COVER STORY, OCTOBER 2005

MEDICAL PROPERTIES
Patients' desire for convenience and the latest technologies are leading to a boom in healthcare construction across Texas.
Dawn Pick Benson

Medical property development is booming across Texas. The need to accommodate an aging baby boomer population and the demand for up-to-date technologies are driving forces behind this trend. The desire for improved patient experiences and the convenience of outpatient services are additional reasons for this expansion. To find out more about this growth in healthcare construction, Texas Real Estate Business recently spoke with companies working on several new medical projects in Texas.

Texas Heart Hospital of the Southwest
Plano, Texas

Texas Heart Hospital of the Southwest (THH) will be a $106 million, 180,000-square-foot specialty cardiovascular hospital located in Plano, Texas. The 68-bed, four-level facility is currently under construction and slated for completion in January 2007. It will provide a dedicated cardiac emergency department and heliport, as well as both outpatient and inpatient cardiovascular care.

Trammell Crow Company is developing Texas Heart Hospital of the Southwest, a $106 million, 180,000-square-foot specialty cardiovascular hospital in Plano, Texas.

“THH will truly be a state-of-the-art digital, ‘paper-lite' facility that is patient-centric throughout its design,” says John Castorina, principal in charge in RTKL's Dallas office.

The development's all-private patient room design uses a junior suite concept that creates a clinical zone for the patient bed area and a family zone in the room. The oversized rooms, which are approximately 360 square feet, allow for some separation and privacy for the patient and family members.

Technology will also play a crucial role in the development. Information technology, medical equipment and building systems are all integrated. Don DeBord, vice president in RTKL's healthcare sector, says the need for new technology is playing a significant role in current medical property development. “The trend toward digital technology is driving a demand for newer facilities that are more user-friendly and accessible,” says DeBord.

He says higher expectations for a quick turnaround as well as higher quality care also factor into the equation. ”Hospitals are looking for ways to guarantee quality, and technology helps them do that,” says DeBord. Because many older facilities are outdated, he says a new facility is often needed to take advantage of new technology.

Medical City and Medical City Children's
Dallas

Medical City in Dallas is in the midst of a $212 million campus-wide renovation project that includes two patient towers, two parking garages and extensive interior renovations. The project will consist of approximately 750,000 square feet of new construction and renovated space, according to John Hill, chief operating officer of Medical City and Medical City Children's.

Medical City in Dallas is in the midst of a 750,000-square-foot, $212 million campus-wide renovation project that includes two patient towers, two parking garages and extensive interior renovations.

The Medical City Children's tower will include an outpatient clinic, a newly renovated neonatal intensive care unit, a 20-bed pediatric intensive care unit and general pediatric medical surgical floors. This 60,000-square-foot tower is currently in the design phase and is expected to be complete in the fall of 2007.

“The focus of the overall project,” says Hill, “is to create a comfortable setting for our patients by converting the majority of the facility to private rooms.” During this conversion, he says they will also add amenities such as entertainment centers, free Internet access and refrigerators for patients' convenience.

As part of this masterplanned project, new technology has also been introduced to the campus. For example, Medical City invested $25 million in a new outpatient imaging center, Medical City Imaging. According to Hill, the center includes a new PET/CT scanner, cardiac MRI, and multi-slice CT scanner with the latest cardiac imaging capabilities. He says the entire campus was upgraded to digital imaging equipment complete with PACS, a new system that converts plain film images to digital pictures.

Rockwall Medical Center
Rockwall, Texas

Rockwall Medical Center (RMC) will be a 90,000-square-foot, two-story medical office and diagnostic center located on 6 acres of land in Rockwall, Texas. The project will feature a 10,000-square-foot advanced diagnostics center with the latest in medical technology. Once completed, RMC will be the largest office building in Rockwall. The new facility will be the first medical complex in the community, providing residents of east Texas with access to better medical care options closer to home. PM Realty Group is the developer of the facility and will also exclusively lease and manage the building.

PM Realty Group is developing Rockwall Medical Center, a 90,000-square-foot, two-story medical office and diagnostic center located on 6 acres of land in Rockwall, Texas.

Perkins says PM Realty Group's approach to the development of medical office buildings like RMC is to design with the specific needs of a physician's practice in mind. “PM Realty Group talked to physicians about RMC's design to ensure that the building truly meets the needs of the physicians and patients,” says Perkins. 

Rockwall Medical Center's architecture promotes an attractive “hill country” look with native stone and open and light interiors. “The company's objective is to provide an improved patient experience by making the patient feel comfortable with the surroundings rather than to feel intimated by being in a medical facility,” says Perkins.

