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New Technology, Healthcare Reform To Shape Medical Office Of The Future


By William E. Molloy and Tracy Altemus, Ensemble Real Estate Solutions

With the implementation of healthcare reform and rapidly changing technology, we know healthcare is going to look very different in the near future. Will medical services be located in re-purposed strip malls?

Bill Molloy

Bill Molloy

Or, will healthcare facilities be modeled after airline terminals to provide operational efficiency, increased volume and satisfy differences in patient groups such as Baby Boomers versus the Millennials?

No one has a crystal ball to enable us to see all of the changes. However, working with one of our strategic partners, Devenney Group Ltd. Architects, we developed ideas and trends we see for the medical office of the future, the delivery of healthcare and its real estate needs.

>> What will change?

After many years of talking about the patient-centered medical home, we will finally see a broader adaptation of this model. A much more collaborative environment will encourage a multi-disciplinary (1), whole health approach to patient care. Practices will continue to join larger health systems, or develop strategic alliances among practices to meet patient needs.

Medical practices will need to comply with new healthcare delivery regulations while striving to provide high quality but cost effective care. As insurers move into care delivery, integrated billing systems and other services will need to be shared for cost efficiencies.

Technology advances will continue to impact many areas of a medical practice as healthcare practitioners use many new tools–from electronic medical records (EMR) to self-check-in kiosks to telemedicine for seeing patients.

>> What needs to change?

Retail will be the new buzz word in healthcare as consumers will “shop” for healthcare services, especially elective procedures. They will have many more choices for their healthcare so practitioners will need to focus on attracting and retaining patients. Some of the competition will come from retail companies such as Walgreens, CVS or Rite-Aid that are already aligning themselves with healthcare systems to offer services.

Healthcare practitioners and systems

Tracy Altemus

Tracy Altemus

will need to cater their services to provide a continuum of care for the life of a patient by providing convenient, easy to find and easy to use services. To satisfy some patients, this may mean providing high touch, low tech services.

Overall, healthcare providers will need to create a better patient experience — affordable elegance with a more home-like feel.

>> How will these changes affect the design and function of medical offices?

Location and physical building are big factors in a medical practice’s ability to deliver high-quality, cost effective care. One of the first steps in determining a practice’s real estate needs should be doing a cost analysis between renovating an existing building versus constructing a new facility. The analysis will help to evaluate whether renovation can be done cost effectively to comply with new regulations.

Because of the many expected changes in healthcare delivery, flexibility in design will be key. Medical practices will need modular spaces that are easily configurable. With the growing trend of sharing spaces and services, designs may include shared waiting areas for several practices, central hand-washing areas, private offices shared among physicians, and waiting areas that are used after hours for patient group visits to leverage peer support (1).

We will see fewer built-ins as interior spaces are finished so the space remains flexible. With the adoption of EMR, less space will be needed for hard files. Using the self-check-in/check-out kiosks, patients may also receive their “boarding pass” to proceed to the appropriate exam room to begin their visit — reducing the space needed for a practice’s front desk.

One of the ways that owners of medical office buildings can recoup some of their costs is by adding services that generate revenue. Adding services such as a coffee shop or daycare that can be used by staff and patients can offset some building costs.

Some physicians may choose to cater to patients who elect to pay for healthcare services themselves rather than use insurance. These patients may require more “concierge” care with separate waiting and exam areas or separate clinic entrances.

In the future, it may be very common to have hotels built near hospitals — not just for patient families but for the patients who don’t need to be hospitalized to receive recuperative care from their physicians.

Healthcare delivery is at a transformational moment. Some of the above ideas are already happening. Physicians and healthcare administrators need to be continually looking ahead to future needs for their facilities to meet the needs of their patients and comply with new regulations. They also need to continually challenge the professionals in our industry to be innovative and help them plan for their future real estate needs.

William E. Molloy is Managing Director/CEO and Tracy Altemus is Executive Vice President, Healthcare Brokerage Services, for Ensemble Real Estate Solutions (ensemblere.com). The full-service real estate firm offers healthcare-specific development, management, leasing and sales services including both landlord and tenant/buyer representation.

