It takes a village: Physicians adopt new approach to keep patients happy

Retail strategies permeate medicine as physician practices package themselves with urgent care clinics, fitness centers, coffee shops and open waiting areas.

By Myrle Croasdale — Posted May 14, 2007

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A group of Dallas family physicians is building their own ideal work environment, and they are not shoehorning it into a hospital complex or making it part of the typical medical office building.

Family Medical Specialists of Texas is building a medical version of the mall. Their goal is to improve their lives and their patients' by creating a one-stop shopping medical experience. The Legacy Medical Village, which will open in stages beginning in July, will offer space for primary care physicians, housing them alongside the specialists they commonly refer to and the most heavily used ancillary services, such as radiology.

The idea is that a patient will be able to see a doctor and have an x-ray, mammogram or stress test all on the same day, in the same building.

"I believe happy doctors produce happy patients," said Christopher Crow, MD, the group's point person for the project. "We want to make physicians' lives easier."

Physicians within the Legacy Medical Village will be able to share information and test results with each other electronically while remaining HIPAA-compliant, so the patient won't have to fill out the same forms at multiple offices. Physicians also will have the option of tapping into centralized billing and administration services, while remaining autonomous practices.

If all goes as planned, the Family Medical Specialists of Texas will be the first move-ins in July, and by October other specialists will join them, along with centers for imaging, sleep, urgent care and physical therapy.

Paula Crowley, CEO and co-founder of Anchor Health Properties, a medical real estate company, has developed several similar projects. "You should be able to access health care services the same way you shop for shoes, instead of having to ramble around a complicated campus," Crowley said.

Donna Jarmusz, senior vice president of Alter+Care, a health care real estate investment brokerage firm, agreed. "I think we're going to see more and more of these. They [medical malls] are convenient for the doctor as well as the patient."

Jim Kornick, senior director of Marcus & Millichap, a national health care real estate firm, said baby boomers are driving this change. "There's a big push toward these retail-like settings. The baby boomers demand convenience, convenience, convenience. They have two working members of the household; they're working longer hours. They want it their way."

Unlike an office building, these projects generally do not have narrow corridors or multiple elevator banks, developers said. Instead they offer open, shared waiting areas with natural light and a place to get a cup of coffee. Offices are grouped by how patients use them. For example a women's health area could have an ob-gyn practice next to a mammogram imaging center.

While there are no breakdowns for medical malls, the medical office real estate market in general is hot. According to Marcus & Millichap, 13 million square feet of medical office space is expected to be built in 2007, down slightly from a record 13.7 million square feet in 2005 and 13.2 million in 2006.

Kraig Kast, CEO of Atherton Trust, a real estate investment management firm, said medical malls have gained investors' confidence since their introduction some 10 years ago. But he said they are complex ventures.

"As investments, they are perceived to be good, but not necessarily great," Kast said. "We have seen some vacancies because of HMO pressures on physicians."

Get the right mix at the right place

A medical mall is "a good investment if the project has been put together correctly," Crowley said. "Just because you have a bunch of doctors who want to buy a building doesn't mean it's a good investment. Is it well-located? Well-built? Who is in there? Is it the right mix of doctors and services?"

Like building a retail mall, finding the right location is critical, Crowley said, as is having the right combination of tenants who naturally will refer patients back and forth to each other.

"Just because you build it, they won't come," Crowley said. Knowing the local market is essential. "You need to understand the community."

Primary care and radiology could do well in any setting, but deciding what other specialists and services to include should be shaped by population needs, Crowley said. If the area has young families with no allegiance to a particular health system, one could cater to pediatrics and women's health. If the population is older, cardiology and geriatrics may be better options.

The research done by Dr. Crow and his partners for the Legacy Medical Village, showed Collin County, Texas, to have a young population, mostly middle- to upper-middle class. Overall, the suburban Dallas county's population of 700,000 is 200,000 more than it was just six years ago, making Collin County one of the nation's fastest growing areas. It also is home to several Fortune 500 companies.

This demographic led his group to emphasize preventive care and chronic disease management. Area employers have voiced interest in the facility, Dr. Crow said, because they like the idea of their employees getting more done during their doctor visits and missing less work.

In Manitowoc, Wis., injury-related musculoskeletal and wellness-related care was the niche identified for Harbor Town, an outpatient site developed by the Holy Family Memorial hospital system. Steven Driggers, MD, chief medical officer for Holy Family Memorial, said with young families moving in and older residents who have lived in the area for years, this emphasis covered both groups' needs.

"Musculoskeletal complaints, sore shoulders or arthritic knees, are a major reason people visit primary care," Dr. Driggers said.

Harbor Town, which opened two years ago, aims to bring these patients relief with a pain center, occupational and rehabilitation medicine, chiropractic, and an urgent care clinic, along with alternative options, like an acupuncturist. A fitness center anchors the site with services like health assessments, nutritional counseling for people with chronic illnesses and a warm-water therapy pool.

