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You are here: Home / Features / Building Nevada / Building Medical: Keeping Pace with Healthcare Growth

Building Medical: Keeping Pace with Healthcare Growth

December 1, 2018 By Pat Evans Leave a Comment

With Nevada’s two major metropolitan areas continuing to grow, the healthcare industry is trying to keep pace.

Nevada’s health industry regularly gets low marks in rankings, including an “F” for accessibility. As Las Vegas and Reno continue to evolve, both cities are experiencing the medical industry’s attempt to catch up. That attempt is reflected in the real estate market.

“Overall, it’s the strongest market right now for medical office that I can remember,” said Bret Davis, a senior vice president with the real estate firm JLL in Las Vegas.

“Vacancy is at its lowest level in more than eight years, due in part to the fact absorption in the past year and a half has exceed the past 12 years cumulatively. I don’t know if it’s government regulations, a positive business climate or something else, but there’s a lot of stories about what’s driving growth and the medical community is embracing it,” Davis added.

To the north, Reno is experiencing the same type of medical market it has seen in previous several years, said Scott Shanks, a principal at Dickson Commercial.

“The past year is mirroring exactly what happened in the past couple, independent groups are going off campus from medical providers,” Shanks said. “Typically, approximate to one of the hospitals or strategically in between the hospitals.”

Niether Shanks nor Davis have noticed any outliers in terms of medical segments being more active in the market than others, instead saying it’s across the board.

Activity isn’t limited to physicians groups, but has also includes a variety of specialty practices. Davis pointed to OBGYN practices shrinking a few years ago with malpractice law fears, but that has leveled out and coming back as well. “I can’t point to one group, it is just growth across the board,” Davis said.

Along with physicians branching out on their own with unaffiliated practices, Shanks believes, with Reno’s population and economic growth, new alternate users will begin looking into entering the market in the near future. With accessibility already a problem and a growing population, Davis said part of the active medical market is a segment of that growing population: the elderly.

Davis grew up in the Midwest and moved to Las Vegas two decades ago and recognizes the positives the Southwest offers retirees, even if Florida gets the nod as the retirement state.

“There’s a lot to coming here to get out of the horrible weather, especially with all the big storms the south has been getting,” he said.

An increase in elderly patients could be a reason more medical offices are locating in more accessible areas outside of a traditional hospital property. The elderly also could be a reason parking is a major factor for these types of facilities, Davis said.

With off-campus physician offices becoming more commonplace in both Reno and Las Vegas, the offices are generally locating in retail corridors for easy accessibility to larger swaths of the population and to satisfy parking requirements.

“[Retail locations] are mostly parking, and easier locations,” Shanks said. “If I’ve broken my [GPS], I don’t want to find a place buried in a medical campus.”

Shanks said landlords are also looking more toward medical users as they can justify a higher rental rate, along with premium rates parking already provides.

Those rents, despite being high, often provide medical users more flexibility than a medical institution-owned property.

Micro-Hospitals

An additional factor in the lack of accessibility to healthcare services, at least in Las Vegas, is the city’s sprawl, which takes residents further away from established hospitals.

The lack of access to hospitals has led to a noticeable trend in the Southern Nevada medical industry toward micro-hospitals.

Dignity Health St. Rose Dominican began operating micro-hospitals, now with four eight-bed locations in the metro area, 18 months ago. In those 18 months, the hospitals have seen 67,000 patients, said Laura Hennum, Regional CEO of Emerus Las Vegas, Dignity Health’s development partner in micro-hospitals.

Hennum said micro-hospitals are a capital efficient way to provide additional emergency and in-patient access to the community. Generally, the hospitals take 11 months to build and cost between $20 and $25 million.

“Micro-hospitals aren’t a new concept or model, but they are new for Nevada,” Hennum said. “We’re patient centered, safe and efficient and, my sense is that, people see there could be a different way at providing a full complement of services.”

Unlike the compact urban areas of the Northeast, and even the Midwest, Hennum said Las Vegas and other sprawling metro areas aren’t as easily served by single hospitals. She used the North Las Vegas micro-hospital as an example of how these new concepts can fit into a community.

“On a good day, the closest that area was to a hospital was 20 minutes,” she said. “We’re encouraged that it’s not seen as a micro-hospital, but rather a community hospital. That’s been a gratifying experience.”

Micro-hospitals are generally used in a similar way to emergency rooms, and were designed by emergency room physicians. They aren’t intended to replace larger medical centers with depth of care, such as orthopedic or cancer centers.

