Planning to renovate an outpatient renovation facility? Read this first.

November 6, 2017 Roger Herritz

Making the decision to renovate an existing outpatient facility is no easy feat, especially when you factor in the various costs associated with a project of that nature, such as hard and soft costs, design and service fees, furniture, fixtures and equipment, technology costs, etc. Not to mention the fact that location can significantly impact the cost of renovating an outpatient facility.

That is why we’ve introduced our first Outpatient Renovation Cost Guide, a tool that digs into the trends that are driving the need for outpatient facilities and provides a market-by-market comparison of the cost to renovate one.

In 1975, there were nearly 1.5 million hospital beds. Fast forward to 2014 and the bed count shrank to around 900,000 beds.  But outpatient visits during this time more than doubled.

Top trends affecting the healthcare and outpatient industry:

  1. Focus on finances. In anticipation of declining reimbursements, healthcare organizations are focused on improving their financial performance. Organizations are improving their bottom line in various ways. Examples of this are mergers and acquisitions that create scale and leverage risks, the monetization of existing assets and the renovation of existing facilities to extend their lifetime.
  2. Policy and potential impact. Healthcare policy continues to be debated and while potential changes are not known at this time, many organizations are orienting their operations to adapt to future possibilities.
  3. Continued focus on ambulatory care. The healthcare industry has been expanding its ambulatory network to provide healthcare to patients in a lower-cost facility setting. As a result, there’s been significant innovation and new construction in the outpatient, tele-medicine and at-home care fields.
  4. The rise of wellness communities. Commonly referred to as “healthcare villages,” these communities include a range of healthcare-related facilities which complement acute care services offered by a nearby hospital. These communities provide high quality services in a setting that ensures convenient access to specialty care and are primarily age-friendly with a socially vibrant urban design.

With the healthcare sector consistently evolving, industry professionals must find ways to combat the challenges that naturally come with change. As new technology that reduces the invasiveness and intensity of procedures emerges, care that was once inpatient will become outpatient care.

How are select regions responding?

Southwest: The region’s decline in inpatient volume is transforming the way healthcare is being delivered. Healthcare providers must ensure that patients are cared for more effectively without compromising quality.

Mid-Atlantic: In the Mid-Atlantic, uncertainty around healthcare laws and requirements for reimbursement is pushing healthcare facility operators to make conservative decisions regarding which requirements to follow for their outpatient facilities, driving up costs.

Northeast: Many of the funds planned for capital projects in the Northeast have been diverted to acquisitions and mergers to gain market share in other geographies. Inpatient hospital settings continue to be renovated but at a much slower pace.

To dig into the market-by-market breakdown, visit the link here.

JLL’s Outpatient Renovation Cost Guide is a powerful tool that was created to help healthcare organizations understand the full cost of renovating an outpatient facility across the United States, leveraging the granular data behind hundreds of JLL managed healthcare projects and budgets.

About the Author

Roger Herritz

Senior Vice President, National Healthcare Practice Lead. Roger is accountable for developing and executing client pursuit strategies that support the overall strategic plan, networking with potential and existing clients, and driving growth through direct client sales. Roger has 30 years of A/E/C experience, with the last 17 years focused on healthcare real estate. Most recently, he was National Director – Healthcare Business Planning for AEI, in which he was responsible for leading their healthcare business planning while developing relationships with clients and strategic partners.

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