Wednesday, September 28, 2011
Rush University Medical Center's new hospital
Rush University Medical Center on Dec. 8 will dedicate a striking new main hospital building on Chicago's Near West Side. Designed by Ralph Johnson of Chicago architects Perkins+Will and located just south of the Eisenhower Expressway, the building places a curvilinear tower for patients' rooms over a rectilinear base for diagnosis and treatment areas. The hospital is expected to achieve Leadership in Energy and Environmental Design status, recognizing its energy-saving features. The hospital opens Jan. 9.
Tuesday, September 27, 2011
City of Chicago to offers Web tool to help business scout real estate
September 26, 2011|By Wailin Wong | Tribune reporter
World Business Chicago, the city's economic development agency, introduced on Monday a Web-based mapping tool designed to help companies scout real estate in Chicago.
The tool, which is called Site Selector, combines a number of data layers and allows users to overlay particular features such as nearby universities, non-residential land owned by the city and incentive districts. Site Selector pulls in city data as well as commercial real estate listings from Rofo, whose information brokerages use. World Business Chicago said it expects to sign similar partnerships to add ore real estate inventory to the tool.
World Business Chicago, the city's economic development agency, introduced on Monday a Web-based mapping tool designed to help companies scout real estate in Chicago.
The tool, which is called Site Selector, combines a number of data layers and allows users to overlay particular features such as nearby universities, non-residential land owned by the city and incentive districts. Site Selector pulls in city data as well as commercial real estate listings from Rofo, whose information brokerages use. World Business Chicago said it expects to sign similar partnerships to add ore real estate inventory to the tool.
Monday, September 26, 2011
As Children's Hospitals Expand Costs rise too
WASHINGTON — Rising from a 60-acre field of old cypress swamp and cattle pasture near the Orlando airport, the seven-story Nemours Children's Hospital will be a monument to "best-in-class" care, its leaders boast.
That may be the case. But at a cost of about $400 million, the equivalent of $4.2 million for each of its 95 beds, Nemours also will rank among the more expensive children's hospitals ever built when it is completed next year. Some people believe construction never should have begun.
Florida health planners twice rejected Nemours' applications for a new hospital, noting that Orlando already had two children's hospitals; most cities have only one. A third hospital could duplicate existing services, driving up costs for insurers, employers and policyholders.
The regulators reversed themselves in 2008, however, after Nemours, a wealthy Jacksonville-based foundation, mounted an extensive marketing campaign and lined up scores or politicians and civic boosters, including former Gov. Jeb Bush.
"It's a case of excess here in Orlando," said Becky Cherney, until recently the head of the Florida Health Care Coalition, a statewide business group concerned about the impact of rising health spending. "We don't have anything against Nemours. But central Florida doesn't need another children's hospital."
The battle over Nemours reflects the transformation of children's hospitals from small, struggling charities to huge, often profitable businesses. From their humble origins more than a century ago, many of the nation's biggest and best-known children's hospitals today are health care juggernauts with sprawling medical centers and suburban satellites, extensive real estate holdings, thousands of well-paid employees and millionaire CEOs.
The billions of dollars flowing through children's hospitals every year pay for care for tens of thousands of kids, many of them extremely sick or suffering from chronic conditions requiring a lifetime of treatment. Hospital officials say costs are high because the care is complicated and the technology expensive. In addition, the hospitals help fund research into the causes and treatment of diseases.
But the surge in spending also is helping to fuel a multibillion-dollar building boom as hospitals add towers and beds. That in turn is spurring more spending on staff and technology, even as Washington, the states and employers grapple with budget-busting increases in health care spending. While children's hospitals represent a small slice of the nation's health care bill, they offer a case study of the expansive ambitions of hospital leaders and the faltering efforts of government to control spiraling costs.
The government heavily subsidizes the care of children from low-income families with Medicaid and the Children's Health Insurance Program, and also provides nonprofit children's hospitals with significant tax breaks that help them fund their growth. Private employers and their workers pay most of the rest of the bill for kids' care through health insurance. When a new hospital like Nemours is built or another expands, taxpayers and private insurance policyholders pick up the tab down the road.
Over the past year, Kaiser Health News examined the business of children's hospitals, interviewing experts and hospital officials and inspecting a variety of records, including the hospitals' publicly available federal tax returns and bond documents filed in the course of borrowing money for expansion.
Some hospitals refused to answer questions, and the documents fell short of providing a complete financial picture. One of the frustrating obstacles confronting independent analysts is the lack of transparency in the hospital industry, including facilities that serve adults. There aren't reliable comparative measures of quality or finances. And, with few exceptions, the prices hospitals charge insurers for care are closely guarded secrets.
Many of the approximately 220 children's hospitals nationwide are part of large adult health systems, and details of their finances aren't public. Some are large and well known, such as the 455-bed Riley Hospital for Children in Indianapolis, part of Indiana University Health, and the Johns Hopkins Children's Center in Baltimore, which expects to open a new 205-bed hospital next year.
Kaiser Health News' examination focused on the nation's 39 largest independent children's hospitals. They are viewed within the industry as elite providers. All are nonprofit. But the financial performance of some would be the envy of for-profit companies, public tax returns show.
The big, freestanding children's hospitals generally have a huge advantage in the marketplace: They face little competition and provide an essential service, giving them leverage to negotiate favorable prices with health insurers. At some, charges have risen sharply, increasing two to three times inflation, records and interviews show. That has encouraged aggressive expansion and spending on new facilities, costly technology and executive pay.
"The elite children's hospitals don't compete on price," said Jerry Katz, a former CEO of St. Christopher's Hospital for Children in Philadelphia. "They compete for prestige. What that means is they are competing for the top docs and researchers, the top programs."
To be sure, not all children's hospitals make big profits; some struggle to break even. In 2009, the elite children's hospitals reported $1.5 billion in profits — what nonprofits call surpluses. The top 10 alone earned more than $800 million in profits. Children's Hospital of Philadelphia reported a $197 million surplus and paid its CEO nearly $2.1 million.
In 2009, most CEOs at the nation's largest children's hospitals were paid $1 million or more, public tax returns show. Randall L. O'Donnell, CEO of Children's Mercy Hospitals and Clinics in Kansas City, Mo., led the list at almost $6 million, including a special retirement payout of $4.1 million. Five other CEOs collected more than $2 million. Many of the executives received hefty bonuses, country club memberships, cars or other perks.
