CHICAGO—The US healthcare market has been roiled by changes in the past few years, and that has created many opportunities for real estate developers. The expansion of health insurance brought in more patients, but the drive to cut costs and boost efficiency is also transforming the provision of care.
According to Bob Smietana, chief executive officer of HSA Commercial Real Estate, the old model of big, centralized hospital campuses is probably gone, and providers now need whole new sets of facilities, a process still in its beginning stages.
“Healthcare is now being delivered in locations convenient to the consumer,” he says in a just-released video that provides a look ahead to the US healthcare market's prospects in 2018. “We're going to start to see more outpatient facilities located in the neighborhoods and communities. That's going to continue.”
And that means our notion of what constitutes healthcare real estate also has to change.
“What we're also seeing is a convergence of medical and retail,” Smietana says. “A lot of the new medical facilities are being located either near or in shopping centers.” And with e-commerce undermining brick-and-mortar retail tenants, bringing in healthcare uses can help many centers stay afloat or even prosper.
The Chicago-based HSA recently finished a development project that illustrates the new model of delivery. The 109,000-square foot Drexel Town Square Health Center is an outpatient and diagnostic center in Oak Creek, WI, sponsored by the Froedtert Hospital System and the Medical College of Wisconsin, and includes a cancer treatment center and an emergency room. “We think this is a model that we're going to see more of, not only in Southeast Wisconsin, but in other areas of the Midwest.”
About two years ago, HSA, partnered with USAA Insurance Co. to create a large equity fund for the development and acquisition of healthcare facilities in the Midwest. The partners have acquired four facilities, and will soon close on a fifth. The four facilities are:
- APAC Medical Plaza in Crown Point, IN
- Coffee Creek Medical Office Building in Chesterton, IN.
- Plymouth City Center Medical in Plymouth, MN.
- Advocate Medical Campus Southwest in Tinley Park, IL.
The firms are generally looking for value-add properties anchored by large hospital systems or medical groups, Smietana says. And this year, they have plans to develop a number of new projects. “What we're seeing in 2018 is something we haven't seen too much yet, but we're going to see more of, is the integration of outpatient care and physical fitness, and merging those two together.”
HSA will announce one such project some time in the first quarter. “We think that's going to be a model, of not only the present, but the future.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
