The Challenges Facing New York Healthcare

Glenn Grube
Merged hospitals, increased outpatient focus and aging facilities — these are just some of the issues facing the New York metro-area healthcare industry, according to a recent panel held by Bisnow at the Roosevelt Hotel in Manhattan.

As director for our healthcare sector, I moderated the New York healthcare panel, speaking with representatives from some of the area's largest healthcare systems about their real estate and facilities strategies. The panelists represented New York-Presbyterian Hospital, Mount Sinai Health System and North Shore L.I.J. Health System; all multi-campus organizations with thousands of beds and facilities budgets in the hundreds of millions. Also participating was Scott Mason from Cushman and Wakefield,  who presented a larger national perspective on healthcare facilities planning.

What's interesting to me is the intensity of focus on the healthcare real estate sector here in New York. There’s a great deal of curiosity, and some fear, about the implications of the Affordable Care Act and its current and pending implementation. How are institutions reacting and how does it translate into their actual facilities-related strategy and decision-making?

There's a great deal of curiosity, and some fear, about the implications of the Affordable Care Act and its current and pending implementation.

Mergers, consolidations and acquisitions are key trends among hospital systems, particularly in the New York metro-area. Driven by competition for patients and the change to a fee-for-performance model, healthcare networks are realigning to create new facilities standards. This includes cost-effective ambulatory care centers combined with "destination" hospitals for patients whose insurance offers them more choice. All three of the healthcare systems on the panel are experiencing these changes. A fundamental challenge for them is maintaining growth despite an anticipated decrease in funding.

New York-Presbyterian's Senior Vice President for Facilities Development and Engineering, Sharon Greenberg, said the organization's current $3-billion master plan is about "new development, renovation, ongoing maintenance, infrastructure investments and most of all, balance between growth of our assets and protection from risk." The master plan, now in its third year, included the recent acquisition of New York Downtown Hospital.

Mount Sinai, which recently merged with Continuum Health Partners to become New York City's largest hospital system, is learning to manage its now 17 million square feet of facility space. "We are very pleased with the facilities we now have across the system", said Tom Ahn, Mount Sinai's vice president of Real Estate. "We’re finding there are some great synergies across our systems where we can take advantage of opportunities, coordinate some outpatient facilities and cooperative functions and get some cost savings, but we are going slowly and cautiously."

...whilst national issues facing healthcare tend to be the similar across the U.S., in New York they are exacerbated by a more difficult regulatory environment, limited real estate and older building stock.

L.I.J. recently acquired Manhattan's Lenox Hill Hospital, expanding its mainly Long Island-based operations. According to John Gupta, North Shore L.I.J.'s executive director for the Manhattan Eye, Ear, and Throat Hospital, acquiring Lenox Hill brought the new challenge of updating its infrastructure to be on par with the existing facilities portfolio. "The system has to ensure the best patient care, but we need to find the right strategic real estate assets and use them," he said.

Scott Mason pointed out that whilst national issues facing healthcare tend to be the similar across the U.S., in New York they are exacerbated by a more difficult regulatory environment, limited real estate and older building stock. "In many cases, the current inventory was assembled without a lot of rationale — it was opportunistic, and designed by and for the hospital systems of a different time," he said.

Scott also spoke of the current national trend of healthcare systems moving away from large inpatient centers and toward 'medical malls' — full service ambulatory care centers with open space, integrated registration, and shared waiting areas. "The inventory of assets is going to undergo a dramatic change, and that is a slow, difficult process," he said. "It demands to be viewed as a portfolio, and managed fairly aggressively to make those assets a lot more productive and lower in cost."

Large healthcare institutions face the added challenge of managing aging and outdated buildings and infrastructure in the face of decreasing capital budgets.

Following the discussion there was a common theme expressed by the panelists: within the highly competitive New York market, each institution must ensure the readiness of its facilities and campuses to accommodate the changing delivery of patient care with a combination of existing and new facilities. Large healthcare institutions face the added challenge of managing aging and outdated buildings and infrastructure in the face of decreasing capital budgets.

Our experience allows us to fully understand the complex and changing nature of healthcare. We offer a range of services that provide healthcare systems with the sensible, up-to-date knowledge required for strategic decision making, master planning, and cost effective delivery of projects. This constructive expertise in facility consulting and project management allows healthcare clients to focus on their mission to deliver the best in patient care.

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