The delivery of healthcare is evolving due to healthcare reform initiatives based on the Affordable Care Act (ACA). Nowhere is that more apparent than in the design of

medical office buildings (MOBs).

Strategies for Healthcare Real Estate Development

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as primary care is positioned at the forefront of the conversation, and represents the catalyst to feed a sprawling network of diagnostics, specialty care, and tertiary care, we must reconsider the environment to better integrate the system. Medical office buildings should be the heart of the healthcare experience, empowering patients with education and wellness, integrating the healthcare community with telemedicine, and providing well-integrated, highly efficient care. array planners and designers are at the forefront of this change in the ambulatory setting, and see medical office buildings as a tremendous opportunity for health institutions to enhance their position in a changing market.

With offices in New York, Pennsylvania, Ohio, Texas,

Florida and Washington, DC, and Boston, Array

Architects is currently assisting clients across the

country with a variety of projects to update their

real estate portfolio to ensure the best return on

investments. With 30 years of exclusively healthcare

planning and design experience, Array brings the users’

perspectives along with knowledge of life-cycle costs,

appropriate/durable materials and, sustainable systems

to keep the building efficient for the long-term. Array is

well-versed in the market trends, affiliates consistently

with the leading sub-consultants and has been privileged

to work with some highly qualified healthcare developers

to meet our client’s changing real estate requirements.

Stay Ahead of the Curve

We created a modern 278,000 SF Medical Office Building that met the client’s needs without incurring additional costs or delays while increasing efficiency.Photographer: Halkin Mason Photography

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as the medical and healthcare industry continues to evolve, there are strategies that your developer/real estate representative and architect can utilize to help you remain on an appropriate course. When designing and constructing facilities, flexibility should be a key driver. Modalities of care are changing rapidly and your facilities will need to respond just as quickly. Consider standardization wherever possible so your facilities can be easily, and more cost effectively adapted to other uses. also, consider investing in the design of a prototype for your ambulatory care and medical facilities; there is no need to reinvent the wheel with each project. Determine what works for your organization and replicate it across your service area. a side benefit: increased Brand Recognition and speed to market.

Finally, manage your real estate and facility assets wisely. Determine if you can support the staffing levels to handle the increased complexity of leases, ROI and asset management so that your facilities are contributing profitably to your bottom line. If not, consider hiring specialists who can.

“Clearly, there is no ‘‘one size fits all’ MOB solution, but the one constant has been the need to provide accessible and flexible/adaptable space that is responsive to constantly changing medical technology and business environments within the healthcare delivery marketplace.”

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Traditionally, MOBs have been comprised of practice suites housing private physician groups occupying as little as 1,000 SF to as much as an entire floor, +/- 25,000 SF. These spaces were designed to support routine physical examinations, checkups, lab work, and minor outpatient

procedures. However, due to changing reimbursement rates resulting from the ACA, an increasing number of physicians are choosing to be employed by hospital systems. As a result, today’s MOBs are designed with new configurations to support increased efficiency, collaboration, and revenue generation. One benefit of hospital-managed physicians is the ability to leverage shared support

spaces across multiple physician practices. As a result, the individual components of the physician suite are being reconfigured.

FLEXIBILITY: THEN VS. NOW

Capital Health Hopewell / Hopewell Township, NJPhotographer: Blake Marvin / HKS, Inc.

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HOW MANY EXAM ROOMS DO YOU NEED?

While different service lines require unique equipment (e.g., dermatology versus podiatry), the basic exam room component exists for nearly all service lines. The question has always been – how many exam rooms are required for each physi-cian’s work day?

In 2009, the Mayo Clinic engaged a research study developed in conjunction with Steelcase to understand the potential impact of utilizing a consultation room for patient visits that do not require a physical examination and if this configuration would result in improved outcomes for both patients and clinicians. In the study, both conventional exam rooms and experimental ‘conversation rooms’ were utilized in a random assignment for 63 pairs of patients and doctors. While the researchers found that both patients and clinicians were very satisfied with the conventional exam room, they observed that in the reconfigured conversation room “patients felt they had more and better access to information, including their own records, test results, images and online patient education material.”

