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CREJ Healthcare Quarterly: Supporting Healthcare's Shift to Outpatient Surgery Centers
National Jewish Health Center for Outpatient Health

The pandemic in 2020 has accelerated multiple aspects of healthcare in the United States – from growth in telemedicine to the speed of vaccine development. Real estate is no exception, and the shifts taking place in where and how care is provided will have a significant impact on not only the healthcare industry in the coming years, but also on the construction, development and planning disciplines within our communities.

The desire to deliver more cost effective, efficient and personalized patient care has been steadily driving a trend toward ambulatory surgery centers (ASCs). Right now, there are nearly 6,000 such facilities nationwide. These are often located outside of the primary hospital setting and treat patients receiving routine, lower-risk procedures – everything from knee replacement surgery to in vitro fertilization (IVF).

With the advent of COVID-19, the trend towards these separate satellite facilities for non-acute patients has accelerated for two reasons. One, hospitals need the extra capacity to be able to treat seriously ill patients. And two, non-COVID patients have become reluctant to come to the hospital for regular care in the midst of the pandemic. In fact, according to the Centers for Disease Control (CDC), an estimated 40.9% of U.S. adults have avoided medical care during the pandemic because of concerns about COVID-19, including 12.0% who avoided urgent or emergency care and 31.5% who avoided routine care.

Hospital systems, private practice groups and surgery center operators are increasingly recognizing the opportunity to respond by removing non-acute patients from the traditional hospital setting and treating them in outpatient surgery facilities. Since the pandemic began, Mortenson has seen an increased interest in developing and building these facilities not just here in Colorado, but nationwide.

Factors Influencing the Move to Outpatient Surgery Centers

Outside of the pandemic, there are a number of other factors influencing the shift to providing care in ASCs, chief among those are cost, patient outcomes and experience. Per the ASC Association, a review of commercial medical-claims data found that U.S. healthcare costs are reduced by more than $38 billion per year due to the availability of ASCs as an appropriate setting for outpatient procedures. Medicare has also started expanding the types and locations of procedures covered, and other payers are likely to follow in their wake.  Experts estimate that total ASC volume will increase 27% by 2027.

From a patient perspective, the lower cost of care can mean a lower out-of-pocket cost. These facilities are increasingly being built in suburban communities, so the procedures are theoretically more convenient and accessible because they are closer to home for many patients. There’s also growing favorable data regarding patient outcomes at ASCs vs. traditional hospital outpatient surgery departments. All of these factors point to a mounting need for real estate development and construction partners who understand the process of developing and operating ASCs, and can bring expertise to address Colorado’s growing demand.

Considerations for Development, Construction & Planning

When it comes to planning for and developing ASCs in communities, it’s important to consider a variety of factors – from strategic planning, portfolio optimization and site selection to creative financing strategies and partnerships that can help bring a project to life. Most of these factors are dependent on the stakeholders involved. The ASCs themselves may be operated by a health system, a private practice group or a private surgery management company – or a combination of those parties. The development and construction needs evolve from there, depending on who is involved and the revenue strategy.

Consider Mortenson’s work with The Oregon Clinic Gastroenterology Clinic and Endoscopy Center in Newberg, Oregon. For this project, we built a 19,000-square-foot freestanding ASC that included three Class-C operating rooms along with non-licensed space and associated services. This was a practice of 16 physicians, four nurse practitioners/physician assistants and approximately 90 total staff members. With freestanding clinics, the facilities can be deployed more strategically within a community, based on need. In this case, the goal was improving access to colonoscopies, cancer screening and prevention for the local community. This also allowed the building to serve as an extension of the clinic’s brand, versus being lumped into the branding of a larger campus.

Beyond the parties involved, the location and function of these facilities, their size, design and technical needs all vary widely. For the Hennepin Healthcare Clinic and Specialty Center in Minneapolis, Minnesota, the client was a comprehensive academic medical center and public hospital with world-class trauma services. In this instance, the ASC was just one part of a Clinic and Specialty Center, which included primary care clinics, specialty clinics, as well as the outpatient surgery facilities. 

Mortenson constructed the six-story clinic and specialty center bringing together 40 clinics that were previously distributed across nine facilities to better serve the growing residential population in the downtown Minneapolis market. In a larger facility like this, the location of the ASC within the building was a critical consideration affecting everything from ventilation to patient experience. For example, a ground-floor location might be the most convenient for patient access, but from a constructability perspective, it might be easier to punch through the ceiling in a top-floor location for proper ventilation and to minimize disruption to the operating rooms from other floors). These factors had to be considered by the design team in the broader context of the complete needs for the Clinic and Specialty Center.

Right now, there are more than 130 Medicare-certified ASCs in Colorado, more than double of any of our neighboring states. Meeting an increase in demand, Mortenson is actively engaging providers across the country in developing and building new facilities.

In the course of Mortenson Development, Inc.’s experience partnering on the development of nearly 700,000-square-feet in the healthcare space in the last decade and building or developing more than 3 million square feet of healthcare space here in Colorado, the trend is clear. Regardless of the speed with which people become vaccinated against COVID-19, the models of care in in this country are rapidly evolving rapidly. So, too, must the real estate industry’s approach to the healthcare market.