Business Advisor: Beyond the ‘Box of Doctors’ Model

Valley Surgery Center offers patients wide-ranging care under one roof.

Building a $50 million new construction project without a major health system as a partner is no easy trick, but that’s just what two western Wisconsin practices did.

Grand opening

The 150,000-square-foot Hudson Medical Center opened last month. Valley Surgery Center, which will occupy 23,000 square feet on the building’s third floor, opens later this year.

The medical center is the brainchild of Hudson Physicians, a large primary medical and surgical group practice with about 120,000 patients. Associated Eye Care, a comprehensive medical and surgical eye care practice, was brought in as a development partner in the facility, as well as an initial partner and co-owner of the planned ASC.

When the December ribbon-cutting ceremony was held, all the office space was leased to capacity. Here’s how they did it:

• The vision came first. The two main partners knew they were in a good situation. While there are critical-access hospitals in the area doing good work that are now competitors, many of the residents in this area of western Wisconsin feel as though they live in a de facto suburb of Minneapolis and St. Paul in Minnesota. While there are a lot of benefits about the proximity to the Twin Cities, there’s also a desire to avoid crossing the St. Croix River for care, says Rita J. Keating, RN, BSN, MA HIIM, CASC, director of surgery operations at Associated Eye Care.

The two practices knew there was a desire for a wide-ranging care destination that had the ability to provide same-day surgical services.

• The building fits the strategy. The vision for Hudson Medical Center was to provide area patients with an integrative ambulatory experience. The medical center includes the ASC, an extended urgent care center, a full array of imaging services, physical therapy and sports medicine programs. The staff includes a concierge for the entire building.

“The ASC was an outgrowth of a larger strategy of bringing physicians-only practices under one roof and creating an integrated care environment for patients,” says Daniel K. Zismer, PhD., CEO of Associated Eye Care and president of the new surgery center. “New medical facilities are best designed to wrap around a strategy rather than shoehorning a strategy into an existing building or a new one that wasn’t designed with the strategy in mind.”

• More than a ‘Box of Docs.’ A traditional medical office building generally has a grid pattern of long hallways with walkways going into physicians’ offices on the left and right. There may or may not be a sign outside, other than one to advertise that there is space available to lease. The physician tenants may not share patients, let alone talk and communicate with each other.

“This building is designed to have much more of a feel that it’s an integrative group of physicians working for patients,” says Dr. Zismer. “This isn’t the ‘box-of-doctors’ design.”

The signage includes callouts for Hudson Medical Center and Valley Surgery Center, as well as signs for the individual practices in the building, many of whom have common patients and clinical affinities for each other.

• Branding is everything. The project began when Hudson Physicians had physically outgrown its location at the campus on one of the nearby critical access hospitals. So the practice decided to create the multispecialty facility with no affiliations to health systems. While the doctors who leased space at the new center will continue their clinical affiliations with local hospitals, the project’s physicians-only concept appealed to them. Hudson Physicians and Associated Eye Care will retain their own brands while also operating under new separate umbrella brands of the new medical center and ASC, which was designed to provide 23-hour lengths of stay that will be offered upon receiving regulatory approval.

It’s a different world of design, function, performance and financing.
Daniel K. Zismer, PhD.

The draw: The integrative ambulatory experience contains multiple specialties under one roof, which includes the ability to provide complex ambulatory surgeries. There is also room on the property for growth to build one or two additional buildings for additional specialties such as pediatric care.

“The larger brand will be promoted to the existing patient groups of the medical center practices’ members, and there will be a pretty aggressive marketing strategy on social media to attract additional patients,” says Dr. Zismer.

• Hire project specialists. Practices considering large ventures like this must have good relationships with banks because they’re going to assume large amounts of debt for projects this size. They’ll also need to hire consultants who are experienced with acquiring medical real estate and developing large medical facilities that involve a complex set of surgical services.

“Projects of this size are an entirely different ballgame than building a 15,000-square-foot freestanding ASC,” notes Dr. Zismer. “It’s a different world of design, function, performance and financing.”

The ASC itself will have four ORs, three procedure rooms and two recovery rooms for the 23-hour stays. Project officials estimate a total of 10,000 surgeries from multiple service lines will take place there each year — and a robotics platform will come online later this year. Dr. Zismer and Ms. Keating are proud that the building is full.

“Being fully leased the day you cut the ribbon isn’t easy, particularly without the help of the balance sheet of a large health system,” says Dr. Zismer. “It’s a large, well-capitalized, expensive aggregation of physicians on a new medical campus with future growth possibilities built in.”

Dr. Zismer’s final suggestion for those considering embarking on such a venture: “While an appetite for financial risk is required, much of the risk is mitigated by partnering with the right number of the right physicians with sufficient market share and a common vision.” OSM