While this particular study focused on the patient experience in different types of rooms, a follow-up study took a deeper dive by looking at the overall process. SpaRC (See, plan, act, Refine, Communicate) is “much more than redesigning exam rooms and equipping them with new furniture; it is also about the process and flow of patient care. How and where patient-caregiver interactions occur, and how to most effectively integrate technology into the patient care experience, are essential to informing the space design.” This study described the benefits of shared support spaces and combination of exam rooms and consultation rooms. Further, in a recent two-day study conducted by Kaiser permanente that focused on MOB exam room configurations, these benefits were noted:

• Improved provider flow and patient care. More available workspace has the potential to enhance workflow and improve provider-patient communication, as well as patient safety and satisfaction.

• Design efficiencies. Flexible exam rooms that could accommodate many specialties would reduce the number of exam rooms needed within the med-ical office building.

• The multi-purpose exam room could accommodate a larger variety of patient needs, allowing clinics to more easily accommodate the increasing diversity of member populations over time.

SHANE WILLIAMS AIA, ACHA, LEAN SIX SIgMA HEALTHCARE

The impact of our design is very reward-ing. It can be seen in the way patients and visitors flow through the space, the way staff and administrators function within the space and the way equipment is placed efficiently and unobtrusively. The array team brings specialists who are accustomed to working with health-care providers as well as with facility management personnel to deliver heal-ing environments that meet schedule and budget while supporting evolving approaches to best practice medicine and emerging medical technologies. We understand the technical and manage-ment challenges faced by hospitals and the need for flexible facilities that meet changing demographics and patient needs. Design creates the response. Our passion for organizing the building in support of the patient, visitor, and caregivers, is more than developing the components into an efficient, effective layout. It’s about creating moments of respite, of reflection and of celebra-tion. Those experiences are founded in design.

Shane’s design background features international hotel destination projects as well as large healthcare campus design. as a result, he is able to infuse hospitality elements that enhance the patient experience while respecting the operational efficiency. as practice area Leader for design, Shane ensures that every project’s “big idea” is translated into the smallest of details.

Click here to visit Shane’s Thoughts page.

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FLEXIBILITY

Virtual Mockups to show variations in consultation space

array’s simulation software and Lean analysis echo the findings of the aforementioned studies: Because of more efficient use of space, MOBs can have fewer traditional exam rooms and a mix of interview/conversation rooms.

With health systems continuing to recruit physicians and establish new service lines, designing an MOB with flexible exam/conver-sation spaces supports additional physicians to utilize the same space. This allows hospitals to construct less space and maintain projected throughput volumes. For patient visits that do not require a physical examination, the conversation room configuration can result in overall less square footage required and improved throughput resulting in greater patient satisfaction. When paired appropriately with exam room modules, this can also lead to greater efficiency in the physician’s workflow.

DESIgNINg TO SUPPORT FLEXIBILITY

Flexibility is essential to the financial success of MOBs. Service lines evolve and change, medical equipment is continually updated, and procedures become less invasive, allowing a shift from an inpatient environment to an outpatient setting. Utilizing universal siz-es for exam rooms, incorporating conversation rooms, and right-sizing procedure rooms to accommodate multiple modalities are all design tools to support flexibility. perhaps the most efficient design tool to support future flexibility is to incorporate modularity in MOB design. Modularity can be seen in a variety of ways:

• Traditional planning: By utilizing an established arrangement of rooms that are repeatable across scale, there can be a range of space from a very small exam/conversation configuration to a large, multi-practice configuration through traditional construc-tion methodologies.

• pre-fabricated rooms: Construction methodologies are increasingly looking into pre-fabricated spaces to improve construc-tion quality and reduce the amount of time to completion. a modular, repeatable configuration of interior spaces facilitates this construction approach.

