Healthcare goes retail across the Valley

Above: WEST VALLEY PRIMARY AND SPECIALTY CARE CENTER: The $70 million facility will sit on 20 acres and be able to serve about 225 patients and visitors daily. Commercial Real Estate | 6 Jun, 2018 |

There is no question that the healthcare industry is in the midst of an ongoing transformation as business models shift towards keeping patients well and technological advances shake things up with new systems, procedures and treatments. 

Healthcare facilities are aging, which has made renovations commonplace, and healthcare providers are finding new ways to meet the patients where they live and work through outpatient facilities.  

In 2015, the U.S. spent a collective $3.2 trillion on healthcare, with about $9,990 of that going towards each individual, according to the Centers for Disease Control.  

The way developers build facilities for the healthcare industry is changing dramatically and those changes translate into big bucks. More than $42 billion was spent in January 2018 alone on healthcare construction in the United States, according to the U.S. Census Bureau.  

Arizona is certainly getting its share of the healthcare construction sector’s economic pie as developers renovate old buildings and build new healthcare facilities across the state and the Valley. And with the increased demand comes an increase in regulations and expectations as new projects must meet modern healthcare needs — from being accessible to the patients to keeping up with the latest technological advances.  

Healthcare comes to you 

Even before the Affordable Care Act brought a focus on reducing costs and making healthcare more efficient by focusing on keeping patients healthy instead of treating them when they’re sick, healthcare providers knew they’d have to transition to wellness care models. 

With the implementation of the Affordable Care Act, providers started to focus on keeping everyone healthy before they become sick and need care in the emergency room or hospital, where it’s the most expensive.  

To keep patients healthy, providers have had to take the initiative of being proactive and making it easier for the patients to get treatment, says Julie Johnson, principal at Avison Young.  

Providers focused on keeping people healthy by moving healthcare away from the hospitals and into their neighborhoods, along with being more focused on primary care from physicians and urgent care clinics, Johnson says.  

“That’s when the shift started towards providing healthcare that is not focused on making the hospital the center of the universe,” Johnson says. “Very often, there was a focus on keeping the doctors happy. Hospitals are now shifting toward more patient-centric healthcare rather than hospital-centric or physician-centric healthcare.”  

In order to accomplish this, there has to be a lot of real estate involved, Johnson says. Providers started developing new facilities to supply spaces for the number of physicians who were leaving private practice to become employees, Johnson says. And more urgent care facilities have been added along with new outpatient facilities, she says.  

There’s also been the rise of micro-hospitals to help cut costs. Surgeries are increasingly becoming an outpatient procedure, Johnson says, so facilities were needed to provide patients a space when they only need to stay one night at the hospital after a procedure. 

These micro-hospitals are smaller than your larger facilities and help lower both the costs and the possibility of exposure to infections that can happen in hospitals, Johnson says.  

As providers implement the strategy of adding more urgent care and outpatient facilities, they have also been taking a page from retail when it comes to signage. 

It’s hard to miss the growing number of flashy neon signs for urgent care facilities and the addition of these healthcare spaces in what were once traditional retail shopping strip malls. These spaces are being added near big box retail stores and within short distances of pharmacies. The idea is to attract the patients within the community before they need help at a hospital or some other healthcare facility. 

“Because retailers are trying to appeal to the customer, all of those things retailers have used in the past are now being used by the healthcare industry because it is trying to appeal to ‘customers,’ which are the patients,” Johnson says. “The healthcare providers are now using signage, locating facilities within close proximity to freeways, whatever they can do to make it easy and accessible to patients.” 

How this plays out 

The best way to serve patients within their communities, it seems, is through these outpatient facilities that are almost retail in nature.  

Cancer Treatment Centers of America is expanding its network in the Valley through the opening of two new outpatient care centers — one in North Phoenix and another in Scottsdale. There are also plans to open a third such facility in the Valley this year.  

