Empty buildings leave 'great bones' for healthcare

What do a shuttered Blockbuster store, a vacant Bed Bath & Beyond and an old funeral home have in common? Hint: They've all been scooped up by Hartford HealthCare. 

The Connecticut health system began acquiring and converting commercial buildings about 15 years ago, Karen Goyette, its chief strategy and transformation officer, told Becker's. Its list of transformed spaces continues to grow; a bank, a corporate office building and a Pier 1 Imports now lead new lives as bustling health centers. 

"When we started this journey, we were really trying to meet the patients and consumers where they wanted to live their everyday lives," Ms. Goyette said. "It's served us so well as patients are trying to get away from coming into the acute care campuses."

Though Hartford HealthCare's approach to convenience is unique, the goal itself is shared among many health systems. More organizations are zeroing in on outpatient, ambulatory care offerings as they look to retain hospital space for acute care. From freestanding emergency departments to grocery store walk-up clinics, health systems are testing new methods to expand their footprints (and appease an increasingly impatient patient before they make the switch to Amazon).  

The trouble with ground-up 

Health systems are understandably eager to expand, but they might lose their enthusiasm when they see the price of a new plot. 

Lon Mapes is president and CEO of LDM Commercial, a Redlands, Calif.-based real estate firm specializing in medical spaces. Construction costs have become "prohibitive" for some of Mr. Mapes' healthcare clients, he told Becker's; after the pandemic, material and labor costs surged. 

As such, more organizations are warming up to the idea of converting a preexisting space. 

"The health systems are open to it," Mr. Mapes said. "The challenge is finding the right building to do it." 

Finding the right bones

Medical spaces can't pop up anywhere there's a "for lease" sign. But if they could, they likely would. 

Mr. Mapes said office landlords call him frequently to ask if their spaces are right for medical conversion. A medical tenant can increase the value of the space exponentially, as they're "extremely sticky," per Mr. Mapes. Once the expensive medical equipment is in the building — along with the complex electrical and plumbing systems that support it — it's likely to stay there for the foreseeable future. 

Landlords know this, and with office vacancy rates at an all-time high, they're eager for tenants who will stick. But most office spaces just aren't conducive to health systems' needs, according to Mr. Mapes — and the several urban health systems Becker's contacted who declined to speak further on the matter. Downtown office buildings don't usually have the parking space to support a steady stream of patients, clinicians and technicians. Their elevators are too compact for a gurney. Their ceilings are rarely high enough to support the specialized ventilation required by medical spaces. 

But if you look beyond the cities, there are still empty spaces: big-box retailers that have succumbed to online shoppers, dusty corporate parks that have fallen to remote work. 

Look hard enough, and you might find a gem. 

A call center case study

The former Wells Fargo regional mortgage headquarters in San Bernardino, Calif., was a rare gem indeed. 

At five stories and 280,000 square feet, the building caught the eye of Mr. Mapes and his client, SAC Health, an 11-clinic system looking to build its 12th. 

"What was fortuitous was that a big part of the building was a call center, and call centers are very employee-heavy," Mr. Mapes said. "And that means there's going to be a large, more-than typical-parking need. So the building had two parking garages on each end of the building, and the parking ratio was 6 per 1,000, which is unheard of for a non-medical office."

As a call center, the building also featured wide open spaces, meaning SAC Health could customize it without much demolition, Maryellen Westerberg, DrPH, the system's chief operating officer, told Becker's. The lack of structure allowed the health system to map their own, designing clinical spaces and exam rooms based upon providers' workflows. 

The cost of building that 12th clinic from the ground up would have been "astronomical,"  Dr. Westerberg said. And finding an existing structure saved SAC Health not only money, but time. 

"It's my preference is to find things that are move-in ready or that could be easily converted," Dr. Westerberg said. "I think the timing of that is much more in line with our expansion efforts as a clinic system on the whole. To build from the ground up just feels like an awful lot of moving pieces, and I think we can recycle or reuse a space that has great bones and is conducive to the types of services that we offer."

Ms. Goyette also mentioned time to market as a consideration for Hartford HealthCare's projects. She estimates that between time saved on construction and permit processes, investing in an existing space can shave six to nine months off a timeline.

And despite the work that must be done to rebrand and convert a space — the carving of skylights to elicit cleanliness and calm, the addition of logos and Hartford HealthCare's signature two-tone gray — Ms. Goyette also spoke to overall cost savings. 

Something old to something new 

One of Hartford HealthCare's most recent projects is a "health desk" in downtown Hartford. Located in a former bank that is now a commercial office space, the unique model has filled a gap in the metropolitan area. 

Downtown Hartford did not previously have an urgent care center, and commuters might not always have a private spot for a telehealth call. Hartford HealthCare's Health Desk @ 100 Pearl is equipped with two private rooms with videoconferencing equipment, so patients can meet with urgent care providers virtually. An on-site medical assistant is present to take vitals and administer tests for non-life-threatening illnesses and injuries, including urinary tract infections, strep throat and COVID-19; an on-site care coordinator can help arrange specialty care for those with more complex concerns. 

In its first month, the health desk saw approximately 125 patients: "We're really pleased," Ms. Goyette said. 

And, expenses and outcomes aside, it feels undeniably good to recycle. 

"We really wanted to be part of the revitalization of downtown Hartford. Our headquarters are here. We're living our life here every day," Ms. Goyette said.

"We're pretty creative. It's something that has been in [Hartford HealthCare's] DNA," she continued.  "And it's served us so well." 

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