• Complete building components: Taking prefabrication a step further, it is possible to construct entire building components remotely, deliver to a prepared site, pad and assemble a building configuration.

as a firm focused exclusively on healthcare design, array helps healthcare institutions envision and realize their operations within the most appropriate setting. Never before has our job been more difficult – as the operations of healthcare are being forced to change to accommodate different patient and payment structures. Yet, at the same time, it is also quite an honor to be in health-care right now – as the roles that we all play will undoubtedly have a huge impact on our communities’ futures. In the past, we would sit with our clients and help to envision their future – we were used to asking questions, receiving answers and then collaborating on

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a solution to satisfy their needs. array does this very well. as an architecture firm dedicated to healthcare for the last 30 years, we were comfortable in that role. Nowadays though, we are not the ones asking questions.

Our clients have been thrown into a strange new ocean, where they are treading water in a shifting tide and are wondering at which angle they should swim to get to a more secure location. Our clients are the ones with the questions. Now, it is our job to help contemplate where to go and how to get there… and only then can we develop an environment that might be appropriate. Here are some of the issues we are hearing about from health system administrators:

• How to integrate and align physicians with a more stan-dardized, controlled operational model.

• How to account for reduced Medicare reimbursement while not adversely affecting patient care.

• How to provide care to more people despite shortages of nurses and doctors.

• How to improve patient satisfaction to maximize reim-bursement.

The overarching goal, it seems, is this: Health providers and health insurers must provide complementary resources – be them financial, intellectual or physical – to provide an efficient, highly effective mechanism to ensure the health of a population. To achieve this goal, we are finding there to be four critical driv-ers that can either facilitate or inhibit the achievement of this goal. The four drivers hospitals must get right are:

1. Access

• Who is the patient?

• What is the market?

• How do we reach these patients best, educate them, em-power them to participate in their own wellness and have them come to us when they really need care?

2. Operations

• as patients change, the business of delivering healthcare changes; the responsible party changes; the expectations change; and, yes, reimbursement changes. How must oper-ations adapt to support these changes?

3. Technology

• The electronic medical record (eMR) should be revolution-izing the way healthcare is delivered. Implementation is costly, and requires huge operational and cultural shifts. Yet, a robust integrated IT infrastructure is the only way to effectively manage the population, standardize care, maintain compliance, and participate in active, real-time reporting (as opposed to historical reporting).

• Technology can improve access.

• Technology can improve operations.

• Technology can actually improve reimbursement.

4. Environment

• The healthcare environment must change to support the new way of doing business. If you are building a hospital, expanding your emergency department, considering a new ambulatory surgery center (aSC) or even looking to build what was once a simple medical office building, we hope you have stopped to consider the changes that need to be occurring INSIDe these buildings and are not just replicat-ing what you already have.

The aCa may have thrust us into this shifting ocean, but it was out of necessity – the business model was broken – so now we all need to figure out a way to be prepared. at array, we are working with many hospitals and health systems across the country to contemplate this change and make sure they are making the right adjustments to their operational and building infrastructure.

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At the epicenter of the ACA is the philosophy that healthcare should be focused on the wellness of the patient rather than narrowly focused on the symptom/diagnosis of a singular event. Creating the experience of having everything a patient and their family needs under one roof, conveniently

organized and accessible, designed to promote a conversational and simplified sharing of information will result in a patient- and family-centered experience and enhanced brand recognition

BRAND RECOgNITION

St. Elizabeth Healthcare / Multiple LocationsPhotography: J. Miles Wolf

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HOLISTIC AND FAMILY-CENTERED PATIENT CARE

The future of MOB design will be closely tied to how it supports patient-centered care. The ability of MOBs to adapt and respond quickly to developing market con-ditions as healthcare delivery adapts to the nuances of the aCa make it the ideal candidate for development of new best practices founded in Lean design.