CEOs say their pay packages are warranted by the responsibilities of running large, complicated businesses — charities or not. Under O'Donnell's leadership, Children's Mercy grew from a small, local hospital to a regional and "national destination," said spokesman David Oliver. Children's Hospital of Philadelphia doubled in size, to an estimated $1.8 billion in annual revenue, under CEO Steven M. Altschuler.
The pay packages of children's hospital executives compare favorably to CEO compensation at the nation's biggest and best-known adult hospitals, record show. The head of the Cleveland Clinic, with more than $5 billion annually in revenue, received $2.1 million in 2009. The head of the Mayo Clinic parent group: nearly $2.2 million.
As nonprofits, children's hospitals enjoy an array of tax breaks covering real estate, earnings and investment gains. Spokesmen say this allows them to act as safety-net providers for the poor. It also helps them boost their reserves and grow the business.
The 39 largest hospitals, Kaiser Health News found, had accumulated $20 billion in stocks, bonds, real estate and other investments as of 2010 — nearly enough to provide an entire year's worth of medical care for free. They had net assets — the equivalent of net worth for non-profits — of $23 billion.
Children's Hospital Boston, arguably the nation's best-known hospital for children, listed $2.6 billion in stocks and other investments in bond filings.
Last year, the 400-bed hospital was cited as having some of the highest charges in Massachusetts in a report critical of hospital expenses filed by state Attorney General Martha Coakley. Hospital officials declined numerous requests for an interview but noted on their website that they have lowered the rate of their increases.
Even with their tax breaks and wealth, top children's hospitals provide relatively little charity care. On average, about 2 percent of what children's hospitals spend is for free medical care, according to the National Association of Children's Hospitals and Related Institutions, an industry group. Some of the largest and richest children's hospitals spend less than 1 percent.
The American Hospital Association does not break out what its more than 5,000 members, mainly adult hospitals, spend annually on charity care. In 2009, the association said its hospitals provided $39.1 billion in uncompensated care, which includes bad debt as well as charity care.
In 2009, less than one-half of 1 percent of Texas Children's Hospital's spending went to charity care, according to its tax return. The 639-bed Houston hospital reported $1 billion in revenue and $1.9 billion in cash and investments that year. It spent $4.3 million on free care.
In an email, a spokeswoman noted that Texas Children's used more than $80 million of its own money to fund research, teaching and other community-based initiatives as part of its charitable mission. Other children's hospitals point to clinics and public health programs as examples of their community outreach. They say those efforts exceed the value of their tax exemptions.
Taxpayers also are helping to underwrite a race to the top among the nation's largest children's hospitals, subsidizing billions in tax-exempt bonds for new hospital towers, outpatient centers, parking garages and research facilities. Nemours is funding $300 million of its new hospital with tax-exempt bonds.
The Nemours project is part of a nationwide construction boom involving children's hospitals. In the last decade, children's hospitals have spent at least $15 billion on expansions, bond filings and other records show. Children's Hospital of Philadelphia spent $1 billion and says it expects to spend another billion in coming years. At $625 million, the new Childrens Hospital of Pittsburgh cost more than the combined price tag of PNC Park and Heinz Field, home to the Pirates and Steelers. Children's Memorial Hospital in Chicago is spending $915 million on a new facility — the equivalent of $3.1 million per bed.
In metropolitan Denver, the major children's hospital has expanded not once but twice in the last five years. In 2007, Denver Children's, now known as Children's Hospital Colorado, opened a $650 million hospital in the suburbs. It is now adding a $230-million, 10-story expansion.
"We were probably as surprised as you that we would need space so soon after moving into our new facility," explained Colorado CEO Jim Shmerling, but demand has risen by 35 percent. "You always wonder with new construction like we have, will it continue? Well, indeed it has."
Shmerling pointed to several factors spurring the increase in demand, including the lure of a bright new facility and a growing population of children. The hospital also has experienced a bump in referrals from outside the state — about 12 percent of all admissions. At the same time, advances in pediatric medicine have cut mortality rates for some childhood diseases.
"We used to see mortality of 90 percent for some cancers. Now we see survival rates of 90 percent," Shmerling said. But survivors require lots of care, including tests, chemotherapy and other procedures, which he said "have them coming back to the hospital."
While overall pediatric admissions have declined about 15 percent in the last decade, they have climbed at independent children's hospitals. One reason is that as community hospitals close small pediatric units, those patients are steered elsewhere. Children's hospitals also are extending their reach into the suburbs, other states and even other countries.
Larry A. McAndrews, until last week the head of the National Association of Children's Hospitals and Related Institutions, said many children's hospitals are also expanding their research efforts. Others are replacing outdated facilities. Yet even in states with declining children's populations, including Ohio and California, billions in new spending is taking place.
Like other businesses, children's hospitals have their own unique brands, missions and ambitions. "Part of it is we are part of a competitive, capitalistic model," said McAndrews. "In this country we want to build a facility that is bigger and better."
Some of the spending, hospital officials say, reflects their unique needs. The typical patient's room is larger than an adult room in order to accommodate more technology and parents who sleep over. Urban construction costs also tend to be higher because of pricey real estate and space constrictions. Children's Memorial officials in Chicago pointed out that building their new 23-story hospital on a "relatively small parcel of land" has posed special challenges, including installing two separate banks of elevators between lower and upper floors.
There are other reasons for high costs. Many of the new hospitals are architectural showcases. They feature atriums, rooftop gardens, indoor playgrounds, flat-panel televisions, on-demand movies and video games and work stations for parents, among other amenities.
Martin Gaynor, an economist at Carnegie Mellon University who has written extensively about hospital spending, says he was stunned when he toured the new Pittsburgh hospital.
"I couldn't believe it," he said. "It's a beautiful, beautiful facility. It's a very nice facility for the families and kids.
"It's a very awkward question to ask," Gaynor added, "but at some point one wonders just how nice does this have to be?"
For the complete article and further information please visit the Bellingham Herald by clicking here.
That may be the case. But at a cost of about $400 million, the equivalent of $4.2 million for each of its 95 beds, Nemours also will rank among the more expensive children's hospitals ever built when it is completed next year. Some people believe construction never should have begun.