Galveston National Laboratory
Galveston, Texas

The Galveston National Laboratory (GNL) will be a sophisticated biomedical research facility constructed largely with funds from the National Institutes of Health. At the facility, scientists will be able to safely study infectious agents that potentially might be used by bioterrorists, or that pose threats as naturally emerging diseases.

The GNL is being constructed on the previous site of the Gail Borden Building and located in the central core of the University of Texas Medical Branch (UTMB) Galveston campus. The 185,000-square-foot building will have six floors housing Biological Safety Level 2, 3 and 4 laboratories. According to Michael Shriner, chief of facilities operation and management at UTMB, approximately 85,000 square feet is assignable and 100,000 square feet is devoted to mechanical and support systems. UTMB is the developer of the project.

According to Shriner, demolition of the Gail Borden Building is complete and the foundation package has started. Site utility work has also commenced and is progressing. Final completion of the project is currently planned for June 2008 with occupancy and operations commencing in September 2008.

“This is the first complex of its type and magnitude undertaken in the United States on an academic campus,” says Shriner. It's the first National Biocontainment Laboratory to be built, although a second such facility is proposed for construction in Boston. Shriner says UTMB competed for the grant award against a dozen other nationally recognized medical centers. 

“Thanks to the existing positive relationship that UTMB has with the Galveston community,” says Shriner, “the community (residents, government and business entities) has supported UTMB's pursuit of the GNL and the associated research programs.”

Memorial Hermann Medical Plaza
Houston

Memorial Hermann Medical Plaza, the first such project to be built in Houston's Texas Medical Center (TMC) in 13 years, ushers in a new generation of professional healthcare space. Comprised of more than 500,000 rentable square feet and a 2,400-car parking garage, the facility will be the largest medical office building in the TMC. “Memorial Hermann Medical Plaza will climb 30 floors and is being developed in partnership with Mischer Healthcare Services,” says Marshall Heins, senior vice president of real estate, construction and support services for Memorial Hermann Healthcare System. The project broke ground in September 2004 and is scheduled to be complete in fall 2007. It represents a capital investment of $155 million.

Memorial Hermann Medical Plaza is the first such project to be built in Houston's Texas Medical Center in 13 years. It will include more than 500,000 rentable square feet and a 2,400-car parking garage.

Memorial Hermann Medical Plaza also offers a wealth of services, including an on-site Ambulatory Care Center with joint venture opportunities for doctors. It's equipped with eight surgical suites, four endoscopy suites and a full-modality imaging center. Upon opening, the Ambulatory Care Center will occupy 100,000 square feet on the two lowest levels above the garage. Plans for expansion will occur at a later date as needed, says Heins.

According to Heins, contributing factors to the current growth in healthcare construction in Texas include the fact that commercial and retail development is slow and medical real estate is complex and reliable. “Tenants are stable and long-term,” says Heins. “And baby boomers are fueling growth, along with new technologies.”

Current Trends

As medical property development continues, developers are seeing several notable industry trends. The most specific new trend in healthcare development, according to Perkins, is the desire by most physicians to have at least a small ownership position in their office facilities — or in the case of those modalities requiring surgical facilities, an ownership interest in off-campus day surgery centers.

Heins says that Memorial Hermann is paying more attention to patient-centric amenities that resemble the service and hospitality industry. “There's less of a ‘hospital' feel as well as an increased emphasis on electronic healthcare technology and more outpatient services,” he says.

Shriner sees a move to re-align the medical services to the population changes that are anticipated in the next 5 to 10 years. He says that specifically, the “baby boomers” will impact the type and quantity of medical services required. “There appears to be a general trend to take the healthcare services closer to the consumer where possible and to address the broader needs of patients once they arrive at a healthcare delivery site,” says Shriner. “This approach requires much more diligence regarding the financial plan and the identification of a critical mass of activity so that the new locations can be financially viable.”  

Hill continues to see a migration of healthcare services to the outpatient setting. He says that patients are looking for accessibility and convenience. As a result, hospitals, physicians and other healthcare entities are providing “free-standing” facilities that address this demand. This means more health-related development will occur where strong population growth is occurring. “From a hospital perspective,” says Hill, “with this trend of outpatient service providing treatment for less acute health problems, we anticipate that patients will be sicker when they visit the hospital.” He says this will require a greater emphasis on critical care-related services and the capacity and technology to care for those patients who come to Medical City and Medical City Children's.

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