Want To Operate Medical Office? Check These Best Practices First

The booming medical office sector has lured investors over the last year as the overall office market continues to slump — but owning and operating these buildings comes with its own set of challenges.

Medical office buildings have radically different construction protocols than traditional office properties, for starters, says Cushman & Wakefield’s Jennifer Seiler. Infection control risk assessments are necessary to identify potential hazards all construction projects in MOBs — whether carpet replacements or total remodels — could pose to patients, visitors, and staff. And control measures should be clearly communicated to contractors to ensure risks are minimized.

Medical office buildings also have greater demands on their HVAC and plumbing systems than traditional offices: “After all, reducing airborne disease risk by filtering air and providing sinks for handwashing in every exam room is imperative,” Seiler says. “A comprehensive preventative maintenance plan must be in place to confirm all equipment is maintained per the strictest manufacturers’ specifications as any downtime due to equipment failure impacts patient care.”

And because they face “constant” foot traffic, owners can expect more wear and tear. On average, physicians see anywhere from four to ten patients per room per hour, prompting Seiler to recommend that owners increase the frequency of janitorial services, particularly in restrooms and common areas, to maintain cleanliness.

Owning a MOB can also require faster response times for maintenance issues, she says.

“While a burnt-out light bulb is a minor inconvenience in a traditional office setting, it can completely impact a provider’s ability to care for patients in a medical office setting,” Seiler notes. “Set clear benchmarks for response times to ensure a sense of urgency in resolving reactive requests and utilize a work order management software tool to help prioritize requests and dispatch engineers.”

Finally, staffing is critical. Cushman & Wakfield requires all engineers supporting healthcare accounts to successfully complete the ASHE Certified Health Care Physical Environment Worker Certification, the only certification of its kind backed by the American Hospital Association. The firm’s engineering teams also complete annual HIPPA training to ensure the protection of sensitive patient health information.

The medical office building sector has surged as of late, with asking rents hitting historic highs in the third quarter as sales volume and pricing also rose.

Despite economic concerns and industry challenges, the medical office property sector (MOB) continues to go from strength to strength,” Colliers analysts noted in a sector report at the end of Q3. “Demand is outpacing supply, vacancy remains tight, and capitalization (cap) rates have remained relatively stable. As a result, development activity is gaining momentum, reflecting confidence in the sector.”

A record $17.2 billion was poured into MOBs in the four quarters ending with Q2 2022, the highest on record.