Philadelphia hospitals look to cut real estate waste

Healthcare providers in the Philadelphia area are looking at creative ways to repurpose often underused office space just as pressure to offer facilities for patient care increases and expenses rise, according to a Nov. 2 Bisnow report.

Radnor Township, Pa.-based Main Line Health, for example, is weighing up options for three nonclinical office buildings it leases, with a decision expected by the end of this year, JoAnn Magnatta, senior vice president of real estate design and construction for the group, said at a Bisnow conference. 

Main Line Health employees will help decide what to do with any underused space, possibly including repurposing for clinical care, through their choices regarding possible remote or hybrid working arrangements, Ms. Magnatta added.

Meanwhile, the Philadelphia-based University of Pennsylvania Health System has already decided on what to do with a total of 600,000 square feet of its office space, as only 10 percent of that capacity is currently being used, Allison Wilson-Maher, vice president of real estate, design and construction, said at the conference.

"That's a lot of space not to be used," she said. "So we're recycling 300,000 square feet for a different use because we own it and the other 300,000 square feet, we are likely going to be giving up and going somewhere to consolidate to a much smaller footprint.”

Other hospitals closing facilities in the area are also putting pressure on how other healthcare groups can absorb patients, further forcing them to look at what to do with possibly redundant nonclinical space. Crozer Health, for example, is currently trying to close down Delaware County Memorial Hospital in Drexel Hill.

"There just is not going to be the capacity for those patients, there is a real fear," Main Line's Ms. Magnatta said. "So we're working on how we can accommodate those patients, and it's not easy; we can't get facilities up fast enough."

Real estate can account for up to 40 percent of a hospital or health system's balance sheet, according to a recent JLL "Healthcare and Medical Office Perspective" report.

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