Hennum said these four Las Vegas micro-hospitals are different than some of the other micro concepts across the country because they also include a medical office portion of the building, which includes Dignity Health primary care, wellness centers and outpatient physical therapy.

“They are fully licensed acute care and we’d like to think people will discover the value of having this type of service available closer to homes,” Hennum said. “The whole point of these is to create that additional access, to have a broader geographical footprint.”

The North Las Vegas micro-hospital has also spurred additional auxiliary medical offices, Hennum said.

Emerus doesn’t have immediate plans for additional micro-hospitals within the Las Vegas metro area, but continues to explore the needs of the neighborhoods. Hennum said the firm doesn’t want to pull a population and instead will focus on where the population is growing.

“If there’s a community need that warrants the development of an additional hospital, we think we’re solving problems and not a solution in search of a problem,” she said. “We’re always accessing where that need might be, historically, we get an F in access to emergency services, and we want to decompress that.”

Hennum said the future of Nevada’s healthcare is brighter than past rankings. The company has no plans currently in Northern Nevada, but could take a look should the need arise — she did mention health professionals from Northern Nevada have come down to take a look at the concept. She said representatives from health systems across the U.S. have come to Las Vegas to look at the micro-hospitals here, but that health innovation will continue to drive the use of real estate.

Hennum mentioned the innovative approaches various companies are taking with healthcare, including Walmart, retail clinics and medical homes.

“We’ve got to continue to be really thoughtful in how we deploy capital within the healthcare industry,” she said. “Time is the new currency, so we want to provide the best care but be respectful of people’s time as they wedge healthcare in with everything else.

“We have to be creative as margins get tighter and more sensitive, so these innovative approaches seek more efficiencies and I don’t see that slowing down.”

SR Construction has built two of the micro-hospitals, and vice president of operations Bret Loughridge said he’s not sure if it’s the wave of the future or not, but a sign of healthcare companies trying new things.

“I foresee both hospitals and micro-hospitals,” he said. “As long as they’re building, we’re happy.”

New Builds and Renovations

While healthcare user lease transaction volume is up, many more medical facilities are also expanding and some new hospitals could be on the way in both Reno and Las Vegas.

Shanks couldn’t confirm but speculated on several major Reno health organization land acquisitions for potential new ancillary campuses along with some large chunks suitable for new full hospitals.

In Las Vegas, Davis said there is new medical growth, largely new construction, near hospitals like Mountain View Hospital off Tenaya Creek. He also mentioned a resurgence of the Medical Corridor on West Charleston, which is anchored by the University Medical Center (UMC) and UNLV School of Medicine and Dental School.

“That area has really come back with reuse and repurpose,” said Davis, who noted both landlords and tenants are investing in the upgrades for medical purposes.

SR Construction is working in medical facilities daily, Loughridge said. “We do work in nearly every hospital at some point or another and usually have several projects going at one time,” he said.

He said the main challenge of specializing in medical construction is all the extra factors of licensing and added building requirements. For renovations, he said there’s also the need to be cognizant of patients and limit the effects of construction around them.

In Reno, Q & D Construction recently completed the new 81,000-square-foot Reno Behavioral Healthcare Hospital. Q & D President Lance Semenko said he believes more specialized hospitals will be on the way in Nevada because of its growing population.

Like SR Construction, Q & D is constantly working in healthcare facilities in the Reno area, Semenko said, specifically the city’s St. Mary’s Regional Medical Center.

“They’re doing different things all the time, ranging from maintenance work to new technology integration,” he said. “They’re always upgrading, we just built it.”

Semenko said Q & D did recently finish a small project in Las Vegas, but is staying more than busy in Reno, which could prohibit travel for work.

SR Construction recently celebrated Henderson Hospital’s second anniversary, in part by finishing a 28-bed expansion that was originally built as shell space for potential expansion. The firm also finished the six-floor west tower at Summerlin Hospital.

Loughridge said there seems to be a future need for an increase of healthcare space in Las Vegas, an observation he’s made looking at the healthcare companies’ investments.

“[Demand] ebbs and flows with the market,” Loughridge said. “Work flows constantly for healthcare, but whether it’s new or a remodel, it is more peak and valley. There is a current need for new construction, and some of that is just because we were underserved as a community as we came out of the recession and people started moving here and the city is growing.”

Filed Under: Building Nevada Tagged With: Bret Davis, Bret Loughridge, Dickson Commercial, Emerus Las Vegas, JLL, Lance Semenko, Laura Hennum, Q & D Construction, Scott Shanks, SR Construction

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