Managed care, advances in medical technology, shrinking Medicare reimbursements, and growing patient populations have combined to place extraordinary operational and facilities demands on the nation's hospitals and healthcare providers. Many of the services and treatments that used to be reserved for hospital care, such as MRIs and radiation therapy for some cancers, are now being offered as outpatient services in medical office buildings and clinics. New reimbursement mechanisms are also making medical office buildings a better financial option for doctors—and patients.
“The biggest issue is that these are not just business occupancies anymore,” said Mike Doiel, SVP of Chicago-based HDR, a design firm that focuses on healthcare. “The key is determining the long-term utilization of the building and the programs you'll have. In the past you could just build a shell and core and simply find tenants. Now it's important to understand complicated program requirements.”
To be able to offer more programs and services, today's medical office buildings have bigger footprints and operate more like medical centers than traditional physicians' offices. Having a developer partner with a physicians' group, a building owner, or a neighboring hospital is often the way to get such complicated, expensive buildings erected on time and within budget. Other buildings simply share some of their for-profit facilities with a neighboring not-for-profit hospital, but every project requires intricate MEP coordination and construction scheduling to meet the requirements of a hospital-quality program.
“The value proposition comes in the delivery of the project,” said Dean Reed, production planning manager for DPR Construction of Redwood City, Calif., which is building a three-story, 250,000-sf MOB for Camino Medical Group in Mountain View, Calif. “The biggest risk to getting it done properly is coordination of mechanical and electrical systems in such a complicated facility.”
Medical centers as office buildings
The Camino Medical Center will be a division of the not-for-profit Palo Alto Medical Foundation, an affiliate of Sutter Health, a nonprofit provider of healthcare services with hospitals and doctors in more than 100 Northern California communities. The new medical center will house offices, exam rooms, an urgent-care center, an outpatient surgery center, a pharmacy, a laboratory, and diagnostic radiology services. The space will bring together nine of Camino Medical Group's 15 clinics for greater ease of access by nearly 200,000 patients a year.
The project, which should be completed this month, is believed to be the first large-scale healthcare project in the U.S. to use building information modeling (BIM) technologies in conjunction with a lean project delivery system (derived from Toyota's system in the automobile industry). Some of its results:
• 3D virtual building models of the mechanical, electrical, and plumbing (MEP) systems are enabling subcontractors to prefabricate most of the MEP materials for delivery, permitting an estimated 20% improvement in productivity in the field.
• Installation of MEP systems in the building's first six areas, totaling 75,000 sf, was completed without any field clashes.
• In 12 months, there have been only 233 RFIs, 159 of which were “confirming only.”
• DPR superintendents have spent less than five hours resolving coordination-related issues through construction of the first six quadrants.
“The difference is in the integrated team approach,” said Reed. The facilities and hospital-quality MEP systems are so intricate in medical office buildings that they require clash-detection and construction planning more than other projects. Using lean construction and BIM together has helped DPR deliver Camino and its other medical projects on tight deadlines to please both hospital and more-demanding developer clients.
Experimenting with funding approaches
The Madison Professional Building at Provena-St. Joseph Medical Center is a three-story, 74,000-sf medical center in Joliet, Ill. Tenants include Surgery Center of Joliet LLC, which leases 17,000 sf of the first floor for a high-tech ambulatory surgery center that frees up inpatient space at the neighboring hospital. The first floor also houses office space for hospital staff. It's connected to the hospital next door by a walkway at each level so patients, physicians, and nurses have direct access.
“Provena is a developer project,” said HDR's Doiel, who explains that the developer brought his money to the table and the hospital joint-ventured with a physician's group, Woodrum/Ambulatory Systems Development, Chicago, to syndicate the first floor. Thus, the ambulatory center is a tenant. “Anytime you have those for-profit revenue streams, it becomes easier to design and build,” says Doiel.
Faith Regional Hospital's medical office building in Norfolk, Neb., another HDR project, is a $9.2 million, two-story, 70,000-sf facility connected to Faith Regional Hospital by a 2,000-sf bridge. It was built by the hospital without a developer, but it still allowed the hospital to charge tenants rent in the new office building, which houses a multi-specialty physician group that includes specialty clinics, 25 physicians, and a surgery center.
“There are a lot more developers coming to the table for hospital services projects than in the past,” said Doiel. “The ease of use that these facilities can provide is better for the physicians and the patients.”
In many cases, a medical office building's equipment is more expensive than the building itself, particularly for outpatient centers that offer oncology and cancer treatment. But some facilities have found a way to use the medical office building to cut equipment costs.
Trinity Medical Center in Bettendorf, Iowa, recently built a $6 million, 60,000-sf medical office building. The new MOB has physician offices and outpatient functions, but the big savings for Trinity comes in the magnetic resonance imaging machine that it shares with its new medical office building, which butts up against the hospital and shares a common wall. The MRI suite is in the MOB, but was built to institutional standards, so it can be considered a part of the hospital.
“You can get really creative with some of these facilities, provided you build them up to standards,” said Mike Doiel, SVP of Chicago design firm HDR, who designed the office building. “Two MRI machines would simply be a killer on the budget for a medical center of this size.”
Trinity and HDR knew that 80% of the MRIs in the area were done as outpatient procedures; only 20% were done on an inpatient basis. The medical office building is connected to the hospital at each floor, so patients that need MRIs have quick access to the MRI suite no matter what time of day it is, even if the main part of the office building itself is closed.