7 Questions To See If You Should Expand Your Hospital

Sutter Health Van Ness Campus Hospital

It’s important for hospitals and health systems to expand and defend their market share within the communities they serve. Patient’s desire for convenient care close to where they live, work and play has led to record numbers of facilities being retrofitted and constructed to meet the demands of communities.

If you are deciding whether or not an expansion is the right move for you, below are some questions you can ask yourself or your strategy team to point you in the right direction:

1. Is there a demand in my area for another facility?

Demand for healthcare services is driven by the needs of the community. Factors ranging from population growth to a gap in physician services can lead to a need for a new facility. Environmental factors – including defending market share from competitors – is another consideration. Choosing a development partner that can work side-by-side your strategy team can help decrease the risk of a new expansion and your speed to market.

2. Where will this location be? 

Healthcare systems have two primary options when expanding or relocating to a new location: 

1. ground-up development or
2. leasing an existing space.

3. How many locations?

Cost, location and speed to market can all drive the strategy behind this decision. One very important element to maintain in either scenario is Control. Maintaining Control of the asset as a health system – including competitive uses, building branding and the financial upside of the asset – is imperative when making a strategic decision. The best healthcare real estate partners are those that use real estate to invest alongside your strategy.

4. Do I have the staff needed for this?

Whether a development requires project management staff or physician recruitment, finding a developer with these in-house capabilities is crucial. Health systems need a partner that:

  • can leverage as an extension of their own staff – one that allows key decision makers to tap into the development partner’s competency to help drive results.
  • needs to be fully-aligned with the health system’s strategy to ensure the system       maintains appropriate control over the process.

5. Will this be a revenue generator? 

A healthcare facility’s financial contribution is entirely dependent on the facility and the strategy of the health system. Often times, it is the financial and strategic decisions that drive real estate planning. If the goal is to capture market share and drive hospital volume, bringing in a developer to develop on and off-campus and attract third-party physicians to the hospital could be a strong strategy. A facility may be a loss-leader if its sole purpose is to defend against a competitor advancing on a system’s market.

Where there has been a lot of success lately in the healthcare real estate space is the diversification of revenue streams – moving from a patient to a consumer perspective. Consumer oriented facilities diversify how a health system generates revenue, and positions it for value-based care in the future.

6. Are we focused on reducing our inpatient and expanding our outpatient services?

Increasing touch points allows healthcare partners to provide better accessibility for patients and allows them to market their expanded presence and investment in the local community.  Planning and programming will make sure outpatient facilities are right sized and efficient to ensure they are a strong financial investment. They allow the health system to create an ongoing relationship with patients for those times when a hospital visit is not required, but the patient still needs healthcare. This helps the health system establish and maintain its role as the sole provider for that individual’s full continuum of health needs.

7. Are we looking to create more of a consumer experience?

There are many ways to engage consumers on multiple levels. It starts with traditional healthcare services like primary care, but there have recently been other ways to maximize the opportunity for clinical integration with things like wellness and retail.  This approach engages various community partners to bring them together and align on a strategy that aims to make all parties successful.  Using the expertise of the medical community and our experience with retail, healthy living services and development allows us to venture beyond the scope of conventional healthcare delivery. 

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Chris White

Business Development Manager

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