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You Won't Recognize the New Doctor's Office

New York Healthcare

Hospitals will shrink and outpatient centers are proliferating, including medical malls. That means fewer bland corridors of individual doctor's offices and more central waiting rooms—all in all a more collegial atmosphere. (But what will stand-up comedians talk about now?)

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450 joined Bisnow at The Roosevelt Hotel on Wednesday, where Health Care REIT’s Mike Noto (whose company owns 1.5M SF in the tri-state and has 220k in development) said the changes aren't due to the Affordable Care Act. Healthcare system CEOs talk in terms of market share nowadays, he says, adding that the industry is “no longer a gentleman’s game.” That means putting clinics in the backyards of competitors—some outpatient centers are as big as 400k SF.

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Simone Healthcare Development president Guy Leibler, whom we snapped with North Shore-LIJ’s John Gupta and whose firm is building a 300k SF bedless hospital for Montefiore, says healthcare has become more of a retail industry than an institutional game. Back in the day, he went to a single physician whose practice was in an apartment building lobby. Now, his daughter goes to Westchester Medical Group, which has 270 docs. That began 20 years ago when healthcare premiums began their 8% to 15% rise. The best money-making proposition for hospitals, he says, is surgery, leaving the medicine to outpatient centers.

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Array Architects' Kent Doss (with William Macklowe Co’s Billy Macklowe and Mike) and Cauldwell Wingate’s Joe Weiner (who joined from North Shore-LIJ this month) say they’re checking construction costs by anticipating the new patient-centric design factors and involving subcontractors early in the process. It all adds up to closer-to-final designs before construction begins.

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Joe (right, with our moderator, Rick Krainin, who heads Arent Fox’s non-profit group) is also looking at pre-purchasing equipment and modular building. (Humans can get pre-built body parts installed. Why not MOBs?)

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Who knew such official business got done at Bisnow events? We snapped Billy signing the contract for Paul Wexler (left, head of Corcoran’s Wexler healthcare properties team) to be exclusive leasing agent at 156 William, which Billy recently acquired. Paul tells us it'll rent for a slight premium to Downtown office, considering renovations will make it state of the art and catered to medical tenants. Billy says the medical bent will help the building stand out from Class-B office Downtown, which has become a commodity with redone lobbies, elevators, and HVAC. Kent’s firm is the healthcare-specialist architect working on the project.

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Mt. Sinai’s Tom Ahn (right, with C&W healthcare leader Scott Mason, who joined us from his DC home base) says his company will monetize some assets now that its merger with Continuum Health Partners is done, but Mt. Sinai needs to get to know its now 17M SF, 3,600-bed, and 50 outpatient-center portfolio before engaging in master planning—even as he says the system is looking at expansion into NJ and Conn. (After all, The Brady Bunch didn't all become friends as soon as the families merged. It took a few episodes.) Renovating some old facilities to hospital system standards, though, simply is not worth it.

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NY-Presby (in the third year of a $3B, eight-year master plan) is busy balancing risk and growth, says the system’s Sharon Greenburger (with our moderator, Faithful+Gould’s Glenn Grube). The hospital system spans six campuses (including last year’s takeover of New York Downtown Hospital, which motivated Billy's 156 William buy), and the buildings average 70 years old. A new building is a unique, luxurious opportunity to create a hospitality-focused format that considers how patients move through the process, she says, but there’s always motivation to extend any existing building’s functionality. And in master-planning, she also knows she has to think ahead on replacing buildings when necessary.

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John says North Shore-LIJ, which recently entered Manhattan via its acquisition of Lenox Hill Hospital, is bringing NYC inventory up to par with its Long Island facilities, teaming with Columbia University to study the formats of its properties. Scott says more than half of today's MOB inventory wouldn’t be chosen if designed today. Thus, he expects MOB inventory to change dramatically, especially as hospital administrators can no longer ignore what a significant part of their costs come from real estate. Saving 5% to 10% on a portfolio of millions of SF makes a difference, he says.