THE MEDICAL OFFICE BUILDINg AS “FRONT DOOR”

Ultimately, the goal of the MOB is to become the primary location for education, preventative care, wellness, outpatient procedures and outpatient surgeries – becoming in essence, the hospital’s “front door.” a successful MOB will provide a consistent stream of referrals for the inpatient hospital. This makes brand rec-ognition across your outpatient and inpatient facilities critical – and architectural design can be a powerful tool to create brand loyalty and awareness. Developing consistent signage and wayfinding programs are important so that a patient and their family know they are in YOUR hospital. Incorporating modular layouts for physician offices, utilizing similar materials, finishes and furniture can help your patients navigate different locations and make them feel comfortable and cared for.

STANDARDIZATION: EASIER, FASTER, SAFER AND FEELS FAMILIAR

Consider standardizing features of medical office buildings wherever possible so they can be easily and more cheaply adapted to other uses. also, consider investing in the design of a prototype for your ambulatory care and medical facilities. There is no need to reinvent or redesign the wheel with each project. Determine what works for your organization and replicate it across your service area. a side benefit: increased brand recognition and speed to market.

Array’s design establishes an optimal outpatient experience with a focus on convenience. Patients are warmly greeted, then invited to use the latest technology for registration. Retail amenities ensure patients and visitors have an engaging, positive experience. Exterior landscaped views, beautiful artwork and rich colors and textures serve as orienting devices for both patients and staff.

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“Location, Location, Location.” For years, real estate moguls have uttered this phrase to express the most important factor in determining the value of any given property or business venture.

Increasingly, this same concept is resonating within the ambulatory healthcare market, as consumers demand convenient access and speed of service delivery when it comes to satisfying

their basic healthcare needs.

LOCATION, LOCATION, LOCATION

Doylestown Hospital / Doylestown, PAPhotographer: Jeffrey Totaro

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Historically, organizations have taken an “if you build it, they will come” approach when developing new facilities – with a healthcare facility often forming the seed of new development for any given location. However, over the past several years, organizations have begun to adopt an approach of locating full-service ambu-latory healthcare facilities in close proximity to established community service facilities, business centers, shopping centers, residential neighborhoods, long-term care facilities, schools, and transportation hubs. It should be no surprise that the major driver of this trend is the consumer.

With two income families as the norm, the age-old notion of “time equals money” may even be challengeable. We are living in a world where precious nature of time can often trump money. Both the baby boomers and generation X-ers now form the majority of healthcare users in the country, and the characteristics of these general populations are driving providers to re-think the strategies of healthcare delivery. These consumers see enormous value if able to bundle visits to a single, convenient location. They will seek out providers who allow them to take care of routine exams for all family members, lab work, diagnostic imaging, urgent (often nighttime) care, and pharmaceutical needs – all in and at a single location. The good news is that the bundling of a critical mass of ambulatory care services in hub locations can also provide opportunities to save operational costs by consol-idating and streamlining workflow processes.

While the advent of the satellite comprehensive ambulatory care facility does not foretell the demise of flagship healthcare facility development, this trend is a reality that merits some thought and discussion. For some systems, this is new territory, while others like Kaiser permanente have been out of the gate for some time now. In any case, it is important for healthcare organizations to understand the unique aspects of this more distributed ambulatory care hub-and-spoke con-cept for healthcare delivery, especially in the aCa-influenced environment that demands efficiency without sacrificing (but actually improving) quality. Below are some major factors to consider when developing a satellite ambulatory care facility.

AVAILABILITY OF REAL ESTATE

By locating a service within an area already developed or in the midst of being developed, it is likely that available real estate acquisition options will be more limited. This condition could drive up the cost, so it is vital to exhibit proper due diligence when searching for property that can provide the right location – with the appropriate physical characteristics – without driving up the cost above what can be afforded. In addition, by identifying potential deficiencies of a given property up front, certain properties can be ruled out from consideration, or the sale and/or lease terms can be negotiated to address the proper correction or accommodation of these deficiencies.

