 30 or more hours a week, or pay a penalty.

Health-care reform was rated an "important" issue for 45% of more than 1,100 chief legal officers surveyed last year by the Association of Corporate Counsel, a trade association for in-house lawyers. Their concerns are growing as compliance deadlines loom—50% said health-care reform would be important in 2013.

For hospitals, insurance providers and other health-care companies, the employer coverage mandate is just one item on a lengthening regulatory to-do list. A host of industry-specific provisions in the Affordable Care Act will change the way they do business, even as many are spending significant time and money to comply with a groundswell of earlier rules.

Meanwhile, regulators on the lookout for health-care fraud and other infractions have stepped up enforcement. Last year state and federal governments netted $7.2 billion in settlements from the health-care industry, according to a report by law firm Gibson, Dunn & Crutcher LLP.

It all adds up to big business for lawyers. Last year corporate clients spent $5.72 billion on legal advice for regulatory matters, including health care, and the market is projected to grow to $6 billion this year, according to a recent survey of corporate legal spending by BTI Consulting Group Inc.

Despite the demand, health-care lawyers don't typically command gold-plated rates. Some major law firms do have substantial health-care practices aimed at capturing lucrative work on key antitrust cases or major transactions. But cost-conscious clients often direct much of their legal work to more affordable lawyers from regional firms with lower overhead.

That is good news for attorneys such as Les Johnson, a partner at Liles Parker PLLC, a 17-lawyer boutique based in Washington, D.C. A self-described "regulations dork," Mr. Johnson works out of the firm's Baton Rouge, La., office. He started out representing small clinics and nursing homes, then developed a specialty in Medicare appeals that earned him a national client base.

"The more they tinker with the federal regulations, the more work we have," said Mr. Johnson.

Among the legal complications: an existing law intended to reduce conflicts of interest during patient service referrals for services such as X-rays has made it trickier for hospitals to structure contracts or acquire doctor groups even as industry consolidation accelerates. A new rule mandating disclosure of financial ties between health-care providers and companies that make drugs and medical devices will increase reporting requirements.

Health-care companies are also dealing with changes this year by the Department of Health and Human Services which strengthened existing patient privacy rules and changed the way providers are required to respond to data security breaches. Next up: an overhaul of the code that governs how medical diagnoses and inpatient procedures are reported.

Keeping up with all the changes is like "drinking from a fire hose," said Gavin Galimi, general counsel for March Vision Care Inc., a Los Angeles company that manages vision benefits nationally for insurers that contract with Medicaid, Medicare and various state insurance exchanges being set up under the Affordable Care Act. "Every company is worrying about what they forgot or don't know."

The chief legal officer for one company that manufactures medical equipment said his legal team spent a considerable amount of time analyzing how various provisions of the Affordable Care Act—such as a medical device tax—would affect the business, and what steps were needed to comply with the law. Resolving those questions means longer hours for his in-house legal team—and spending more money on outside lawyers and other advisers.

"No company wants to get it wrong, because the cost of a bad judgment call is significant on this," he said.

Compliance isn't the only concern. Some pieces of the Affordable Care Act will also shift how hospitals and insurers do business—generating more work for attorneys needed to structure deals and contracts.

For example, new health-care delivery models intended to cut costs and improve patient outcomes are being tested that could supplant the fee-for-service approach most providers now use.

"The organizational structures and the way health care is being organized and paid for is changing at a really rapid rate," said William S. Bernstein, chair of the health-care division at law firm Manatt, Phelps & Phillips, LLP.

At the same time, a wave of consolidation among hospitals and medical practices that predated the health-care reform is accelerating, driven in part by providers' quest for economies of scale, said Stephen W. Bernstein, a partner at McDermott Will & Emery LLP who heads the firm's health industry advisory practice group. Insurance providers and health plans are also teaming up with hospitals and medical groups to try and reduce costs, he said.

Those mergers are drawing more attention from antitrust regulators concerned about reduced competition and potential price increases. The Federal Trade Commission and state attorneys general have challenged such transactions in Georgia, Idaho and elsewhere.

"There is so much regulatory scrutiny," said Carolyn Metnick, a lawyer at Barnes & Thornburg LLP in Chicago. She began her career as a litigator but switched tracks six years ago and now specializes in health-care transactions. "I don't see demand letting up anytime soon," she said.

A version of this article appeared June 17, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Wanted: Health-Care Legal Experts.

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