Monday, June 23, 2008

Practicing in Retail Settings

“Why didn’t I think of that?”
We live in a world of innovation overdrive, overloaded by consumer choice and excruciating tough commercial realities, realities that include the rapid commoditization of markets, technology shifts, margin pressures, and relentless fragmentation of consumer and business markets.

Erich Joachhimsthaler, Hidden in Plain View, Harvard Business School Press, 2007

Sometimes the obvious is in plain sight. But we may overlook the obvious because of current or perceived problems. Doctors live in a world where medicine has become a business. There is no better evidence of this than the opening of 1500 retail clinics in commercial outlets.

One of the maxims of innovation is;”Look at the opportunity not the problem.” Every problem presents opportunities.

• In U.S. shopping centers, the current vacancy rate is 7.6%. Because of the sluggish economy, the CoStar Group, a real estate information provider, expects 28% of new real estate space to remain vacant.

• In the physician office space market, costs are going up, especially in medical office buildings, adding gloom to the present picture of increasing overhead and flat or decreasing revenues.

Now would be a good time for physicians to consider moving into strip malls. Spaces are empty. Rents are negotiable. Foot traffic is heavy. Remodeling costs are modest. Parking space is ample. Patients are looking for convenience.

An article in the June 16 AMA News “Revitalizing Dead Space” quotes Kenneth Watson, president of Kenneth Watson & Associates in Miami , a health care real estate brokerage, “ Retail draws a tremendous amount of trips each per year. And with a medical office in a retail center, one person can see a physician while the family dines or shops.”

With the cost of gas, consumers are looking for one stop shopping opportunities. This has not gone unnoticed by Walgreen, CVS, and Walmart, all of whom are opening retail clinics at a brisk clip.. By the end of 2008, 1500 of these clinics are expected to be in operation. These retail chains see the opportunity of combining shopping, health advice, and prescriptions. Walmart has added a new wrinkle – having local hospitals operate these clinics. Academic centers are also into the act. Vanderbilt University Medical Center has yet another approach. It has a project, Vanderbilt Health at One Hundred Oaks, where it will house 16 medical clinics and support services in a vacant retail space at ½ the cost it would have taken otherwise.

Opening medical facilities in retail setting is not new. Lucien Wilkins, MD, a Wilmington, N.C, a retired gastroenterologist turned real estate entrepreneur, has long been in the business of promoting and building big MACCs (multispecialty ambulatory care centers) in prime retail locations in North Carolina.

Aaron Kohl, a medical office broker in Scottdale, calls combining retail with medical “A genius concept” – big lots on major roads, and more parking and visibility and access than congested medical centers, which tend to be inner cities .

There’s another factor as well. The health care industry is the most vibrant part of the U.S. economy, and brokers are more than willing to negotiate a favorable rate in blighted retail malls. In an aging population with all the publicity surrounding health care, medical growth tends to be recession-proof.

One caveat. I’m not certain retail clinics, run by nurse-practitioners, are the wave of the future. To date, only 7% of patients have visited them, and 65% have concerns about staffs without doctors. But these clinics may have paved the way for medical offices located in similar settings. There’s a place for retail clinics offering vaccinations, treating colds and warts and rashes, routine preventive tests, physicians exams for camps, sports, and school, but there may be even large place for doctors offering comprehensive care in similar locations.


Weight Loss Warrior said...

yep that is what i say all the time

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kevinh76 said...

Thanks for this insightful blog. I am currently looking at my options as my lease has expired and my landlord wants to raise my rent. This has given me something new to think about.

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