ADRIAN HAgERTY AIA, LEED AP

adrian has built his career by leading significant healthcare design projects in the National Capital Region for more than a quarter century. His passion for delivering healthcare design excellence has been proven by successfully lead-ing the design of numerous projects for many of the most noteworthy health-care providers in this region including Kaiser permanente, Mercy Medical Center, University of Maryland Medical System, adventist HealthCare, Johns Hopkins Medicine, and the Department of Veterans affairs. adrian is a strong advocate of integrated project deliv-ery, and prides himself in building and maintaining positive relationships with the entire project delivery team, so ev-ery member feels a sense of ownership in the successful outcome of a project- ultimately exceeding the expectations of his clients and healthcare provider stakeholders.

Click here to visit Adrian’s Thoughts page.

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ACCESS AND PARKINg

When convenience is the key factor in a developed location, the importance of convenient access from a developed road network and public transit cannot be overstated. It is important to understand the patterns of the patrons located in its target-ed catchment area. While urban environments present more challenges for private automobile access, transit options and shuttle access should be considered. In suburban settings, the availability of separate and discreet parking for patients/visi-tors, staff, and other healthcare professionals should be consid-ered. If a convenient access plan for a given property cannot be envisioned or developed, the property should simply be dropped from consideration.

paid parking is often a hotly debated topic when considering the development of facilities located near urban centers. This important business decision is most commonly based on local customs and market conditions. This decision is not unlike the decisions made by airlines to charge (or not charge) customers for checked luggage and/or food service. There are instances when an organization feels that it may lose a competitive advan-tage if a separate charge for parking is levied, but fiscal realities of offsetting overhead costs is often at odds with this notion. The most effective development should build in necessary infra-structure to accommodate access control devices that would allow for paid parking without necessarily implementing the paid parking program on day one of operation. This provides the flexibility to implement such a plan in the future with minimal upfront cost.

BUILDINg NEW VS. ADAPTIVE REUSE

Often opportunities of existing real estate assets can be readily adapted to suit the needs for ambulatory care environments. Over the course of the last three years, Kaiser permanente has developed six ambulatory care facility development projects in

its Mid-atlantic region. Four of these six projects involved adap-tive reuse of existing facilities to accommodate ambulatory care functions that include urgent care, clinical decision units, ambulatory surgery, and a host of outpatient specialty ser-vices. after studying a variety of options, it was determined that adaptively reusing existing facilities provided an opportunity to deliver facilities to its members with greater speed, while also taking advantage of a particularly sluggish real estate market that offered excess inventory of prime and available real estate assets.

When taking advantage of this adaptive reuse approach, it important to understand the possible limitations of the existing infrastructure needed to support the more acute aspects of ambulatory healthcare. There likely will be a need to upgrade ex-isting facilities to accommodate features, such as the following:

• entrance and access features to accommodate a greater number of more physically challenged patrons.

• elevators that can accommodate stretchers.

• Life safety features that address basic ambulatory care facility requirements.

• possible enhancements of emergency power and HVaC systems to accommodate invasive procedures.

• possible enhancements to accommodate additional plumbing and medical gas delivery systems, etc.

LONg-TERM LEASE VS. OWNERSHIP

Like most of the big decisions that need to be made when de-veloping a satellite ambulatory care center, there is no one best approach between the concepts of ownership versus long-term lease. Since capital became scarce in the wake of the latest recession, organizations have become more open to alternate development strategies that preserve capital for strategic growth outside of facility development. ambulatory care centers are perfect candidates for more innovative development and fi-nancing strategies. But, there are many other factors that come into play when making such a strategic decision. The informed healthcare organization will seek the consultation of real estate advisors and design professionals to guide the decision-making process toward a successful outcome.

