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Dying malls and medical clinics: A symbiotic relationship that works


February 1, 2018

As healthcare providers begin to adopt a patient-centric approach to the services they provide, and consumers demand a place where they can take advantage of those services in one location, an interesting new trend is beginning to take root in the country.

Healthcare systems are beginning to open up medical clinics -- and the ancillary services that go along with them -- in larger spaces such as failing malls and the parking lots of rural shopping centers. Most of us have a mental image of a small physician office in the middle of town that refers patients out to specialists and the local pharmacy, but those days are long gone.

And those who aren’t opening new buildings are just jumping into the healthcare business. If they already have a storefront, that’s even better. Take Rhode Island–based CVS Health, the country’s largest pharmacy chain, for example, which recently announced a planned $69 billion merger with Aetna, one of the largest national health insurers.

CVS has gone the route of “healthy” for some time now, giving up sales of cigarettes and introducing clinics in their stores that provide basic healthcare services such as flu shots. How long until they start placing doctor’s offices in their stores, too?

The deal with Aetna is known in business circles as a “vertical merger,” involving firms in different but related markets. Because these firms don’t directly compete, vertical mergers have been viewed as good for competition -- or at least benign -- on the theory that competition will force the newly merged company to pass most of the benefit of any increased efficiency on to consumers.

Pharmacies have long been buying up smaller drugstores, and healthcare systems have been buying up smaller hospitals. So why is the trend of combining medicine and “life services” such a big deal? Well, with today’s rushed schedules, patients have an increasing need to consolidate their healthcare access: They want to be able to run to the doctor for a checkup, go across the hallway for an x-ray, and then pick up a prescription from the pharmacy, all under one roof in the same trip. And what better place to fit these services than shopping malls that are having a hard time keeping retail tenants?

The Dana-Farber Cancer Institute in Boston, for example, has transformed half of a 290,000-square-foot mixed-use property at the former Atrium Mall, which is being remodeled into a medical hub in the Chestnut Hill neighborhood. It will serve as an extension of the main campus and provide exams, infusions, and supportive services to newly diagnosed adult cancer patients in a location featuring ample parking and connection to public transit. Patients will also have access to new mixed-use developments sprouting up nearby.

Convenience at a cost
Many of these facilities (and freestanding ERs) have begun springing up in rural areas of the United States where residents need to be able to find doctors and emergency care, but costs have restricted healthcare systems from building full-service hospital facilities.

But with convenience comes a cost -- and limited security. While the facilities have brought 24-hour emergency care to areas of the country where a hospital may be hours away, they’re also located in places that present security concerns, and security staff have been limited to skeleton crews and occasional check-ins by local police.

“Often they don’t have any security, because they are new and small and aren’t generating revenue yet,” says Richard D. Beougher II, CPP, CHPA, regional director of operations of healthcare security for HSS, Inc., based in Austin, Texas.

That’s where putting clinics in failing malls becomes a great idea. Many malls already have security forces that patrol regularly and keep an eye on things. Even the physical layout of a mall adds to the security of the facility. First, the building has a limited number of ways in and out, usually monitored by cameras. Next, most of the areas, usually designed in a wraparound fashion, provide the visibility and pedestrian traffic to help ward off people with sinister intentions.

It’s a solution that benefits providers, commercial real estate owners, and the community. Vanderbilt University Medical Center (VUMC) turned half of a struggling shopping center in Nashville into an outpatient hub in 2007, renovating the nearby One Hundred Oaks Mall and moving more than 20 of its clinics to the shopping center at a fraction of the cost required to build an entire new campus. As a result, many of the facility’s clinics, including dermatology, OB-GYN, preventive cardiology and imaging centers, a breast center, and a physical therapy office, are now occupying about 440,000 square feet of the nearly 900,000-square-foot mall center.

It’s a symbiotic relationship that appears to work. On the one hand, commercial real estate that sits dormant gets rented, while healthcare systems get to grow their businesses and give patients the convenient services under one roof that they demand.

VUMC designed the former retail space with patient access, usability, and new technology in mind -- and the mall environment helped make that a reality. Patients can walk down a central hallway with physician offices and work areas on either side. Before being paged for their appointments, they can grab a bite to eat at the mall’s food court. Patients register via paperless kiosks that speed up check-in times and allow them to review medical records, make copayments, and schedule appointments.

Patients who can travel to clinics easily, navigate them efficiently, and tackle other errands are ultimately happier, said C. Wright Pinson, MD, MBA, deputy CEO and chief health system officer of VUMC, in a report in Healthcare Facilities Management (HFM) magazine.

“As we moved into the notion that we need to go to the market and make our services more convenient, this was an important step. Now we have clinics in 130 different locations,” Pinson said.

Such clinics have begun looking at the patient experience in a similar fashion to how airports have evolved. Think about it -- when you go to the airport, everything from convenience stores to bars, family restaurants, and even service kiosks are there, serving a largely captive audience. Why can’t healthcare services cater to their audience in much the same way?

“Retrofitting an existing facility instead of putting shovels in the ground -- a lot of CFOs and CEOs of hospitals and health systems will say that is an appealing option,” Nirad Jain, a partner in Bain & Co.’s New York office, and one of the developers happy to help out with the effort, told HFM.

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