“ReMed” has Arrived
By Jim Henry, AIA, EDAC | November/December 2022 Issue of MCD Magazine
In the November/December 2022 issue of MCD Magazine, author Jim Henry discusses “ReMed” facilities (blending of medical and retail) and why this growing outpatient market is so popular, and what’s to come. Let’s start with some facts & figures from the 2022 JLL Outpatient Fit Out Guide, 2022 JLL Patient Consumer Survey and statista.com:
- 12.6% – Percentage outpatient volume is expected to increase between 2020 and 2030
- 2.9% – Percentage inpatient volume will decline between 2020-2030
- $355 – Over the past five years, the national average per-square-foot cost to renovate an outpatient facility has increased from $266 to $355
- 1/3 – More than one-third of patient’s positive feelings during an outpatient visit can be attributed to a modern/updated environment
- 1.5B – Rough number of U.S. outpatient visits that took place in physician offices in 2020
As retail and brick-and-mortar stores shutter their doors, healthcare providers are increasingly choosing these locations for their offices and clinics. Primary and specialty care like oncology are among the medical specialties finding success in former retail spaces (ReMed).
Large urban and suburban health systems need what shopping centers have plenty of… space and parking. With many healthcare providers looking to integrate health into their patient’s life choices, retail spaces offer centralized and convenient healthcare locations for consumers.
Healthcare providers are embracing creative ways to broaden their network and provide service for communities. In addition, new providers with more of a direct-to-consumer model of care are pursuing nonclinical settings, opening facilities in storefronts on city streets, moving into shopping centers in suburban and rural areas, and sometimes occupying the large shells vacated by big-box and department stores.
With the growth of e-commerce, malls and large anchor stores began to see a decline in the early 2010s – ultimately leading to significant closings and vacancies. Repurposing these spaces as medical facilities increase foot traffic in areas that were previously abandoned.
According to CoStar Group data, in 2022, about 20% of leased medical space is in retail buildings, up from about 16% in 2010. While it only is a 4% increase, experts expect this number to stay at 20% and possibly increase in the coming years.
The following are key benefits and opportunities with these “ReMed” facilities:
Branding from the beginning
Not only is the move to retail spaces about convenient access, but there are also lessons learned from retail brands and practical reasons for the shift. In the same way that retail brands use a choreographed approach to entice shoppers to enter the store, healthcare providers can also leverage their brand in the same way.
By creating a welcoming environment, patients enter and are received the same way as in a retail or hospitality setting. In retail, experts say the branded elements that align loyalty and experience with a brand connecting between a place and experience is known as place attachment, helping create an unbreakable bond. The design approach includes the choreography of the eye, the feet, and the hand, “What do I see,” “what is my approach, and what do I feel?” These questions allow the focus to be on the details and opportunities to enhance the overall experience and help shift away from the more clinical feel.
On the practical side, the open floor plan allows for variations in clinical layouts, making the retail space ideal for various specialties. Often these spaces are column free with high ceilings and are good for surgery and imaging centers that require taller floor-to-floor space. Retail spaces also have a distinct “back door” that allows goods and services to be back-of-house. This model aligns with the desired on-stage-off-stage separation of healthcare.
Alignment of synergies
When searching for available retail space, healthcare providers should be looking to partner with like-minded retail brands. With the potential for creative, cooperative solutions looking, the idea of being near similar businesses creates a natural halo effect, increasing exposure to customers and creating a one-stop-shop experience.
This is especially true for medical groups leaving properties located on hospital campuses; “ReMed” becomes a new avenue for patient acquisition and brand representation in metropolitan areas. To further this concept, consumer data and market research aligning with patient demographics and healthcare providers’ growth strategy would lead to a better alignment of these synergies.
With all of the positives, there are some challenges with renovating retail to medical. High ceilings also mean a strategy for taking walls to deck and creating appropriate soundproofing between spaces for patient privacy. If the space is licensed through CMS then the space needs to be fully sprinklered and follow the NFPA and other building codes, which will most likely require upgrades to several of the systems.
Most retail spaces also lack the required restrooms and there is usually more plumbing required, which means trenching slabs or working in crawl spaces. In addition, there may need to be structural and MEP system upgrades depending on the services provided.
Retail brands have been in transformation for years as they look to blend a new online experience with brick-and-mortar stores. As healthcare makes a similar transition and combines a hybrid model for the patient continuum of care, health providers can also earn lessons about the new digital front door and end-to-end experience across multiple channels and blended patient experiences.
The merger of medical and retail is primarily about understanding patients and their needs by creating a frictionless experience. Regardless of the strategy, the blending of medical and retail is creating a new market that leverages the best of both, focusing on customer experience and achieving successful business results.
Jim Henry, AIA, EDAC; is a principal, well-being initiative leader, and healthcare sector leader of CRTKL.
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