Major retailers such as Starbucks have researched traffic and demographic characteristics to pick their sites, so Gilbert said if such franchises are nearby it gives MedStar some confidence in the location's viability. He calls it the “Starbucks seal of approval.”
MedStar now has 10 urgent-care centers that each see about 30 to 40 patients daily. Up to four more centers are expected to open in the next 12 months. Also, MedStar has developed a strategy of co-locating a primary-care office next to its new urgent-care center. The two facilities have separate doors and waiting rooms, but share facilities for staff break rooms, labs and imaging.
More healthcare organizations are following MedStar's example in establishing outpatient sites at converted retail spaces, said Curt Whelan, managing director at Chicago-based consultant Huron Healthcare. “It's a speed-to-market issue,” he said. Such renovations often take half as long as building from scratch and cost half as much, including site selection costs, zoning approvals and parking lot construction for a greenfield site.
In the 36th annual Modern Healthcare Construction and Design Survey, 29% of respondents said they worked on some type of renovation project that converted an existing structure into a healthcare facility in 2014. Of those working on conversions, 78% said they were transforming a retail property into a healthcare facility, up from 53% in 2013. (Survey findings will be published March 23.)
In Gaithersburg, Md., the best location MedStar could find was a former Fudd-ruckers sports bar. Gilbert said it was in the geographic area where MedStar wanted a presence and included ample parking, a location at the intersection of two main roads and highly visible signage. But it involved more work than converting a video store because the kitchen and bar had to be torn out.
MedStar began renovations in March 2013, and the urgent-care facility opened on July 31, 2013. Patients joke with staff that they used to visit the facility for burgers and beers.
At about 6,600 square feet, the site is substantially larger than MedStar's prototype of a 3,600-square-foot space. But it fit well with MedStar's emerging strategy of opening a primary-care office next to the urgent-care center. The two offices share staff if one or the other is busy. This happened during the most recent flu season, which brought an additional 500 patients a week to MedStar urgent-care centers.
About 30% of urgent-care visitors require a primary-care follow-up visit, while 10% to 15% need to see an orthopedic specialist. So the co-location model includes building space in the primary-care office for an orthopedic specialist to come in at least once a week.
“It's a super-smart move,” Whelan said of the co-location strategy. “You want to capture as much of the primary-care market as you possibly can.” It's also a good population-health strategy because it assigns patients to a primary-care doctor. That leads to better health management and influences where people go for elective procedures.
Gilbert said good real estate sites get snapped up quickly, so there isn't time for the health system board's usual months-long approval process. He has been given pre-approved funds to lease and build out sites and open a set number of centers a year.
Whelan said the strategy of converting retail sites can be a savvy one. “Typically, most retail is well-studied—it's all about traffic count,” he said. “And if the property has been vacant for a while, you'll have a motivated landlord.”