Even as they are under pressure to reduce the cost of delivering care, executives at health care systems and hospitals across the country are dealing with the effects of health care reform, market dynamics, community needs, and trends aimed at improving quality. Regardless of the outcome of the U.S. Supreme Court’s ruling on President Obama’s Affordable Care Act, expected in June, health care organizations face a crisis of not being able to provide care affordably within the existing model.

The need to change has generated a growing list of critical concerns that must be addressed as health care providers determine what type of facilities to develop—and where to place them—in order to be competitive and meet increasing demand for care. While the push for operational efficiencies is clearly driving decisions, market-smart leaders also understand that the very concept of health care is being redefined.

In the redistribution of care, some services are beginning to move away from the central health care campuses. Over time, this migration will open up new possibilities for health care centers, creating space for other uses, including residential, hospitality, and retail, that will attract interest from developers and reshape medical districts.

If one looks at the current configuration of many medical centers—dense, often urban, and frequently constrained clusters of health care facilities—while listening to the longer-term plans of health care systems for more dispersed networks of facilities and programs embedded in communities, it is possible to envision a different future for health care campuses. As outpatient services and medical office buildings move away from inpatient-focused campuses to be closer to patients in neighborhood centers and suburban locations, as payment structures for health care change, and as the focus on wellness intensifies, will health care campuses evolve into health care communities?

In California, so often the bellwether state for change, several of the region’s leading health care institutions are developing buildings capable of providing more sophisticated care in less square footage. They are devising entire new models that deploy real estate and facilities differently to support healing and wellness. They are rethinking everything from acute-care facilities to neighborhood clinics, aligning their businesses and facilities not only to meet the exigencies of health care reform, but also to create a more sustainable delivery model.

 

On-Site Research Facilities

 

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The new Cedars-Sinai Advanced Health Sciences Pavilion
will be a flexible physical environment that colocates teaching,
research, and clinical care to create a synergistic
model focused on the patient.

Clinical research is a critical component of the emerging model. Instead of researchers working off site in sequestered laboratories, they are brought onto the hospital campus, close to clinicians and patients. Today’s researchers often are also clinicians and educators whose work brings multiple medical disciplines together with patients and requires facilities that benefit all users. For example, at Cedars-Sinai Medical Center in Los Angeles, the new $350 million Advanced Health Sciences Pavilion (AHSP), scheduled to open in 2013, will place outpatient care, medical and scientific research, and graduate and professional education all in one place on a compact site on the 24-acre (9.7 ha) urban campus.

“In 2007, we were at the end of a long-term master plan, and this was one of our last available open sites,” says Robert Cull, executive project director of facilities planning, design, and construction for Cedars-Sinai Health System. “We had completed a new intensive-care bed tower in 2005 and had begun planning an outpatient facility for the site. Revisiting the strategic and facility master plan in 2007, we saw a growing need for additional research space to support our growth as an academic medical center and decided to add the research labs into the outpatient facility.” Adding two floors of laboratories to the outpatient building represented an opportunity to explore a new clinical model that integrates patient care, research, and education.

On the campus of Scripps Memorial Hospital La Jolla, a major redevelopment is underway as part of a 25-year master plan that was started in 2010. While the 43-acre (17.4 ha) campus is less constrained than Cedars-Sinai’s, the development goals are similar—to create a destination medical campus where patients will be able to address all their health care needs, from wellness and prevention to advanced diagnostics and treatment. By adding three new hospital towers, as well as two new medical office buildings, an outpatient-care pavilion, and research and graduate education facilities, Scripps is creating a fully integrated health care campus.

“We are moving from a model where patients are often handed off from their primary care physicians to specialists and traveling from one care setting to another for treatment, to a model where the medical team works hand in hand,” says Bruce Rainey, corporate vice president of facilities and construction at Scripps Health. An example of the new model is the relationship between the $456 million, 383,000-square-foot (35,600 sq m) Prebys Cardiovascular Institute, the first of the new hospital towers, under construction and scheduled to open in 2015 on the Scripps Memorial Hospital La Jolla campus, and the planned medical office building that will be attached to it. “The institute will provide cardiovascular patients with the most advanced treatment and surgical options, and the same physician team will be part of their continued care, right next door,” Rainey says. “It’s about providing better care that is also more cost-efficient.”

Scripps Health’s efforts to improve quality and, at the same time, control the cost of health care extend throughout its system, which includes four acute-care hospitals on five campuses—Scripps Memorial Hospital La Jolla, Scripps Memorial Hospital Encinitas, Green Hospital, and Scripps Mercy Hospital—and 23 outpatient facilities throughout San Diego County that are part of either Scripps Clinic or Scripps Coastal Medical Center.

“It’s a model that allows a physician to focus on practicing medicine, leaving paying the rent and staff and the administrative end of things to Scripps, which is attractive to many doctors,” Rainey notes. The expanded and integrated system, with its partner physicians, is helping Scripps reach out in the community where the patients live and where the shift from healing to wellness begins.