COMPLIANCE WITH REgULATIONS AND LOCAL CUSTOMS

Compliance and licensing issues tied to insurance and reim-bursement requirements need to be addressed upfront in the planning process. The state and local regulatory environment is also a major consideration. Zoning regulations and other

The Capital Health Medical Center- Hopewell campus was strategically placed to maximize views from the busy I-95 corridor in Hopewell NJ. The campus features a full-service ambulatory care/surgical/diagnostic testing facility and MOB, connected by an atrium to a 223-bed hospital. Image: Array Architects

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land-use restrictions or covenants may require modification to accommodate a proposed healthcare use. Some states still re-quire certificate of need compliance for certain ambulatory care functions, such as ambulatory surgery, even when not physical-ly connected to a hospital campus. One of the more surprising challenges that may be encountered is the occasional hesi-tance of a land owner or developer to welcome the development of healthcare functions within a building or complex that has been planned for office or retail. The incompatible mix of pa-trons has been cited as a reason not to allow medical develop-ment within the same building or complex that may have (say) high-end business offices that cater to a very different clientele when compared to the visitors of a healthcare provider. This can be overcome with proper planning and separation of access points, but is noted as a factor for planning consideration based on historical evidence of challenges in past developments.

Whether you are building or operating an ambulatory surgery center or converting a “big-box” former retail space into a multi-functional healthcare space, you need to maintain regu-latory compliance with the Centers for Medicare and Medicaid Services (CMS) and the Joint Commission on accreditation of Healthcare Facilities (JCaHO) to receive Medicare, Medicaid, and third-party reimbursements. New and challenging “Life Safety” and “environment of Care” standards related to healthcare facilities have been introduced and have caused both owners and developers to be more vigilant regarding documentation of equipment maintenance. The new require-ments, effective July 1, 2014, apply to medical equipment and utility systems equipment. The impact of the change is that all healthcare organizations subject to the Medicare Conditions of participation will have to revise medical equipment and utility systems management programs to match the new require-ments. all stakeholders (hospital or physician group, or in some cases, both) must understand what testing, maintenance, and documentation requirements will be necessary and who will be responsible. In addition, you may want to have these require-ments, and who is responsible for the documentation, included

in the lease rather than trying to figure out later how to comply when the facility has failed a CMS or JCaHO survey. Valuable reimbursement dollars are at risk.

additionally, the facility must be compliant with the american with Disabilities act (aDa), which guarantees the civil rights of all disabled people, not just those limited by physical disabil-ities. In the summer of 2012, the Department of Justice and attorney general announced a new, joint-enforcement program called the “Barrier-Free Health Care Initiative,” with the goal of ensuring that persons with disabilities have access to medical information as well as physical access to medical buildings. The initiative addresses many aspects of healthcare environ-ments and services, such as facilities, diagnostic equipment, websites, parking, transportation, information in alternative formats, videophones, and sign language interpreters. The best advice: anticipate the needs of disabled patients while in the planning phase by mapping out the entire path of travel for the patient from the parking lot, into and throughout the health-care facility, and back out to the parking lot. Referred to as the “aDa path of Travel” requirement, this technique will help you incorporate all codes: parking, drop-off, entrances, protruding objects along corridors, toilet rooms, signage, and alarms. Note: aDa minimum standards do not address bariatric design. With the increased obesity in the general population, larger door widths, wider and more sturdy chairs, stronger toilets, and grab bars are needed for both patients (and their family members) and staff. another caveat: be aware that the aDa standards are enforced as civil rights violations and are separate from building code violations.

KEY TAKEAWAYS

as healthcare organizations continue to face challenging strategic decisions to sustain and grow healthcare delivery systems during implementation of the aCa, comprehensive ambulatory care center development will likely remain on the top of the menu for years to come. Once the decision is made to develop such a program, the key to success is careful planning and execution that utilizes the best resources available for the development. But, without a doubt, the “location” decision is unchangeable and of par-amount importance. By applying appropriate due diligence to the site selection process, healthcare organizations will indeed create opportunities in the shadows of the many challenges that are presented, and will be well positioned for the successful delivery of services.

