Hospital construction projects anchor large, multi-use developments

Several large hospital construction projects place hospitals at the center of retail, hotel and multifamily residential developments, according to real estate information company CoStar Group.

Five or more of the hospital expansion projects cost at least $1 billion. They include a $2 billion expansion of Tisch Hospital at the New York University Langone Medical Center, a $1.5 billion University of Pennsylvania Hospital, and luxury-style amenities added to the $1.1 billion Johns Hopkins hospital--officially known as the Charlotte R. Bloomberg Children's Center and the Sheikh Zayed Tower--that opened in 2012.

The projects are part of a $97 billion hospital construction boom occurring nationwide, FierceHealthFinance previously reported, to include 150 new or replacement hospitals.

"The retail strategy for these healthcare systems on mixed-use facilities is a result of their realization that they need to go where the patients live, work and shop in order to compete effectively with other hospital systems," Jeffrey Cooper, head of Savills Studley's Healthcare Capital Markets Group, told CoStar. "And for hotels, apartments and retail, it makes a lot of business sense to have a synergistic affiliation with big medical centers. For example, there's a real demand for hotels close to hospitals, to house families visiting patients, and for multifamily to provide housing for healthcare employees who want to live nearby."

Earlier this year Williamsport Regional Medical Center in Pennsylvania opened its own hotel that is connected to the hospital via a walkway to accommodate patients and families. 

In another example, the University of Maryland Medical Systems is working with a mall developer to consider construction of a $650 million teaching hospital in Largo, Maryland, that could include up to 3 million square feet of commercial space, a hotel, a nursing facility and 4,000-plus residential units.

Any hospital construction project has to figure out what demand for beds and different kinds of services and amenities will be at least a decade out, one hospital executive told Hospitals & Health Networks. Jack Lynch III is president and CEO of Main Line Health in suburban Philadelphia, which is spending $200 million to upgrade one of its hospitals and $46 million to build a facility focused on population health.

"You've got to really understand your demand and where your patients are going to come from, and what's the impact of healthcare reform and change in practice and standardization in practice going to do to the demand on your inpatient facilities," he told H&HN. "And the other piece of it is that, if those facilities aren't easily accessible, user-friendly for both the caregivers and the families and patients, they're going to get alternative solutions from somebody else."

In its $200 million modernization of Bryn Mawr Hospital, Main Line Health is reducing the bed count and moving from a majority of semiprivate to mostly private rooms, Lynch said. The project also includes an ambulatory surgery center connected with a medical office building, an urgent care center and a medically oriented fitness and wellness center.

To learn more:
- here's the CoStar article
- read the H&HN article

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