Florida health planners twice rejected Nemours' applications for a new hospital, noting that Orlando already had two children's hospitals; most cities have only one. A third hospital could duplicate existing services, driving up costs for insurers, employers and policyholders.
The regulators reversed themselves in 2008, however, after Nemours, a wealthy Jacksonville-based foundation, mounted an extensive marketing campaign and lined up scores or politicians and civic boosters, including former Gov. Jeb Bush.
"It's a case of excess here in Orlando," said Becky Cherney, until recently the head of the Florida Health Care Coalition, a statewide business group concerned about the impact of rising health spending. "We don't have anything against Nemours. But central Florida doesn't need another children's hospital."
The battle over Nemours reflects the transformation of children's hospitals from small, struggling charities to huge, often profitable businesses. From their humble origins more than a century ago, many of the nation's biggest and best-known children's hospitals today are health care juggernauts with sprawling medical centers and suburban satellites, extensive real estate holdings, thousands of well-paid employees and millionaire CEOs.
The billions of dollars flowing through children's hospitals every year pay for care for tens of thousands of kids, many of them extremely sick or suffering from chronic conditions requiring a lifetime of treatment. Hospital officials say costs are high because the care is complicated and the technology expensive. In addition, the hospitals help fund research into the causes and treatment of diseases.
But the surge in spending also is helping to fuel a multibillion-dollar building boom as hospitals add towers and beds. That in turn is spurring more spending on staff and technology, even as Washington, the states and employers grapple with budget-busting increases in health care spending. While children's hospitals represent a small slice of the nation's health care bill, they offer a case study of the expansive ambitions of hospital leaders and the faltering efforts of government to control spiraling costs.
The government heavily subsidizes the care of children from low-income families with Medicaid and the Children's Health Insurance Program, and also provides nonprofit children's hospitals with significant tax breaks that help them fund their growth. Private employers and their workers pay most of the rest of the bill for kids' care through health insurance. When a new hospital like Nemours is built or another expands, taxpayers and private insurance policyholders pick up the tab down the road.
Over the past year, Kaiser Health News examined the business of children's hospitals, interviewing experts and hospital officials and inspecting a variety of records, including the hospitals' publicly available federal tax returns and bond documents filed in the course of borrowing money for expansion.
Some hospitals refused to answer questions, and the documents fell short of providing a complete financial picture. One of the frustrating obstacles confronting independent analysts is the lack of transparency in the hospital industry, including facilities that serve adults. There aren't reliable comparative measures of quality or finances. And, with few exceptions, the prices hospitals charge insurers for care are closely guarded secrets.
Many of the approximately 220 children's hospitals nationwide are part of large adult health systems, and details of their finances aren't public. Some are large and well known, such as the 455-bed Riley Hospital for Children in Indianapolis, part of Indiana University Health, and the Johns Hopkins Children's Center in Baltimore, which expects to open a new 205-bed hospital next year.
Kaiser Health News' examination focused on the nation's 39 largest independent children's hospitals. They are viewed within the industry as elite providers. All are nonprofit. But the financial performance of some would be the envy of for-profit companies, public tax returns show.
The big, freestanding children's hospitals generally have a huge advantage in the marketplace: They face little competition and provide an essential service, giving them leverage to negotiate favorable prices with health insurers. At some, charges have risen sharply, increasing two to three times inflation, records and interviews show. That has encouraged aggressive expansion and spending on new facilities, costly technology and executive pay.
"The elite children's hospitals don't compete on price," said Jerry Katz, a former CEO of St. Christopher's Hospital for Children in Philadelphia. "They compete for prestige. What that means is they are competing for the top docs and researchers, the top programs."
To be sure, not all children's hospitals make big profits; some struggle to break even. In 2009, the elite children's hospitals reported $1.5 billion in profits — what nonprofits call surpluses. The top 10 alone earned more than $800 million in profits. Children's Hospital of Philadelphia reported a $197 million surplus and paid its CEO nearly $2.1 million.
In 2009, most CEOs at the nation's largest children's hospitals were paid $1 million or more, public tax returns show. Randall L. O'Donnell, CEO of Children's Mercy Hospitals and Clinics in Kansas City, Mo., led the list at almost $6 million, including a special retirement payout of $4.1 million. Five other CEOs collected more than $2 million. Many of the executives received hefty bonuses, country club memberships, cars or other perks.
CEOs say their pay packages are warranted by the responsibilities of running large, complicated businesses — charities or not. Under O'Donnell's leadership, Children's Mercy grew from a small, local hospital to a regional and "national destination," said spokesman David Oliver. Children's Hospital of Philadelphia doubled in size, to an estimated $1.8 billion in annual revenue, under CEO Steven M. Altschuler.
The pay packages of children's hospital executives compare favorably to CEO compensation at the nation's biggest and best-known adult hospitals, record show. The head of the Cleveland Clinic, with more than $5 billion annually in revenue, received $2.1 million in 2009. The head of the Mayo Clinic parent group: nearly $2.2 million.
As nonprofits, children's hospitals enjoy an array of tax breaks covering real estate, earnings and investment gains. Spokesmen say this allows them to act as safety-net providers for the poor. It also helps them boost their reserves and grow the business.
The 39 largest hospitals, Kaiser Health News found, had accumulated $20 billion in stocks, bonds, real estate and other investments as of 2010 — nearly enough to provide an entire year's worth of medical care for free. They had net assets — the equivalent of net worth for non-profits — of $23 billion.
Children's Hospital Boston, arguably the nation's best-known hospital for children, listed $2.6 billion in stocks and other investments in bond filings.
Last year, the 400-bed hospital was cited as having some of the highest charges in Massachusetts in a report critical of hospital expenses filed by state Attorney General Martha Coakley. Hospital officials declined numerous requests for an interview but noted on their website that they have lowered the rate of their increases.
Even with their tax breaks and wealth, top children's hospitals provide relatively little charity care. On average, about 2 percent of what children's hospitals spend is for free medical care, according to the National Association of Children's Hospitals and Related Institutions, an industry group. Some of the largest and richest children's hospitals spend less than 1 percent.
The American Hospital Association does not break out what its more than 5,000 members, mainly adult hospitals, spend annually on charity care. In 2009, the association said its hospitals provided $39.1 billion in uncompensated care, which includes bad debt as well as charity care.