This 120,000 sq ft ambulatory care center for St. Elizabeth Healthcare in Covington, KY was purposely sited adjacent to a major highway for visibility and incorporates a “video wall” on the exterior of the building that features health-related public service announcements. Photographer: J. Miles Wolf

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MANAGING YOUR REAL ESTATE AND FACILITY ASSETS WISELY

ADDITIONAL CONSIDERATIONS RELATED TO RETURN ON INVESTMENT (ROI)

Determine if you can support the staff levels to handle the increased complexity of leases, return on investment (ROI), and asset management so that your facilities are contributing profitably to your bottom line. If not, hire specialists who can.

gREEN BUILDINg PRACTICES/SUSTAINABILITY

Investigate all sustainable options possible in the design and construction of healthcare facilities. While achieving Silver or gold LeeD certification may be setting the sustainability bar too high, there are many incentives and options for pursuing envi-ronmentally-friendly design choices that could achieve LeeD certification. First, investigate all opportunities to recycle your construction waste. Second, identify design and engineering options that reduce electricity and water use. Lastly, focus on selecting sustainable project materials that support high indoor environmental quality (IeQ). a combination of these strategies could contribute to LeeD certification. Several of these green building strategies may cost more initially, but if healthcare ex-ecutives can get over the short-term fiscal hurdle, the dividends for both the healthcare system and the environment could be huge later on.

The costs are hard to predict and vary per project, but an esti-mated 1%–3% increase in the construction budget should be anticipated. This can be largely off-set by savings, particularly in energy consumption. Some studies have shown that invest-ment in sustainable building practices have a payback time of less than 5 years. The US green Building Council (USgBC) has accelerated the introduction of green building practices through the Leadership in energy and environmental Design (LeeD) pro-gram. LeeD works through third party certification and is based on rating a building against benchmarked levels of sustainability in 5 categories: Sustainable sites, Water efficiency, energy and atmosphere, Material resources, Indoor environmental Quality and Innovation. In addition to meeting a number of prerequi-sites, a building obtains a score in each category, the sum of which constitutes the overall LeeD score. There are four levels

of recognition based on the total score: Certified, Silver, gold, and platinum.

If an owner decides to achieve a certain level of LeeD certifi-cation during the project planning phase, the design team will select the combination of criteria to be achieved during the design phase.

The LeeD process is elaborate and requires substantial data gathering and reporting. The documentation and soft costs associated with LeeD will impact the architectural/engineering firm’s fee. This may explain why a very small percentage of LeeD registered projects are healthcare related. In addition, some LeeD credits are harder to obtain for medical facilities compared to non-medical facilities. In response, an organiza-tion called the green guide for Healthcare (ggHC) has been conducting pilot studies as an alternative to LeeD certification. Their program is a voluntary, self-certifying toolkit that includes construction and operations checklists. This approach may assist projects in attaining green principles, while saving some documentation and certification costs typically associated with LeeD. The USgBC has been working with the ggHC to develop a healthcare-specific LeeD checklist for future use.

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REIMBURSEMENT MODELS: STAND-ALONE VS HOPD

as medical technology has advanced, more diagnostic and sur-gical procedures have migrated to the outpatient setting. as a result, the number of free standing ambulatory surgery centers (aSCs) has increased dramatically in the US, and this trend is expected to continue. a report from Sg2, a national healthcare consulting firm, projected a 22% increase in aSC services from 2010 to 2019.

Often designed through a consumer lens, aSCs are popular, cost-effective choices for patients and payers because they offer an enhanced patient experience at prices that are within their high-deductible insurance plans. Many aSCs provide one-stop-convenience for a range of outpatient and diagnostic imaging services. They are a welcome alternative to traditional hospital outpatient departments (HOpDs), which can be more institutional in their design and more difficult to navigate since departments are not necessarily co-located.

Did you know WHeRe the procedure is done determines the cost? Currently, aSCs are reimbursed by CMS at approximate-ly 55% to 65% of the rate at which HOpDs are reimbursed for the same procedure (depending on the specific procedure and other factors). This growing divergence in payments is driven, in part, by differences in how the payment systems are updated each year to account for inflation. Despite the fact that aSCs and HOpDs offer the same services, the CMS applies two differ-ent measures of inflation to update each payment system.

• For HOpDs, CMS uses the hospital market basket, which measures the cost of medical expenses.