“Clinical advancements in cancer care have significantly changed the way in which we treat the disease, including offering patients access to the most advanced treatment options in a convenient, more cost-effective outpatient setting,” said Raj Garg, MD, JD, president and CEO of Cancer Treatment Centers of America. “CTCA Outpatient Care Centers will provide patients medical oncology treatment and integrative care at the hands of highly respected CTCA oncology experts.” 

Arizona’s largest healthcare provider, Banner Health, is also pursuing these new types of facilities, having spent $425 million on construction and equipment costs in 2017, according to its unaudited financial report.  

Banner Health has nearly 400 active construction projects right now, says Kip Edwards, vice president of development and construction of Banner Health.  

These projects are aimed at deploying care for patients within their communities with the addition of health centers, ambulatory surgery centers, urgent care facilities and soon, more imaging centers, Edwards explains.  

Many of these projects involve “putting the care in the community close to the customers that we serve and just improving the ease of access and the distance and putting care where it most needs to be,” Edwards says.  

There’s going to be much more of this, he says, and it will probably be the biggest, growing trend when it comes to new construction projects. But this doesn’t mean there won’t be any more hospitals, Edwards notes. There will always be hospitals as part of the delivery of healthcare, but there will be growth in investment for small clinics and urgent cares within retail facilities.  

“Things that are close and easy to access are really much better for our patients,” he says. “They can get in easy, they can get in quickly and at a lesser cost, quite frankly.”  

Banner Health is aiming to continuously evolve to be the strongest provider of care with the best locations and facilities, Edwards explains. The key piece of this puzzle is making healthcare easier for patients when it comes to access, he adds.  

BANNER UNIVERSITY MEDICAL CENTER-PHOENIX: 700,000-square-foot emergency department and patient tower expansion project is one of the projects that shows how Banner is updating an older asset to fit in line with how care is delivered today.

In 2016, Banner Health purchased 32 urgent care facilities across the Valley. The nonprofit healthcare provider has also been renovating and investing in its facilities. 

Edwards says there has been a lot of investment into the infrastructure for Banner’s facilities. The company is in the process of a 10-year plan where it plans to continuously replace infrastructure and refurbish facilities to keep them up to date, Edwards says. 

Banner University Medical Center-Phoenix’s 700,000-square-foot emergency department and patient tower expansion project is one of the projects that shows how Banner is updating an older asset to fit in line with how care is delivered today.  

The $418 million project is transitioning the entire hospital to private beds, while also creating a new emergency department for modern use. Edwards says the old emergency department was poorly configured and too small for many modern uses. 

The $400 million Banner University Medical Center-Tucson project is also updating an outdated facility by adding a new patient tower and expanding the operating rooms. Edwards says the old operating rooms at the Tucson facility didn’t comply with modern building codes and the rooms were too small for modern machinery that’s needed in today’s operating rooms, so an update and upgrade was needed. 

Another project that’s updating old spaces within Banner’s projects is the new emergency department for its Boswell Campus, Edwards says.  

By building modern facilities, upgrading infrastructure at existing sites with the latest and greatest technologies and delivering care to the people through outpatient and urgent care facilities, Banner Health will remain a leader in the healthcare sector, Edwards says.  

Ultimately, Banner is making the transition towards population health, or wellness care, and utilizing technology to deliver care where and when people need it.  

How to achieve wellness care 

Healthcare is all about bringing wellness to the communities that need it and the Maricopa Integrated Health System is doing just that.  

Maricopa Integrated Health System’s upcoming West Valley Primary and Specialty Care Center in Peoria is focused on treating the whole body in a community where these services aren’t readily available, says Kris Gaw, chief operating officer of Maricopa Integrated Health System.  

After analyzing about 115 million claims from 2016, MIHS was able to determine that by placing this new facility in Peoria near Grand Avenue and Cotton Crossing, MIHS would be able to treat the greatest number of people from one location, Gaw says.  