In 2009, less than one-half of 1 percent of Texas Children's Hospital's spending went to charity care, according to its tax return. The 639-bed Houston hospital reported $1 billion in revenue and $1.9 billion in cash and investments that year. It spent $4.3 million on free care.
In an email, a spokeswoman noted that Texas Children's used more than $80 million of its own money to fund research, teaching and other community-based initiatives as part of its charitable mission. Other children's hospitals point to clinics and public health programs as examples of their community outreach. They say those efforts exceed the value of their tax exemptions.
Taxpayers also are helping to underwrite a race to the top among the nation's largest children's hospitals, subsidizing billions in tax-exempt bonds for new hospital towers, outpatient centers, parking garages and research facilities. Nemours is funding $300 million of its new hospital with tax-exempt bonds.
The Nemours project is part of a nationwide construction boom involving children's hospitals. In the last decade, children's hospitals have spent at least $15 billion on expansions, bond filings and other records show. Children's Hospital of Philadelphia spent $1 billion and says it expects to spend another billion in coming years. At $625 million, the new Childrens Hospital of Pittsburgh cost more than the combined price tag of PNC Park and Heinz Field, home to the Pirates and Steelers. Children's Memorial Hospital in Chicago is spending $915 million on a new facility — the equivalent of $3.1 million per bed.
In metropolitan Denver, the major children's hospital has expanded not once but twice in the last five years. In 2007, Denver Children's, now known as Children's Hospital Colorado, opened a $650 million hospital in the suburbs. It is now adding a $230-million, 10-story expansion.
"We were probably as surprised as you that we would need space so soon after moving into our new facility," explained Colorado CEO Jim Shmerling, but demand has risen by 35 percent. "You always wonder with new construction like we have, will it continue? Well, indeed it has."
Shmerling pointed to several factors spurring the increase in demand, including the lure of a bright new facility and a growing population of children. The hospital also has experienced a bump in referrals from outside the state — about 12 percent of all admissions. At the same time, advances in pediatric medicine have cut mortality rates for some childhood diseases.
"We used to see mortality of 90 percent for some cancers. Now we see survival rates of 90 percent," Shmerling said. But survivors require lots of care, including tests, chemotherapy and other procedures, which he said "have them coming back to the hospital."
While overall pediatric admissions have declined about 15 percent in the last decade, they have climbed at independent children's hospitals. One reason is that as community hospitals close small pediatric units, those patients are steered elsewhere. Children's hospitals also are extending their reach into the suburbs, other states and even other countries.
Larry A. McAndrews, until last week the head of the National Association of Children's Hospitals and Related Institutions, said many children's hospitals are also expanding their research efforts. Others are replacing outdated facilities. Yet even in states with declining children's populations, including Ohio and California, billions in new spending is taking place.
Like other businesses, children's hospitals have their own unique brands, missions and ambitions. "Part of it is we are part of a competitive, capitalistic model," said McAndrews. "In this country we want to build a facility that is bigger and better."
Some of the spending, hospital officials say, reflects their unique needs. The typical patient's room is larger than an adult room in order to accommodate more technology and parents who sleep over. Urban construction costs also tend to be higher because of pricey real estate and space constrictions. Children's Memorial officials in Chicago pointed out that building their new 23-story hospital on a "relatively small parcel of land" has posed special challenges, including installing two separate banks of elevators between lower and upper floors.
There are other reasons for high costs. Many of the new hospitals are architectural showcases. They feature atriums, rooftop gardens, indoor playgrounds, flat-panel televisions, on-demand movies and video games and work stations for parents, among other amenities.
Martin Gaynor, an economist at Carnegie Mellon University who has written extensively about hospital spending, says he was stunned when he toured the new Pittsburgh hospital.
"I couldn't believe it," he said. "It's a beautiful, beautiful facility. It's a very nice facility for the families and kids.
"It's a very awkward question to ask," Gaynor added, "but at some point one wonders just how nice does this have to be?"
For the complete article and further information please visit the Bellingham Herald by clicking here.
Thursday, September 22, 2011
Health Care REITs Raise $22.5B for Investment
CHICAGO-Investors have been increasingly chasing the stability and ROI attractiveness of the $700 billion worth of medical property in the United States, including hospitals, outpatient facilities and senior housing, according to locally based Jones Lang LaSalle.
According to a recent report by the firm’s Healthcare Capital Markets group, about $22.5 billion alone has been raised in debt and equity for the sector in the past 18 months by the groups easiest to track, the public and private real estate investment trusts. Mindy Berman, managing director of capital markets for the group, tells GlobeSt.com that the trusts are the easiest investment group to track.
“If you look closely at the figures, health care trusts make up about 12% of all REITs, but they have raised about 25% of the total US REIT investment, a disproportionate number,” Berman says. “That’s not including the non-trust asset management, developers and investors that are also expressing an interest in this product.”
Three of the trusts alone – Grubb & Ellis Healthcare REIT II, Healthcare Trust of America and American Realty Capital Healthcare Trust – acquired more than $500 million of medical properties in 2011. The three trusts acquired 55 properties, more than a third of all medical office assets traded hands during the period.
Berman attributes the strong interest to a few factors. Primarily, ROI has shown to be an average 5.3% for health care properties, as opposed to office, industrial and retail properties with an averages all less than 5%.
“You have demographics in your favor, as health care is going to increase in demand no matter what,” she says. “Plus with the reform, you have the 32 million of uninsured individuals that will get coverage by 2014, though those numbers will be offset by certain planned reductions in Medicare reimbursement.”
She says investment sales have risen due to the ripening of the properties developed during the 2005-07 cycle, presenting favorable pricing. “These sellers are reinvesting in new development activity that has been spawned by hospitals and health care providers that firmed up financials in the past couple years, after getting clobbered in 2008-09,” Berman says. “With their financial condition improved, the projects that were shelved are coming back to life.”
According to a recent report by the firm’s Healthcare Capital Markets group, about $22.5 billion alone has been raised in debt and equity for the sector in the past 18 months by the groups easiest to track, the public and private real estate investment trusts. Mindy Berman, managing director of capital markets for the group, tells GlobeSt.com that the trusts are the easiest investment group to track.
“If you look closely at the figures, health care trusts make up about 12% of all REITs, but they have raised about 25% of the total US REIT investment, a disproportionate number,” Berman says. “That’s not including the non-trust asset management, developers and investors that are also expressing an interest in this product.”