(1) Health Care Advisory Board “Re-envisioning Today’s Clinic”



Patient Experience Simulation Lab Inspires Conference Attendees

Attendees of the 2012 Healthcare Design Conference held recently at the Phoenix Convention Center were privy to a unique showcase: the first “Patient Experience Simulation Lab” allowing small groups of designers, hospital administrators and other healthcare stakeholders to experience a virtual tour of unfriendly design features compared to an actual tour of a “patient-empowered room.”

The full-scale model was the result of a design competition that the Institute for Patient-Centered Design held to gather best practice ideas from healthcare designers. The winning submission, created by Milwaukee-based Kahler Slater, came to fruition with the help of DWL Architects + Planners which created the construction documents, i-Frame Building Solutions which provided the walls for the room model, and Kitchell which built the mock-up.

“We are empathetic builders – looking at each project by putting ourselves in the patient role,” said Kitchell Healthcare Division Manager Steve Whitworth. “That’s why participating in this project was so intriguing.”

The project was built in two short days in a 2,000 SF space, leaving room for facilitated discussions and a virtual experience alongside the model. The popular workshops, which took place throughout the conference, engaged a diverse group of patients, designers, clinicians and other healthcare stakeholders in a collaborative exchange for improving the patient environment of care.

Featuring color selections indigenous to Arizona – even a back-lit picture window that emulated a grassy hospital courtyard area — the room allowed participants to experience the inpatient room from the perspective of the end users, moving about the space while assuming the role of the patient or family member in a pre-determined scenario. Feedback from the sessions will be included in ongoing research that will result in new evidence-based design tools for patient room design.

“This room is not the patient room of the future; but, rather a laboratory for examining the impact of design features on the patient experience,” said the Institute’s Tammy Thompson. “We were able to usher through those who are responsible for building hospitals and share patient insights in a collaborative environment, providing powerful feedback from practicing nurses, real patients and their families.”


Dan Pierce, President of Kitchell, AZRE Magazine May/June 2012

Q&A: President Dan Pierce of Kitchell

Q&A: Dan Pierce, President of Kitchell

Q: Technology is playing an important role in today’s construction market. What are some of the latest advancements you’re seeing utilized to make building better?

A: We’ve seen remarkable advances with respect to building information modeling (BIM) technologies. The capacity to share information efficiently has enhanced our ability to collaborate with owners and architects. Tablets, iPads, laptops and smartphones are commonplace — the line between design and construction has blurred. And I’ve been very impressed with the caliber of the young people who have chosen construction as a career. Their aptitude in leveraging the various technologies are enhancing our capacity to service our customers.

Q: How has Kitchell developed such a strong presence in healthcare?

A: I think that we’ve managed to develop strong relationships with our customers over the years. For example, we have worked on the hospital campuses that are now part of Banner Health since 1962. Those types of relationships have helped us anticipate many of the challenges that face healthcare providers in our marketplace. We see ourselves as strategic partners.

Q: Are you seeing signs of promise in Arizona’s commercial construction industry?

A: Despite Arizona’s oversupply in most market sectors of the built environment and the fact that we will likely be lagging most areas of the country in terms of economic recovery, we are seeing more activity in 2012 with a number of our design partners. Our development company is also seeing more activity. I see that as a very positive sign and I am optimistic.

Q: How has Kitchell managed to stay successful during the past five years?

A: Because of our diversity, we have been able to remain nimble and adaptive to the marketplace. This is what makes us unique. The size of our company — and the fact we’re employee-owned — is perfectly suited to be fluid and flexible, to be able to adjust workloads to exactly where we need to be at any given moment.

Dan Pierce has had a hand in the construction of numerous commercial projects throughout the Southwest, and has been with Kitchell for more than 30 years, having joined the company right out of college. As President of Kitchell Contractors, Pierce oversees divisions, including everything from renewable energy and healthcare to custom homes and medical technology planning.

Pierce has a bachelor’s degree in construction from Arizona State University. He served on the Accreditation Review Board and the Department Advisory Council when the construction management program was established at Northern Arizona University. An ASHE-Certified Healthcare Builder, he is on the Board of Barrow Neurological Foundation, has served on the Board of the Foundation for Blind Children and is involved in the American Society for Healthcare Engineering.

For more information on Dan Pierce, President of Kitchell, visit Kitchell’s website at kitchell.com.

AZRE Magazine May/June 2012

Healthcare Technology, AZRE Magazine May/June 2008

High-Tech Touch: Looking At Healthcare Technology

Healthcare construction projects are on the rise in Arizona and across the United States. Spurring the increase is competition among hospitals, aging facilities, growing populations and demand for new and changing healthcare technology. Industry experts estimate the boom will exceed $60 billion a year by 2010.