• For aSCs, CMS uses the Consumer price Index-Urban (CpI-U), which measures the cost of goods such as milk and bread. Not only is the CpI-U based on changes entirely unrelated to medical costs, the inflation update is histori-cally lower than the hospital market basket.

Because of this growing disparity in the payments that aSCs and HOpDs receive based on reimbursement rules set by CMS, there are financial incentives to treat patients in HOpDs rather than in the more economical aSC setting. Thus, it is increasingly attractive for hospitals to acquire aSCs. even if an aSC is not physically located next to a hospital, once it is part of a hospital, it can terminate its aSC license and become a unit of the hospi-tal. according to an analysis of aSC closures by the ambulatory Surgery Center association, one-third of the 179 aSCs that have closed since 2009 did so after being purchased by hospitals and converted to HOpDs. When an aSC is converted to an HOpD, the hospital is entitled to bill for services at a higher rate. For example, when cataract procedures are performed at an

aSC, Medicare pays $964. However, if the aSC were acquired by a hospital and converted to an outpatient unit, the payment rate would be $1,671, an increase of $707 per surgery.

While it may seem like a “no brainer” to go the HOpD route because of higher reimbursement, it is important to understand the competitive market. There is risk in pursuing the HOpD model, since independent lower-priced aSCs may also be in the market. In addition, with healthcare reform, price transparency is becoming an important factor in where patients elect to have care.

as healthcare designers, array understands the importance of supporting the business drivers of our healthcare clients. Recently, array designed a new greenfield hospital, featuring a five-story atrium that links the central diagnostic and treat-ment/surgery chassis with the inpatient tower on one side and an outpatient medical office building on the other. This design allowed the hospital to maximize the use of expensive diagnostic and treatment (D&T) equipment, as it supports both inpatient and outpatient populations, and care is reimbursed at HOpD rates.

ARRAY ARCHITECTS

With 30 years of exclusive healthcare planning and design experi-ence, Array has amassed a wealth of knowledge regarding users’ perspectives, life-cycle costs, appropriate/durable materials, and sustainable systems to keep the healthcare facility efficient for the long-term. Array is well-versed in market trends, and affil-iates consistently with highly qualified healthcare developers and the leading sub-consultants. We have specialized teams in 6 practice areas [Continuous Improvement, Planning, Design, Interior Design, Design Technologies, Asset Advisory Services, and Mechanical, Electrical and Plumbing (MEP) Engineering Design, and we were the highest-ranking healthcare-only practice in Architectural Record’s 2013 “Top 300 Architecture Firms.”

http://nexus.som.yale.edu/design-mayo/?q=node/99

http://www.nurture.com/wp-content/uploads/2012/04/Mayo-Clinic-Case-Study.pdf

http://xnet.kp.org/innovationcenter/docs/MOB_08.pdf

Who We AreaRRaY-aRCHITeCTS.COM

We Are Healthcare Architects

We are a team of architects and designers with unique backgrounds, but we all have one thing in common - we share a strong desire to use our expertise and knowledge to design solutions that will help people in moments that matter most.

This focus makes us leaders in our field. array architects offers a full complement of knowledge-based services including planning, architecture, interior design and advisory services. array is ranked by Modem Healthcare in the top 35 largest firms in the US, by design fees earned in 2013. When comparing fee volume of design firms focused exclusively on healthcare, array has a #1 ranking across the U.S. In architectural Record’s Top 300 List, array is ranked 83 world-wide. array architects is recognized by architect Magazine in their Top 50 for Business ranking.

Together, we discover optimal solutions with our clients. It is our four decades of specialization that allows for effective communication, collaboration and precision in the complex, changing world of healthcare.

Array’s Knowledge Communities

We believe strongly in sharing our expertise and knowledge with others. We invite you to explore each of our thought leaders and share your thoughts with the healthcare design community.

Click here to visit our blog.

to listen to Jeffrey’s Podcast on Investment Opportunities in the Healthcare Real Estate Market

Click here

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