Three of the trusts alone – Grubb & Ellis Healthcare REIT II, Healthcare Trust of America and American Realty Capital Healthcare Trust – acquired more than $500 million of medical properties in 2011. The three trusts acquired 55 properties, more than a third of all medical office assets traded hands during the period.
Berman attributes the strong interest to a few factors. Primarily, ROI has shown to be an average 5.3% for health care properties, as opposed to office, industrial and retail properties with an averages all less than 5%.
“You have demographics in your favor, as health care is going to increase in demand no matter what,” she says. “Plus with the reform, you have the 32 million of uninsured individuals that will get coverage by 2014, though those numbers will be offset by certain planned reductions in Medicare reimbursement.”
She says investment sales have risen due to the ripening of the properties developed during the 2005-07 cycle, presenting favorable pricing. “These sellers are reinvesting in new development activity that has been spawned by hospitals and health care providers that firmed up financials in the past couple years, after getting clobbered in 2008-09,” Berman says. “With their financial condition improved, the projects that were shelved are coming back to life.”
Thursday, September 15, 2011
Loyola Health chooses Vanderbilt hospital chief as CEO
By Michael Oneal
Tribune reporter
4:46 p.m. CDT, September 9, 2011
Trinity Health named a new chief executive for its recently acquired Loyola University Health System Friday.
Larry M. Goldberg, 49, chief executive of the Vanderbilt University Hospital and former vice president of operations at Northwestern Memorial Hospital, Chicago will take over in mid-October, Trinity said.
Trinity, based in Novi, MI., operates 47 acute care hospitals and is the nation'sfifth largest Catholic health system. It announced the purchase of the Loyola hospital business in March after Loyola University Chicago concluded a merger with a larger organization was the only way to stay competitive in an increasingly difficult business.
The deal will allow Loyola and Trinity to pool capital to buy new computer systems, electronic record-keeping systems and the latest medical technology.
Trinity said Goldberg stood out at Vanderbilt by leading a multi-year effort to reposition the system's clinical, research and academic units to improve profitability. He also oversaw the planning and construction of a 141-bed critical care facility and supported the development of the Vanderbilt Heart and Vascular Institute.
At Northwestern, he managed all support, diagnostic, therapeutic, and ambulatory care services, Trinity said.
Although Loyola passed all ownership to Trinity in July, Goldberg will be working closely with the university in his new role. Under the deal, the medical center will still be considered a teaching hospital, training residents, fellows and nurses from the medical and nursing schools that will remain owned and operated by Loyola University Chicago on the 61-acre Maywood campus.
Loyola faculty will also continue to provide medical care and research to patients.
What Trinity adds is heft. With hospitals in nine states it has more than $7 billion in annual revenue and a balance sheet with more than $3 billion in cash and investments. It pledged to contribute $75 million to a new $150 million medical research that Loyola University Chicago plans to add with proceeds from the Trinity deal.
"We are going to be getting scale while we contribute skill," Loyola president, the Rev. Michael Garanzini, said in July.
Tribune reporter
4:46 p.m. CDT, September 9, 2011
Trinity Health named a new chief executive for its recently acquired Loyola University Health System Friday.
Larry M. Goldberg, 49, chief executive of the Vanderbilt University Hospital and former vice president of operations at Northwestern Memorial Hospital, Chicago will take over in mid-October, Trinity said.
Trinity, based in Novi, MI., operates 47 acute care hospitals and is the nation'sfifth largest Catholic health system. It announced the purchase of the Loyola hospital business in March after Loyola University Chicago concluded a merger with a larger organization was the only way to stay competitive in an increasingly difficult business.
The deal will allow Loyola and Trinity to pool capital to buy new computer systems, electronic record-keeping systems and the latest medical technology.
Trinity said Goldberg stood out at Vanderbilt by leading a multi-year effort to reposition the system's clinical, research and academic units to improve profitability. He also oversaw the planning and construction of a 141-bed critical care facility and supported the development of the Vanderbilt Heart and Vascular Institute.
At Northwestern, he managed all support, diagnostic, therapeutic, and ambulatory care services, Trinity said.
Although Loyola passed all ownership to Trinity in July, Goldberg will be working closely with the university in his new role. Under the deal, the medical center will still be considered a teaching hospital, training residents, fellows and nurses from the medical and nursing schools that will remain owned and operated by Loyola University Chicago on the 61-acre Maywood campus.
Loyola faculty will also continue to provide medical care and research to patients.
What Trinity adds is heft. With hospitals in nine states it has more than $7 billion in annual revenue and a balance sheet with more than $3 billion in cash and investments. It pledged to contribute $75 million to a new $150 million medical research that Loyola University Chicago plans to add with proceeds from the Trinity deal.
"We are going to be getting scale while we contribute skill," Loyola president, the Rev. Michael Garanzini, said in July.
Tuesday, September 13, 2011
Guest Column: Healthcare Reform and Real Estate
The Patient Protection and Affordable Care Act, which becomes fully effective in 2014, is the most ambitious undertaking in the American medical field since Medicare’s highly controversial passage in 1965.
The law, which expands healthcare coverage to as many as 52 million Americans who are currently uninsured, goes into effect at a time when the nation’s 68 million Baby Boomers–many of whom have pre-existing medical conditions–celebrate their 65th birthdays at the rate of one every eight seconds.
The impact on healthcare real estate will be significant because there is a robust requirement for new mixed-use campuses and outpatient facilities where preventive care can be delivered to millions of newly insured Americans. Sg2, a Chicago firm that works with more than 1,000 hospitals and health systems, estimates that the use of outpatient services will grow by 21.6 percent between 2009 and 2019. In comparison, during that same time period, inpatient care will grow by just 1.7 percent.
Even if healthcare reform had not been passed, demographic trends were already supporting the outpatient sector, according to Alan Pontius, managing director of the healthcare real estate group at Marcus & Millichap Real Estate Investment Services. According to Pontius, reform makes a good thing even better.
Although reform will definitely boost demand for space, investment principles for the healthcare sector are likely to remain unchanged. Supply is tagged to demand. “I don’t think spec development in medical office is the right thing to do,” Pontius said. “We’ve seen a lot of spec development fail in the past 24 months. And the impact of this healthcare reform isn’t going to show up overnight, anyway.” There is still uncertainty over how healthcare reform will impact the overall economy, which drives demand for all types of outpatient facilities.
