Facing shortages in construction labor and obstacles in originating financing for new projects, developers who specialize in healthcare properties are starting to think smaller, according to a recent study by Indianapolis-based REIT Duke Realty Corp. This means more micro hospitals.
Micro hospitals are similar to community and small-town medical facilities — a hybrid of urgent care centers and full-fledged hospitals. They offer significantly fewer inpatient beds than regular hospitals — eight to 12 per facility is average — and typically span between 15,000 and 50,000 square feet.
As such, they fit more comfortably into densely populated urban pockets and provide more immediate access to acute and emergency care. With delivery costs that range from $7 million and $30 million, depending on size, micro hospitals represent a cheaper means of financing a regular hospital.
What else is driving demand for micro hospitals? According to the study, they offer a convenient, cost-effective alternative to larger hospitals without compromising the quality of care. When considering where to build a micro hospital, developers are encouraged to pinpoint high-visibility sites within 20 miles of a major hospital. This enables them to tap directly into the smaller submarkets for which micro hospitals are intended.
“Anticipated changes in the healthcare act, compliance with existing legislation and the quest for arriving at the most efficient, affordable and convenient methods of delivering care to patients are all impacting the decisions of healthcare providers,” says Keith Konkoli, senior vice president of Duke Realty’s healthcare operations.
“When it comes to delivery, one of the most prevalent trends is the use of micro hospitals, where patients can receive many of the same services available at larger inpatient hospitals, but in locations closer to where they live,” adds Konkoli.
While no two micro hospitals are the same in terms of services provided, they generally share a few common practices, such as pharmacy access, lab services, imaging and both primary and emergency care. The reduced number of beds prioritizes outpatient procedures and minimizes high levels of patient readmissions, which hospitals are penalized for under the Affordable Care Act.
These penalties are driving another trend in the healthcare sector: standalone rehabilitation facilities. Compared to their inpatient counterparts located on hospital grounds, these off-site rehab centers are cheaper to build and operate, and are linked to faster recovery times, according to the study.
Models of successful rehabilitation practices face a new challenge in seamlessly integrating top-notch care into patients’ regular routines. This ups the ante on site selection. Furthermore, it prioritizes retail-oriented criteria — convenience of location, friendliness of atmosphere — when choosing a rehab center.
Just as gas stations and convenience stores must consider whether to position themselves on the “drive-home side” or the “drive-to-work side” of the road to increase customer traffic, so too will rehab centers and urgent care clinics, according to Duke’s findings.
The increase in construction of both micro hospitals and standalone rehab centers is pushing the money and labor away from ground-up constructions of full-service hospitals.
According to data in the study, there are 546 expansions of medical buildings, totaling 65.5 million square feet, slated to either break ground or come on line in the United States in 2017. Conversely, only 136 new developments totaling 36.8 million square feet are planned or underway.
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— Taylor Williams