In the 1970s, a doctor’s visit often was a family affair. The same doctor would probably see mom, dad and the kids, sometimes in the same visit.
Our family doctor was a grizzly fellow who owned his own little neighborhood building and practice, was the only doctor in our end of town an
d took smoke breaks between patients in the alley. I associated good medical care with meaty cold fingers and the lingering aroma of Chesterfield cigarettes wafting off the doctor’s white smock as my bare fanny crinkled on what was left of the paper-covered exam table where I watched my brother and sister squirm around moments before.
In those days, a typical doctor’s office was about 2,000 square feet of space housing one or two doctors, a couple of nurses, a receptionist and a waiting area. Any real complicated follow-up surgeries and procedures were almost always done at hospitals.
Advances in medical technology began changing the makeup of a typical doctor’s office because treatment alternatives changed. The term “outpatient” was born in the 1980s where arthroscopic surgeries and other procedures could be done the same day outside of the hospital. Drug and chemotherapy or radiation treatments expanded and needed places to be delivered now. Imaging centers replaced the single X-ray machine and new easy-access diagnostic centers began popping up. Other efficiency-driven efforts influenced, in part, by the increase in Medicare-supported patients forced consolidation of doctors into group practices.
This morphed the role of medical office buildings (MOBs) in which medical services are delivered to us into larger buildings of 15,000 to 30,000 square feet, usually with multiple medical disciplines interacting in the same location, an MRI and imaging center down the hall, and a place for out-patient procedures.
By the 1990s, any doctor operating in his own 2,000-square-foot suite in a suburban neighborhood was either near retirement, seeing his patient base whittled away by larger clinics or a rare breed who served a niche that was holding up under the old model. Most doctors coming out of medical school today wouldn’t dream of opening their own practice. They become employees of hospitals and group practices inside of large, multidiscipline clinics.
This change to the size and shape of medical office buildings is being played out right before our north Puget Sound eyes. The Feb. 17 opening of Swedish’s new Mill Creek facility off I-5 at 128th Street SW brings a conglomeration of medical services to a region that hasn’t seen Swedish’s brand in its midst before. Which is exactly why it’s in Snohomish County.
Swedish has a big hospital in Seattle and a new affiliation with Stevens Hospital in Edmonds and both need to keep busy in order to survive. Swedish is trying to grab market share here and funnel patients to these hospitals, plain and simple. By creating a connection with the customer where the customer can find them, a referral to Swedish’s hospital is created.
Providence Regional Medical Center Everett, already with a strong network through its own physician network and close alliances with The Everett Clinic and other physician groups, is leveraging expansion of their hospital to add medical centers of their own in order to strengthen patient patterns and loyalty where it has a home-field advantage. Strengthening points of contact and brand loyalty to health care through Providence’s own clinics and alliances with referral sources to its Everett hospital is the end goal.
The size and shape of MOBs, therefore, must fit the delivery model today. Most will range from 25,000 to 50,000 square feet, be very efficient, and will be located near malls or in high-traffic suburban areas, bringing to the patient everything they need that can’t be done in an overnight stay at a hospital. It’s a national trend. The smaller suite that once served doctors in the 1970s now is the domain of dentists, chiropractors, physical therapists, naturopaths and other private-pay or niche medical practices. They, too, are consolidating into more efficient space inside of office buildings. It’s the smaller stand-alone buildings that once housed the family doctor that will struggle.
How health care legislation passed in 2010 affects all of this is unclear. The constitutionality of the legislation itself is being challenged in court. If it holds up, 30 million to 50 million more Americans will pick up taxpayer-subsidized insurance coverage and now be able to seek medical services. Market share to capture existing customers is one goal. Being well positioned to pick up this new customer base is another and explains, in part, why we’re seeing a turf war in our back yard.
Tom Hoban is co-owner of Everett-based Coast group of commercial real estate companies. Contact him at tomhoban@coastmgt.com or 425-339-3638.
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