Demand for space will be impacted by the supply of healthcare providers, according to Robert Bach, chief economist at Grubb & Ellis Co. “Do we have enough doctors, nurses and other professionals to accommodate the rising demand? Over time, we will see greater demand for healthcare facilities, but the rate of increase will be constrained by how quickly medical schools can ramp up the supply of healthcare professionals.”
The American Medical Association anticipates that the nation will be short by at least 125,000 physicians by 2025. Dr. Cecil Wilson, its president, says that “this is not a surprise, of course, but I hope that the oft-repeated statistic will force our nation and our government to face the harsh reality of America’s current physician shortage, our growing underserved populations and the dismal issue of access for those newly insured after 2014 under provisions of the Patient Protection and Affordable Care Act.” Complicating the situation is the fact that the Department of Health and Human Services estimates that as many as one-third of physicians practicing today will retire over the next 10 years.
Jeffrey Cooper, an investment banker who specializes in healthcare facilities with Savills, believes the potential exists to develop as much as 60 million square feet of new medical office buildings nationally over the next few years. Using the standard multiplier that calculates that each new outpatient requires 1.9 square feet of medical office space, Cooper says that a lowball figure of 30 million newly insured individuals will require the construction of approximately 57 million square feet.
In Massachusetts from 2006 through 2009–as a direct consequence of the introduction of the Commonwealth Care Health Insurance Program–an additional 1.8 million square feet of medical office space was developed and absorbed, a 14 percent increase. CoStar Group Inc. reported that construction of medical office building space on a national basis peaked at 19.5 million square feet in the fourth quarter of 2006 and plummeted to 6.7 million square feet in the first quarter of 2009. The Massachusetts numbers bucked the national trend and are a direct result of RomneyCare.
The Growth of Outpatient Care
Outpatient care, which currently accounts for 40 percent of a hospital’s total revenues, will surge as newly insured people seek healthcare services. Currently, the United States delivers 65 percent of healthcare services in outpatient facilities, a significant increase over the 43 percent reported in 1980.
A study by McKinsey & Co.’s Global Institute found that outpatient spending is growing at a rate of 7.5 percent annually, adding $166 billion between 2003 and 2006. Outpatient spending is expected to total $163 billion in 2011 alone and is likely to grow by 30 percent over the next decade. With 600 million outpatient visits every year, inpatient admissions will continue to decline. As the number of annual outpatient visits increases dramatically, hospitals will shift their resources to more dynamic and integrated ways of delivering healthcare to their patients.
According to the McKinsey report, “In theory, this shift (to outpatient care) should help to save money, since fixed costs in outpatient settings tend to be lower than the cost of overnight hospital stays. In reality, however, the shift to outpatient care has added to, not taken away from, total system costs because of the higher utilization of outpatient care in the United States.”
The mission of healthcare facility development firms in coming years will be to build primary-care, imaging, diagnostics, outpatient surgery and free-standing emergency departments so preventive medicine can be delivered in positive, convenient, patient-centered environments.
Additionally, there will be a strong focus on wellness centers. Just five years ago, wellness was an emerging $200 billion-a-year industry; today, it totals $500 billion and is growing rapidly.
Healthcare villages–which typically are associated with a local hospital and feature a wellness center–are becoming destinations of choice for people in the community. For practices striving to reduce their overhead and debt service, healthcare villages offer enormous growth opportunities. These include access to electronic health-record services, as well as service-line managers who help practices enhance growth of their revenue streams.
These facilities usually also include a state-of-the-art, medically based wellness center, including clinical departments that promote preventive care, lifestyle modification, disease management programs and rehabilitation. Wellness centers typically house a fitness center with an indoor aquatics center; spa services; an indoor walking track; group exercise rooms; cardio and strength-training equipment; and well-appointed men’s, women’s and family locker rooms.
Donna Jarmusz is a senior vice president for Alter+Care, an integrated, comprehensive consulting services company that plans, develops, finances, markets and manages healthcare real estate assets. Alter+Care is the healthcare services affiliate of The Alter Group. For more information, visit www.altercare.net or call 800-637-4842.
The law, which expands healthcare coverage to as many as 52 million Americans who are currently uninsured, goes into effect at a time when the nation’s 68 million Baby Boomers–many of whom have pre-existing medical conditions–celebrate their 65th birthdays at the rate of one every eight seconds.
The impact on healthcare real estate will be significant because there is a robust requirement for new mixed-use campuses and outpatient facilities where preventive care can be delivered to millions of newly insured Americans. Sg2, a Chicago firm that works with more than 1,000 hospitals and health systems, estimates that the use of outpatient services will grow by 21.6 percent between 2009 and 2019. In comparison, during that same time period, inpatient care will grow by just 1.7 percent.
Even if healthcare reform had not been passed, demographic trends were already supporting the outpatient sector, according to Alan Pontius, managing director of the healthcare real estate group at Marcus & Millichap Real Estate Investment Services. According to Pontius, reform makes a good thing even better.
Although reform will definitely boost demand for space, investment principles for the healthcare sector are likely to remain unchanged. Supply is tagged to demand. “I don’t think spec development in medical office is the right thing to do,” Pontius said. “We’ve seen a lot of spec development fail in the past 24 months. And the impact of this healthcare reform isn’t going to show up overnight, anyway.” There is still uncertainty over how healthcare reform will impact the overall economy, which drives demand for all types of outpatient facilities.
Demand for space will be impacted by the supply of healthcare providers, according to Robert Bach, chief economist at Grubb & Ellis Co. “Do we have enough doctors, nurses and other professionals to accommodate the rising demand? Over time, we will see greater demand for healthcare facilities, but the rate of increase will be constrained by how quickly medical schools can ramp up the supply of healthcare professionals.”
The American Medical Association anticipates that the nation will be short by at least 125,000 physicians by 2025. Dr. Cecil Wilson, its president, says that “this is not a surprise, of course, but I hope that the oft-repeated statistic will force our nation and our government to face the harsh reality of America’s current physician shortage, our growing underserved populations and the dismal issue of access for those newly insured after 2014 under provisions of the Patient Protection and Affordable Care Act.” Complicating the situation is the fact that the Department of Health and Human Services estimates that as many as one-third of physicians practicing today will retire over the next 10 years.