Construction costs are also soaring and putting pressure on an already stretched healthcare system. Between 1999 and 2006, construction costs in San Francisco jumped from $190 PSF to over $600 PSF. They also rose dramatically in the Phoenix market. Kip Edwards, system vice president for design and construction of Banner Health, created the following chart to illustrate cost escalation between 2004 and 2009.

“Our biggest challenge is always cost,” says Edwards. “It used to be $1 million a bed to build a hospital, but now it’s closer to $2 million.”

Edwards says one of the biggest factors driving capital costs is Information Technology. Hospitals and medical facilities at one time budgeted hundreds of thousands of dollars to pay for IT, but now must budget millions. Additional resources are also necessary to create flexibility for future growth, such as producing excess capacity for the continued addition of information systems, sizing up computer closets and HVAC systems and adding extra electrical power for future needs.

Healthcare Technology: Building Information Modeling (BIM)

To help manage these growing costs, many healthcare construction teams are using BIM, a technological tool designed to detect problems prior to construction and reduce downtime in the field. BIM enables users to create a virtual 3D model of an entire building, including walls, finishes, heating and air conditioning, plumbing, electrical, etc. Each trade creates its own 3D model at the start of a project. The models are then imported into a software program called Navisworks, which analyzes the drawings to detect collisions in the project.

Sharon Harper, CEO of The Plaza Companies, contends BIM is one of the most important pieces of technology used to develop healthcare facilities today.

“Healthcare facilities are extremely complex and each area has specific challenges,” she says. “The ceiling in an operating room, for example, is full of pipes and ducts because the room has special air requirements. With BIM, we can build all that into the model and then run conflict resolution to maintain control over what goes into the ceiling. BIM helps us optimize the design, and make it better and less costly.”

Information Highway

Server-based project management systems are also widely used today to help run healthcare construction projects. Orcutt|Winslow, a Phoenix-based architectural firm, creates a Web site for each of its projects through an online database they call Virtual Project. Members of the construction team can log onto the Web site anytime from anywhere, and check the progress of the project. They can also look at staff hours, schedules, updates, construction documents, the project’s budget and floor plan.

“The Web sites allow our project teams to share information quickly and effectively,” says Neil Terry, a partner at Orcutt|Winslow. “Before Web sites, we used scanners and fax machines and e-mailed PDFs. But e-mail has limitations on the size of file you can send, whereas any size file can be uploaded to a Web site.”


Steve Steinberg, former senior director of Lauth Property Group, says great advancements in healthcare and the market sector’s construction have taken place over the last five years, due to the computer and its ability to analyze information quickly and distribute it globally. He also contends that healthcare delivery is on the cusp of a paradigm change.

“The face of healthcare delivery is changing,” Steinberg says. “Hospitals are becoming infused with research and development components so delivery of care will become more personalized and specific to a person’s profile. That means hospitals will have doctors and nurses, plus added care givers like scientists, on their team who will advise on genetic and molecular levels and create treatments that are custom-designed for each person.”

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Links for more information about healthcare technology:






Per Diem Offices

UTAZ Development in Gilbert is building medical per diem offices in several locations around the Valley to help attract doctors and specialist to local hospitals.

The purpose of the per diem offices is twofold: (1) to provide physicians and healthcare practitioners an opportunity to establish a new practice or expand an existing practice in a new community; (2) and to provide temporary medical offices for practitioners waiting for new office space to be completed.

The daily, short-term lease rates associated with these per diem offices allow the practitioner flexibility in the number of hours and days they will occupy the space, thus minimizing the cost and risks associated with typical lease terms.

“This concept is not unlike the executive office suites created for general office use,” says Terri Tobey, senior vice president of sales and marketing for UTAZ. “The difference is that the UTAZ per diem offices are designed specifically to accommodate the medical user.”

The 1,500 SF per diem offices include architectural and design features that create a welcoming and healing environment. Each office also has a procedure room and basic exam rooms that are fully furnished and stocked with basic medical supplies, as well as individual locked storage for each lessee to secure their own specific supplies.

Physician and healthcare practitioners can lease the space on a per-day or per half-day basis, one to six days per week. Lease rates are $150 per half day, $300 for a full day. Terms can be as short as six months or as long as two years.