The $70 million facility will sit on 20 acres and be able to serve about 225 patients and visitors daily. There will be an urgent care, dental clinic, dialysis clinic, four operating rooms, two major procedure rooms, pre-operative and recovery bays, as well as sterile processing at the facility. It will also include behavioral health services, lab services and a retail pharmacy.  

During the planning process for the facility, MIHS found that many patients were not seeing specialists for their health needs when directed. MIHS hopes that the site in Peoria will help guide patients to the specialists they need by having everything under one roof, Gaw explains.  

“We don’t know exactly what those reasons are,” Gaw says, referring to the fact that too many patients aren’t seeing specialists, “but what we do know is that we needed to put access to those services in the West Valley.”  

MIHS Maryvale ER

MARICOPA INTEGRATED HEALTH SYSTEM: MIHS will reopen the emergency room at the Maryvale Hospital in order to continue serving the 40,000 patients who annually visit that ER.

MIHS is focused on serving Medicaid patients, Gaw says, and this facility is filling a need for that underserved community and will work towards keeping those patients healthy in the community in which they live. 

MIHS is also working with local municipalities to ensure that there’s access via public transportation by ensuring there are easy connections from key neighborhoods to the facility, Gaw says.  

This isn’t the only way the Maricopa Integrated Health System is working to provide care to patients in areas that need it.  

MIHS purchased the Maryvale Hospital that Abrazo Community Health Network had recently closed.  

MIHS will reopen the emergency room at the Maryvale Hospital in order to continue serving the 40,000 patients who annually visit that ER, Gaw says. But, MIHS will also have 203 inpatient beds for behavioral health at the hospital.  

“MIHS is able to check off two major community needs by purchasing that facility,” Gaw says. The health system will invest $59 million into the facility for renovations, bringing new life to it in a community that needs the investment. 

How facilities are designed and built 

With technology quickly evolving as to how patients are treated, facilities need to be agile and ready for change.  

ARCHSOL, an architectural firm based in Scottsdale, works on many healthcare projects and works with clients to understand their current and future needs, which could have an impact on the way a space is designed.  

Technology has changed a great deal and procedures that were normally done in the operating room can now be done elsewhere. 

One example ARCHSOL mentions is how the design of a radiology department needs to allow a multidisciplinary team to work within it as procedures migrate from the operating room to the radiology department.  

Consideration of the workflow needs to be taken into the design of healthcare facilities and now as ARCHSOL designs the space, it factors in the evolving need to accommodate new innovations and updated equipment.  

Hamilton Espinosa, the National Healthcare Core Market leader at DPR Construction — the construction company behind the Banner University Medical Center-Phoenix emergency department — says that a push towards efficiency within healthcare facilities remains a constant.  

Healthcare facilities must respond to many variables in today’s environment, such as an aging population, patient consumerism, healthcare reform, mergers and acquisitions, technology innovations and changing market conditions.  

Departments are designed in order to create the optimal layout by placing supply areas closer to rooms, which, “allows staff to spend more time delivering care and less time moving supplies around,” Espinosa says.  

While providers are creating more outpatient facilities, there is also a renewed focus on designing the best inpatient spaces, so they can focus on capturing market share and improving the patient experience, he says.  

Facilities do this by upgrading emergency departments, observation units, diagnostic imaging and treatment and transitioning semi-private rooms into private rooms, he says. All of these things create better spaces that attract and retain patients, he adds.  

“The biggest challenge faced by healthcare systems is that they must do more with less,” Espinosa says. And that means the way these facilities are being built has to be changed, too. 

Utilizing advanced building methods like virtual design and construction, lean principles, co-location and prefabrication are great ways to address a project’s needs, Espinosa says.  

“Throughout the Banner University Medical Center-Phoenix projects, the co-location of teams in one room has brought about a number of creative solutions to maximize space and building efficiency,” Espinosa says.  

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