Like Scripps Health, the MemorialCare Health system is an integrated delivery system that includes six hospitals, three medical groups, an Independent Practice Association (IPA) retail clinic, and numerous outpatient health centers throughout southern California. Recently, hospital officials revisited planning options on its two Long Beach campuses where three of the hospitals—Long Beach Memorial, Miller Children’s Hospital Long Beach, and Community Hospital Long Beach—are located.

They evaluated the current condition of their facilities and analyzed potential development and relationships with the surrounding neighborhood to create a flexible plan for the future. “When the timeline for Senate Bill 1953 compliance—which was enacted in 1994 after the Northridge earthquake required all hospitals in the state to ensure that their acute-care spaces would be able to continue operation following an earthquake—was extended from 2008 to 2030, we realized that we had a longer planning horizon. We had time to develop a strategy for the campus that would support a changing health care model,” says Wendy Dorchester, chief planning officer at Long Beach Memorial.

What they developed was a strategy for their 60-acre (24 ha) health campus, a set of guiding principles, and implementation strategies. In addition to transforming the current hospital site to a better-planned campus, they sought several specific benefits that related to improved care, lower cost of care, and market position.

“The guiding principles we developed are important as they provide a means to measure the effectiveness of the plan in meeting our goals,” says Dorchester. “This is especially important because we set ambitious goals, like reducing operating costs by 25 percent.” The implementation strategies include the development of a robust ambulatory program, improvements to quality, patient environments and operations, and community and enterprise development, which includes partnering with others to make outpatient care more accessible for patients.

The major building programs on the campuses of Cedars-Sinai Medical Center and Scripps Memorial Hospital La Jolla, and those built to date at Long Beach Memorial, have been developed by the hospitals themselves. As nonprofit health systems, they rely on funding from a variety of sources including operating revenues, philanthropy, debt, and bond issues.

However, all three systems, like many others across the county, have both leased and owned off-campus facilities, including medical office buildings, clinics, and imaging centers. Health care providers’ evolving needs for a wider range of facility types and locations are spurring new development models.

 

A Medical City

 

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Presby Cardiovascular Institute,
will have state-of-the-art
cardiovascular operating rooms,
hybrid operating rooms, centralized
research labs, and a center for
graduate medical education.

Consider March LifeCare, an innovative and integrated health care campus with inpatient, outpatient, physician, medical, and surgical services—spanning birth to hospice care—that is planned for the former March Air Force Base in Riverside County, California. “It’s not just a medical center; it’s a medical city,” says Donald N. Ecker, founder and project leader at March Healthcare Development, the master developer for the new campus.

Ecker saw an opportunity in what he calls “the perfect storm”—the need for high-quality health care close to home, an aging population, increasing health care needs, devastating economic conditions, and the urban blight of unused land at the former March Air Force Base. What he first envisioned in 2004 as “the Mayo Clinic of the West” when he evaluated the excess land and decommissioned hospital on the air-base site has become much more. The current concept calls for a wellness campus, which at buildout would include a hospital, medical office buildings, a retail village, skilled nursing facilities, memory care facilities, a child care center, ambulatory care facilities, a continuing care community, assisted living residences, research facilities (in collaboration with the University of California at Riverside School of Medicine and the California Baptist University College of Allied Health), a community-based outpatient clinic for Riverside County veterans, wellness and healing gardens, restaurants, a spa and fitness center, a performance venue, and a hotel combined within one master-planned community encompassing 6 million square feet (557,000 sq m) of development space on 236 acres (96 ha).

Key to the success of March LifeCare’s vision are partnerships with like-minded organizations including hospitals, ambulatory surgery centers, physicians groups, and education and research centers. The scale and scope of the medical enterprise will engage the entire community, including the large population of veterans and their families. Ecker sees it as “transforming health care through collaboration.” As an example, the development’s first partner, Riverside Medical Clinic, has made a commitment to develop a medical office building and an ambulatory surgery center.

After eight years of planning, Ecker’s vision is moving closer to realization. Phase I demolition of buildings on the former Air Force base site is complete; the land is fully entitled; bids for the development of infrastructure were let in April 2012; and the parcel map for the entire development was scheduled to record in May, which will allow the sale of individual pads to interested health care organizations as well as to retail and mixed-use interests to open escrow. March LifeCare has raised all its funding through private sources. The March Joint Powers Authority, a commission composed of representatives from Riverside County and the cities surrounding the campus, has made an “enforceable obligations commitment” of $32.4 million based on a tax increment that the project will create over time.

While the development strategies for each of these institutions are tailored to the demands of their patient populations, campus conditions, and geographies, all are intended to create a more robust health care model—one that is efficient, effective, and engaged with the community.

Ambulatory care, whether on a hospital campus or off site in a neighborhood, just makes economic sense. The expense of high-acuity care in a hospital—from costs of facilities to clinicians—can be higher than that of less-acute treatments delivered in an outpatient setting. There also is a need to provide care, apart from the emergency room, when the doctor’s office closes at 5 p.m.

In addition to traditional partnerships, such as those with physician groups, health care organizations are looking beyond the boundaries of their campuses and into the community for kindred businesses, including health care–related retail, fitness, wellness, and support services. It is a new era for health care, and it will demand new development strategies from the health care community and its partners in city government and planning, and in the real estate and development communities.