UTAZ provides all basic medical supplies such as exam table paper, cotton swabs, tongue depressors and other disposals. They also supply basic exam equipment such as otoscopes, blood pressure devices and thermometers, as well as office equipment such as phone, fax and copy machine.

“We’re trying to help the Valley attract doctors and specialists,” Tobey says. “There’s still a great need for medical professionals in Arizona. The challenge is finding the perfect location with the attributes needed for success.”

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 AZRE Magazine May/June 2008

Pin-Point Site: Acquiring Good Sites For Medical Facilities

The growth Phoenix has had in recent years equates to growth in the medical needs of its population. In turn, a greater number of medical facilities are needed within a broader area. The large inner city hospitals and satellite clinics that dominated healthcare for so long are no longer adequate to meet all of our healthcare needs, not because of a lack in quality of care, but because of proximity to the patient.

Sooner or later an organization that provides medical care must acquire a site to better serve the patient population base. The selection, evaluation and acquisition of a new site is unique, more complicated and more likely to run afoul than other non-medical site acquisitions if all of the issues are not identified and addressed before the site is acquired. The following are a few of the issues that a medical care provider must consider before closing on the purchase of a site.

The Contract:

The contract to purchase the site must be carefully negotiated. In the case of medical care facilities, there are at least two issues of particular note: (i) the due diligence period must be long enough to accommodate multiple inquiries and analysis well beyond even the most complex transactions; (ii) if the medical care facility is part of a larger complex, or the seller owns other adjoining property, a set of deed restrictions against the seller’s property should limit or prohibit other competitive medical care providers or incompatible uses of the adjoining property, and the provider should be entitled to enforce the restrictions.


The first step is ensuring that the zoning permits medical care, including the type of medical care, procedures and patients that will be at the facility. The zoning should be comprehensive and there should be no requirement for a special-use permit or further governmental action.

Rezoning Contingency:

If a rezoning special-use permit is required, the contract should provide for an adequate period of time for the medical care provider to acquire the approval or otherwise terminate the contract.

Title Review:

Title should not preclude the variety of activities incidental to medical care, typically involving noise, radiation hazards and environmental and waste materials, which are all commonly prohibited.


Medical care facilities require substantial parking. The adequacy and proximity of parking should be confirmed as part of the zoning, any deed restrictions and as a practical matter. There should be the ability to park undercover and immediately adjoin the facility.

Governmental Incentives:

The medical care provider should look at several sites in several different jurisdictions. Most jurisdictions are seeking a greater core for their constituents and some may have the flexibility to offer incentives to induce the provider to locate within its boundaries.

Developer Incentives:

Private developers with a large development may see a medical care facility as a highly desirable amenity to the project. They have an opportunity to seed the development and will grant substantial concessions in price, location, access, infrastructure and signage, just to name a few.

Utility, Other Needs and Incentives:

Larger medical facilities also can require substantial and reliable utility needs. The utilities may be willing, particularly in conjunction with a developer and governmental jurisdiction, to upgrade services from the entire grid by construction of additional substations, wells or plant capacity to meet the needs of the facility.

Specialty Uses:

Some medical care facilities present unique issues, in particular drug abuse/half-way houses or full-care psychiatric facilities. The problem most commonly encountered is finding a location that has the proper zoning and no other restrictions on what would be viewed by neighboring properties as highly undesirable. The provider does not want to acquire a site that requires the approval of what would be certain opposition.


Ultimately, the provider has to look far enough into the future to ensure that it has acquired, or has an option to acquire, a right of first refusal that will give the provider a measure of comfort that, if the need arises, it can still expand and provide centralized service for an extended time. This is not just a question of the amount of land, but the adequacy of the utilities and all other issues revisited as well.

Looking Ahead:

The most valuable part of the process is looking ahead and anticipating to the extent possible what healthcare will look like in the future and determine that there are no constraints to meet those needs.

For more information about Jennings, Strouss & Salmon and acquiring sites for medical facilities, visit jsslaw.com.

Bruce B. May is a real estate lawyer with Jennings, Strouss & Salmon’s Phoenix office. He represents national, regional and local developers, homebuilders, and institutional and individual investors involved in all phases of the investment and development process. He can be reached at 602-262-5923 or Bmay@jsslaw.com.

AZRE Magazine May/June 2008