Jeffrey Cooper, an investment banker who specializes in healthcare facilities with Savills, believes the potential exists to develop as much as 60 million square feet of new medical office buildings nationally over the next few years. Using the standard multiplier that calculates that each new outpatient requires 1.9 square feet of medical office space, Cooper says that a lowball figure of 30 million newly insured individuals will require the construction of approximately 57 million square feet.
In Massachusetts from 2006 through 2009–as a direct consequence of the introduction of the Commonwealth Care Health Insurance Program–an additional 1.8 million square feet of medical office space was developed and absorbed, a 14 percent increase. CoStar Group Inc. reported that construction of medical office building space on a national basis peaked at 19.5 million square feet in the fourth quarter of 2006 and plummeted to 6.7 million square feet in the first quarter of 2009. The Massachusetts numbers bucked the national trend and are a direct result of RomneyCare.
The Growth of Outpatient Care
Outpatient care, which currently accounts for 40 percent of a hospital’s total revenues, will surge as newly insured people seek healthcare services. Currently, the United States delivers 65 percent of healthcare services in outpatient facilities, a significant increase over the 43 percent reported in 1980.
A study by McKinsey & Co.’s Global Institute found that outpatient spending is growing at a rate of 7.5 percent annually, adding $166 billion between 2003 and 2006. Outpatient spending is expected to total $163 billion in 2011 alone and is likely to grow by 30 percent over the next decade. With 600 million outpatient visits every year, inpatient admissions will continue to decline. As the number of annual outpatient visits increases dramatically, hospitals will shift their resources to more dynamic and integrated ways of delivering healthcare to their patients.
According to the McKinsey report, “In theory, this shift (to outpatient care) should help to save money, since fixed costs in outpatient settings tend to be lower than the cost of overnight hospital stays. In reality, however, the shift to outpatient care has added to, not taken away from, total system costs because of the higher utilization of outpatient care in the United States.”
The mission of healthcare facility development firms in coming years will be to build primary-care, imaging, diagnostics, outpatient surgery and free-standing emergency departments so preventive medicine can be delivered in positive, convenient, patient-centered environments.
Additionally, there will be a strong focus on wellness centers. Just five years ago, wellness was an emerging $200 billion-a-year industry; today, it totals $500 billion and is growing rapidly.
Healthcare villages–which typically are associated with a local hospital and feature a wellness center–are becoming destinations of choice for people in the community. For practices striving to reduce their overhead and debt service, healthcare villages offer enormous growth opportunities. These include access to electronic health-record services, as well as service-line managers who help practices enhance growth of their revenue streams.
These facilities usually also include a state-of-the-art, medically based wellness center, including clinical departments that promote preventive care, lifestyle modification, disease management programs and rehabilitation. Wellness centers typically house a fitness center with an indoor aquatics center; spa services; an indoor walking track; group exercise rooms; cardio and strength-training equipment; and well-appointed men’s, women’s and family locker rooms.
Donna Jarmusz is a senior vice president for Alter+Care, an integrated, comprehensive consulting services company that plans, develops, finances, markets and manages healthcare real estate assets. Alter+Care is the healthcare services affiliate of The Alter Group. For more information, visit www.altercare.net or call 800-637-4842.
Tuesday, September 6, 2011
Docs and Hospitals, Get on Board (Everyone wins if Medicaid car is improved)
In January, we appauled Illinois lawmakers for finally passing a serious Medicaid reform bill. The state's ambitious goal: Move half of Illinois' 2.6 million Medicaid patients - that's 1 of every 5 Illinoisans into managed care by 2015. The overarching strategy is to improve health care for millions of Medicaid patients and save the state tens of millions of dollars.
As the Tribune's reported Judith Graham discovered last week, the state is pushing to enroll people in serious physical and mental disabilities in two private, HMO-style plans - Aetna Better Health and IlliniCare Health Plan.
But many doctors and hospitals have refused to join the new managed care program. The hospitals listed by Graham include Northwestern Memorial Hospital, Rush University Medical Center, the University of Chicago Medical Center, Children's Memorial Hospital and Loyola University Health System. Many of these elite hospitals and physician groups are still negotiating terms and rates so all of this could/should change.
For the time being however, those hospital and doctor refusals are forcing hundreds if not thousands of poor, chronically ill patients who had been relying on them to find new doctors and make new health care arrangements.
The the complete article and more information, click here
As the Tribune's reported Judith Graham discovered last week, the state is pushing to enroll people in serious physical and mental disabilities in two private, HMO-style plans - Aetna Better Health and IlliniCare Health Plan.
But many doctors and hospitals have refused to join the new managed care program. The hospitals listed by Graham include Northwestern Memorial Hospital, Rush University Medical Center, the University of Chicago Medical Center, Children's Memorial Hospital and Loyola University Health System. Many of these elite hospitals and physician groups are still negotiating terms and rates so all of this could/should change.
For the time being however, those hospital and doctor refusals are forcing hundreds if not thousands of poor, chronically ill patients who had been relying on them to find new doctors and make new health care arrangements.
The the complete article and more information, click here
Thursday, September 1, 2011
The Rise of Retail Clinics & What You Can Learn from Them
Retail medical clinics (also known as urgent care centers) have become quite prominent over the past couple of decades, taking a significant slice of the medical providers’ pie. But instead of bemoaning the rise of retail clinics, it’s smarter to learn from them and even use them to your advantage. Here, MOT takes a look at what patients like about retail clinics and how you can incorporate some of their traits into your practice.
Why are retail clinics so popular?
Let’s face it – it can be inconvenient and time-consuming to schedule with and visit a traditional medical practice, prompting many patients to opt for retail clinics.
“Convenience has been the main driver of their growth,” says Jason Hwang, executive director, healthcare, for Innosight Institute in Mountain View, Calif. “Retail clinics, with their accessible locations and walk-in service, have been smart to capitalize on common medical issues that people are comfortable managing away from the doctor’s office.”
Low prices and aggressive marketing are additional factors contributing to retail clinics’ success, Hwang adds. “Retail clinics have lower costs because they employ lower-cost providers who work in lower-cost settings. In contrast, traditional practices must be capable of managing the entire spectrum of human illness – simple and complex, acute and chronic, routine and urgent – which continuously drives up their overhead costs in order to keep up with the needs of the market.”