"We wanted to appeal to people who aren't the kind of people who go to the corner fitness center," Dr. Driggers said.

Besides location and physician mix, the financing source can be an important issue, said Alan Zuckerman, president of Health Strategies & Solutions, a health care management consulting firm. If the project is undercapitalized it will have difficulty getting through the building and leasing stages, he said. Because most physician groups do not have the capital this takes, it is more common for hospitals and developers to back such projects, with physicians making smaller investments through limited liability companies.

The majority stake of Dr. Crow's $30 million, 100,000-square-foot village is owned by Harrod Properties of Tampa, Fla., with the physicians holding a much smaller share in the structure. The 86,000-square-foot Harbor Town facility was financed by Holy Family Memorial. The physicians, employed by the health care system, did not invest in the building.

Underestimating the complexity of these enterprises and not managing them effectively is another reason some projects fold, Zuckerman said. For instance, office hours should mirror normal business hours. Zuckerman once visited a medical office project where an obstetrician's office was closed except for Monday and Thursday mornings. "You'd be surprised how many people will rent a store, and the store is always closed."

Uniformity among tenants is another ingredient for success, Zuckerman said. They should regard each other as peers in terms of quality or they will not refer to each other. The ancillary services at the site should have a proven track record. If a business fails or does not provide quality service, that reflects on all the tenants.

Making a good impression

Orthopedic surgeon Kieran Cody, MD, and his partners moved into the Health & Wellness Center by Doylestown Hospital in Warrington, Pa., when it opened five years ago.

"The whole concept of the building was very appealing," he said. "There's a surgery center in the building, MRI, x-ray, primary care doctors. It's so convenient for me and the patients. We just moved to a larger suite in the same building."

Dr. Cody said the proximity of the physician practices with other services works well. "When I order tests, patients prefer to get everything done right here, right away."

His patients also like the building's atmosphere. "There's a 'wow' factor when patients walk in," Dr. Cody said. "There are fountains, a koi pond, fitness center. The emphasis is on service; there's more personal attention."

It is expensive, though. Dr. Cody joked that the building does not need to set required office hours because doctors have to stay open all the time to pay the rent.

The mall setting has brought an unexpected benefit, namely in the growth of their physical therapy services, Dr. Cody said. The practice's physical therapists have space in the fitness center, and when the patients see those facilities, they're motivated to stay for their therapy.

Considered cutting edge today, however, such upscale offices will have to work to stay current, Crowley said. "Retail is not stagnant."

With health care taking on retail characteristics, she said, outpatient care and the physicians who deliver it will need to be able to adapt and be flexible to stay competitive.

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Medical village makeup

A medical village or mall generally will have shared waiting areas within an open layout so people can see where they are heading. Many referrals and tests can be taken care of in the same building. Here's the preliminary tenant list for the Legacy Medical Village in Dallas. The 100,000-square-foot facility will open in stages starting in July and finishing a year later.

Physician offices: Dermatology; gastroenterology; general surgery; neurology; ophthalmology; otolaryngology; plastic surgery; physical medicine and rehab; primary care; psychiatry/counseling

Services: Aesthetic center; cardiopulmonary testing; coffee shop or café; conference center; executive health; hearing and balance; imaging; optical shop; pharmacy; physical therapy; rehab; research; sleep study; surgical center; urgent care; wellness/fitness center

Source: Legacy Medical Village

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Medical malls raise legal concerns

Jane Doe, MD, rents office space in a medical mall or owns a share of one and refers her patients for an MRI in that facility. Is she violating the Stark anti-kickback laws created to keep physicians from financially benefiting from patient referrals?

No, according to attorney Mark Manigan, a partner with WolfBlock's Health Law Practice Group in Roseland, N.J. But she has to do two things provided in safe-harbor guidelines.

"To insulate yourself to exposure, you must show you are renting at fair market value and have a [lease] arrangement for at least a year in length," Manigan said.

Fair market value is key. Paying more or less than that in rent could be seen as a bribe for either giving or receiving referrals, Manigan said.

Stark anti-referral laws make it illegal for a doctor to refer Medicare or Medicaid patients to a facility for services such as laboratory or diagnostic tests, if the physician has a financial interest in that facility.

Manigan said physician office space ownership also raises other issues for practices. "You don't want to have partners who don't own if others do."

This is often neglected as younger physicians join a practice where the original partners own a share of their building.

Those without a stake in the real estate might question if the practice is paying a fat premium to those who do own a share of the facility.

"Unequal ownership creates an underlying resentment," Manigan said.

Make the real estate investment equal for all partners, he said, and make ownership contingent on being an active partner. Once physicians retire they should be required to sell for the market value of the investment, minus any debt owed.

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