May 24, 2018
John B. Mugford

MOBs are the Key to Successful Ambulatory Networks

As the country’s health systems look to grow their ambulatory networks – which one well-known healthcare consulting firm says they must do in order to survive in today’s environment – the main property that can help them do so remains the tried-and-true medical office building (MOB).

This was one of the main points made during a keynote speech at BOMA International’s 2018 Medical Office Building + Healthcare Real Estate Conference in Houston, held May 9-11. The speaker was Ethan Brosowsky, senior director of educational services with Washington, D.C.-based The Advisory Board Co., which provides services, research, information and consultation to more than 4,400 hospitals and health systems nationwide.

Mr. Brosowsky and the Advisory Board are calling ambulatory networks “ambulatory constellations,” as they say health systems must have outpatient facilities that are “located, planned and designed in a way that maximizes inter-connectiveness.”

And while 92 percent of all health systems that responded to one of the organization’s surveys said they are planning new MOBs, ambulatory surgery centers (ASCs), or urgent care facilities in the next couple of years or so, Mr. Brosowsky said most of them “haven’t really been making the right investments to cultivate their ambulatory networks. Either they are investing in the wrong assets or can’t make the assets work together as a network.”

An “ambulatory constellation”, he said, needs to help health systems: improve patient access; enter new markets; protect existing market share; and encourage patients to use lower-cost sites of care.

As health systems look to build, grow or fine-tune their networks and achieve the goals listed above, there are five main property types for them to consider: MOBs, ASCs, urgent care centers, micro hospitals and freestanding emergency departments (FEDs).

Citing its research, the Advisory Board gave above average to good grades to ASCs, urgent care centers and micro hospitals. It gave lower marks to FEDs, even though some health systems are using them to successfully move into new markets and/or alleviate crowding at their main, on-campus emergency departments, Mr. Brosowsky said.

MOBs, Mr. Brosowsky pointed out, remain, and will continue to be, the most important outpatient facility type that providers plan to invest in.

He added that a new breed of the facility type, the 60,000 square foot to 140,000 square foot, multi-specialty MOB with a flexible design to accommodate new services and emerging technologies, is emerging and becoming an invaluable tool in helping health systems build their “ambulatory constellations.”

“We should absolutely expect more large, multi-disciplinary ambulatory pavilions in the future,” Mr. Brosowsky noted.

While construction of MOBs and other outpatient facilities has been dropping over the last three years, according to healthcare real estate research firm Revista, it is expected to rebound in 2018.

In recently released statistics from Revista, 314 outpatient projects with a total of 16.7 million square feet were started or completed during 2017, down from 466 projects with 21.9 million square feet in 2015.

“Outpatient construction starts have come off their highs set in 2015 but are expected to rebound in 2018,” said Revista Co-Founder and Principal Mike Hargrave, noting that such a projection is based on numbers supplied by developers and health systems.

As Mr. Brosowsky wrapped up his keynote address at BOMA, he told the real estate professionals in the crowd that they need to step up and help health systems achieve success with their “ambulatory constellations.”

“The bottom line is that these providers are going to make less money (in the future because of the Affordable Care Act) … and they need help in maximizing efficiency in how they use and network their facilities, since future investments are likely to be less profitable.”

And while most health systems realized they need outpatient facilities to help them achieve success, “most providers tend to view physical plants as more fixed than they really are,” he added. “They need (you) to help them make their facilities and portfolios evolve to meet the needs of their patients.”