Runoff between ERs and primary care physicians is another reason cited for retail clinics’ boom. “People need to see a doctor and are squeezed between overcrowded ERs and overworked and understaffed PCPs,” says Tom Cusumano, managing partner in sales and marketing for Doctors Express Newark Urgent Care Center in Newark, Calif. “Urgent care centers do play a vital role in helping to fill this vacuum with high-quality, convenient, cost-effective and, in many cases, compassionate care – oftentimes in a very speedy manner that meets the needs of people with hectic schedules.”
What can traditional practices learn from retail clinics?
Most retail clinics are avid users of EMR systems, which helps streamline the practice of medicine, reduce paperwork and errors and increase patient flow. Meanwhile, some traditional practices have been slow to move from paper records to digital, Cusumano notes.
Retail clinics may help you treat patients who need more time and attention given to their medical conditions than you can afford to give. Retail clinics that specialize in a particular condition can help patients manage chronic or long-term conditions such as weight loss that can require significant one-on-one time between doctor and patient.
“Physicians in traditional private practice are extremely busy meeting the medical needs of their patients,” says Tasha B. Wallace, D.O., with Wallace Family Practice in Lehigh Acres, Fla. “Weight loss is special in that it requires much more time for education and encouragement. To be effective, I recommend this to occur with each patient on a weekly basis. Physicians in private practice cannot have this load added onto their already very busy schedules.”
Retail clinics also help take the burden off busy practices for minor or urgent issues that don’t require a PCP. “Physicians must realize that growing portions of their current practice can and should be managed by other members of the healthcare team,” says Hwang. “Physicians will be most effective when they become leaders of care teams and are able to delegate tasks to others.”
Be sure to do your due diligence on any retail clinic you recommend to patients, just as you would for all medical referrals.
What advantages do traditional practices have over retail clinics?
Unlike traditional practices, most retail clinics don’t get their patients via referrals, but have to rely on advertising, marketing and strategic real estate decisions to find their customers, points out Kent Holtorf, M.D., founder of Holtorf Medical Group, a large private physician group with practices in San Francisco, Los Angeles and New York.
Also, there’s a lot to be said for developing long-term relationships with your patients, and this usually cannot be achieved in the retail clinic model. “Urgent care is episodic,” Cusumano explains. “A PCP may see a patient with diabetes, for example, and will need to see that patient weekly or monthly or quarterly for many years. The PCP will often get to know their patients on a very personal level. This will usually not occur with urgent care.”
Realize, too, that most patients still want to come to you first, Hwang says. “Traditional practices are still patients’ preferred choice for almost all care, and it will especially remain so for complex conditions that are best managed by physicians,” he points out.
(Article by Carrie Rossenfeld)
Why are retail clinics so popular?
Let’s face it – it can be inconvenient and time-consuming to schedule with and visit a traditional medical practice, prompting many patients to opt for retail clinics.
“Convenience has been the main driver of their growth,” says Jason Hwang, executive director, healthcare, for Innosight Institute in Mountain View, Calif. “Retail clinics, with their accessible locations and walk-in service, have been smart to capitalize on common medical issues that people are comfortable managing away from the doctor’s office.”
Low prices and aggressive marketing are additional factors contributing to retail clinics’ success, Hwang adds. “Retail clinics have lower costs because they employ lower-cost providers who work in lower-cost settings. In contrast, traditional practices must be capable of managing the entire spectrum of human illness – simple and complex, acute and chronic, routine and urgent – which continuously drives up their overhead costs in order to keep up with the needs of the market.”
Runoff between ERs and primary care physicians is another reason cited for retail clinics’ boom. “People need to see a doctor and are squeezed between overcrowded ERs and overworked and understaffed PCPs,” says Tom Cusumano, managing partner in sales and marketing for Doctors Express Newark Urgent Care Center in Newark, Calif. “Urgent care centers do play a vital role in helping to fill this vacuum with high-quality, convenient, cost-effective and, in many cases, compassionate care – oftentimes in a very speedy manner that meets the needs of people with hectic schedules.”
What can traditional practices learn from retail clinics?
Most retail clinics are avid users of EMR systems, which helps streamline the practice of medicine, reduce paperwork and errors and increase patient flow. Meanwhile, some traditional practices have been slow to move from paper records to digital, Cusumano notes.
Retail clinics may help you treat patients who need more time and attention given to their medical conditions than you can afford to give. Retail clinics that specialize in a particular condition can help patients manage chronic or long-term conditions such as weight loss that can require significant one-on-one time between doctor and patient.
“Physicians in traditional private practice are extremely busy meeting the medical needs of their patients,” says Tasha B. Wallace, D.O., with Wallace Family Practice in Lehigh Acres, Fla. “Weight loss is special in that it requires much more time for education and encouragement. To be effective, I recommend this to occur with each patient on a weekly basis. Physicians in private practice cannot have this load added onto their already very busy schedules.”
Retail clinics also help take the burden off busy practices for minor or urgent issues that don’t require a PCP. “Physicians must realize that growing portions of their current practice can and should be managed by other members of the healthcare team,” says Hwang. “Physicians will be most effective when they become leaders of care teams and are able to delegate tasks to others.”
Be sure to do your due diligence on any retail clinic you recommend to patients, just as you would for all medical referrals.
What advantages do traditional practices have over retail clinics?
Unlike traditional practices, most retail clinics don’t get their patients via referrals, but have to rely on advertising, marketing and strategic real estate decisions to find their customers, points out Kent Holtorf, M.D., founder of Holtorf Medical Group, a large private physician group with practices in San Francisco, Los Angeles and New York.
Also, there’s a lot to be said for developing long-term relationships with your patients, and this usually cannot be achieved in the retail clinic model. “Urgent care is episodic,” Cusumano explains. “A PCP may see a patient with diabetes, for example, and will need to see that patient weekly or monthly or quarterly for many years. The PCP will often get to know their patients on a very personal level. This will usually not occur with urgent care.”
Realize, too, that most patients still want to come to you first, Hwang says. “Traditional practices are still patients’ preferred choice for almost all care, and it will especially remain so for complex conditions that are best managed by physicians,” he points out.
(Article by Carrie Rossenfeld)
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