Firm Pioneers Debt-Free Development of Hospital-Based Medical Buildings
(Reprinted from the San Diego Daily Transcript, August 26, 1999)
Today’s hospitals have evolved from centers for emergency treatment and surgery into fully integrated campuses offering outpatient services and physician offices all at one location.
What began as a matter of convenience for medical staff members, on-campus medical office buildings have become a significant factor in hospitals’ marketing and financial planning. The centralization of healthcare delivery began shortly after World War II, when physicians were moving their practices, which had been previously located near the patients in suburbs, into hospital-based medical office buildings. The number of private practices and specialists increased, and many physicians wanted offices near a hospital.
Today, the increasing emphasis on outpatient services is requiring frequent remodeling and expansion of existing facilities. Many hospitals are choosing to expand their facility into a campus setting by locating these services in a new building rather than remodeling the hospital. The choice results in a development plan which is both cost-effective and less disruptive to the hospital.
A local company has been involved in the creation of hospital campuses for 28 years. Pacific Medical Buildings develops and manages medical office buildings, outpatient facilities and parking structures for hospitals and medical groups through the western states. PMB has made expansion a viable option for many hospitals with its innovative debt-free development plan.
PMB was established in 1988 by a group of senior executives who acquired the West Coast division of American Medical Buildings in a management buy out. The division was renamed and established headquarters in San Diego. The firm has built 61 facilities in 38 cities, more than any other developer in the West. It currently owns and manages buildings in three states.
PMB has a strong presence in the San Diego area, having built facilities near seven hospital campuses including Palomar Hospital, Alvarado Hospital, Sharp Memorial Hospital, Paradise Valley Hospital, Mercy Hospital and Mission Bay Memorial Hospital.
The medical office building that PMB built for Alvarado Hospital Medical Center is part of a comprehensive 40-acre campus. It contains an ambulatory surgery center, an in vitro fertilization lab and offices for 30 physicians. The hospital campus accommodates more than 200 private physician practices and specialty outpatient services.
In times when many hospitals are concentrating on funding Y2K preparation and seismic retrofit requirements, PMB’s program, which conserves the hospitals’ capital and debt capacity, is a workable solution for needed expansion.
“The financing and ownership of medical office buildings have changed along with their design and function. Capital conservation measures are causing many hospital to look at creative leasing strategies for medical office buildings,” said Robert A. Rosenthal, president, Pacific Medical Buildings. “That’s where Pacific Medical Buildings comes in. We offer a variety of development plans to ensure successful completion of the new facility.”
PMB pioneered the developer-owned hospital campus based medical office building. Unlike other companies that have similar programs, PMB does not require the hospital to master lease the building, assume debt or make any investment.
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