St. Rose Uses Development Company for Outpatient Facilities, Medical Offices
(Reprinted from the Henderson Home News, August 17, 1999)
In an era of tight profit margins, declining reimbursements and increasing managed care penetration, hospitals across the country are looking to outside sources for capital to build new facilities. More hospitals are choosing the services of development companies such as Pacific Medical Buildings to build outpatient facilities and medical office buildings without incurring risk or investing scarce capital. St. Rose Dominican Hospital in Henderson used the services of a development company in 1992 when Pacific Medical Buildings built the 44,000-square-foot St. Rose Dominican Medical Plaza. The hospital chose to work with a development company again and selected Pacific Medical Buildings for the St. Rose Dominican Hospital – Sienna Campus medical building.
“In planning our new hospital campus, we knew there were a lot of options out there. We had a positive experience in 1992 with the St. Rose Medical Plaza and felt working with a development company was the way to go for our new medical office building ,” said Rod A. Davis, president and CEO or St. Rose Dominican Hospital. The hospital went through a formal review process and sent out a request for proposals medical office building developers in the West. Pacific Medical Buildings was selected and is developing the Del E. Webb Medical Plaza on the southwest corner of Lake Mead Drive and Eastern Avenue in Henderson.
The Plaza is part of the $185 million St. Rose Dominican Hospital – Sienna Campus which will feature a hospital with a community medical center, ambulatory care center, physicians’ offices, prevention programs and associated health care services.
“In today’s environment, it is a challenge to manage a hospital,” Davis said. “We are careful stewards of our resources and we need to focus on our business of caring for people . Working with a company like Pacific Medical Buildings allows us to concentrate on clinical patient services and not tie up our precious assets in real estate.”
The $15 million Del E. Webb Medical Plaza will be attached on all four floors to the new Sienna Campus hospital providing physicians and patients convenient access to the hospital. The 93,000-square-foot medical office building will be four stories tall.
Part of the ground floor will be occupied by a 12,00-square-foot outpatient cancer center with a separate entrance. The remaining three floors will be occupied by multi-specialty medical offices for 70 physicians. The facility is scheduled to open in March 2000.
According to Pacific Medical Buildings’ President Robert Rosenthal, services of development companies continue to grow in popularity as hospitals choose to invest their core business instead of bricks and mortar.
“The growing difficulty that many hospitals are experiencing in obtaining capital, along with necessary focus on capital management, means that off-balance sheet financing for medical office buildings will become a more popular strategy in the future,” Rosenthal said.
The San Diego-based Pacific Medical Buildings has been developing health care facilities for more than 30 years, building everything from medical office complexes to outpatient centers to parking garages.
In 1986, the company pioneered the hospital-based, developer-owned medical building which conserves a hospital’s capital and debt capacity. Pacific Medical Buildings leases hospital land, the develops, finances, leases and manages the facility.
The financing and ownership of medical office buildings have changed along with their design and function.
“Once merely a convenience for the medical staff, medical office buildings are becoming an increasingly important part of a hospital’s marketing and financial strategies,” Rosenthal said.
Rosenthal feels that the shifting of more health care services into the outpatient setting is having a profound effect upon the function as well as the financing of medical office buildings.
“These buildings can be constructed at lower costs because they do not have to conform to the stringent building code requirements for hospitals,” Rosenthal said. “And, outpatient services can be provided at a lower cost in a medical office building than in the hospital itself.”
Outpatients also respond favorably to being treated in building separate from the hospital, which is traditionally associated with life-threatening illnesses and injuries.
As a result of the increasing need for hospitals to emphasize outpatient services, most medical office buildings being developed today house extensive outpatient diagnostic and treatment services as well as physicians’ offices.
Hospitals are able to control these services when the building is on its campus.
Many of these services require expensive technology that only the hospital can afford but the physician must use.
Placing these services in a building with physicians’ offices is conductive to cooperation rather than competitive relationships with the medical staff.
Building medical office buildings offers its own challenge. The design, building and infrastructure of a medical facility has many differences from the construction of a non-medical use structure.
Rosenthal said, “Among the many considerations for medical office buildings are cooling data services and the specialized space needs of physicians and their equipment.”
Pacific Medical Buildings pays special attention to the building’s interior as well as exterior. The new building’s appearance is important so that it enhances the hospital campus while complementing existing architecture.
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