Like a lot of health systems across the nation, Beaumont Health is looking to diversify its revenue stream. So the Southfield, Mich.-based health system is stepping out into commercial real estate.
Beaumont is building a 117,000- square-foot shopping center formerly occupied by the Northwood Shopping Center adjacent to its Royal Oak hospital campus. The $32.8 million Woodward Corners by Beaumont will be anchored by a Meijer grocery store and include a five-story hotel, urgent-care facility, dance studio, brewpub, café and several restaurants. It’s slated to open this year.
As admissions decline and visits get shorter, revenue related to hospital operations is shrinking. Health systems have to adapt and find alternatives, Beaumont Chief Operating Officer Carolyn Wilson said.
“Most are doing that with more outpatient facilities and free-standing diagnostic and surgery centers. We will also likely do more of that, but we anticipate that a retail element can factor into those centers as a larger component,” she said, adding that Beaumont will carefully wade into the retail space as it doesn’t want to venture too far outside of its main skill set and take money away from its core mission.
Schostak Bros. & Co. and A.F. Jonna Development are co-program managers for the project with Tower Construction overseeing construction.
Beaumont’s new venture represents a growing trend of health systems building out ancillary businesses as they try to adapt to a less profitable operating environment. Healthcare providers are building sports complexes, spinning off artificial intelligence-enabled apps, supporting medical marijuana dispensaries, investing in specialized food delivery services and financing housing projects.