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Page 12 — Health Care & Senior Housing Quarterly — October 2021 www.crej.com HEALTH CARE — MARKET UPDATE create a better strategy for supply chain space and supply chain con- solidation. Health care facilities can improve supply chain strategies by prioritizing local sourcing, identify- ing critical supplies and demand planning. Several changes in the develop- ment model are a result of the lessons learned over the past 18 months. With these changes also come increased opportunity for new facilities and investment activities. n New opportunities in develop- ment. The growth in outpatient care facilities will continue. This is mostly driven by hospital-sponsored clinical services, and COVID-19 has escalated this need. Hospitals need to expand into new markets or pro- vide new models of clinical care for their employed physicians’ clinical partners. Additionally, more people are moving to new cities as a result of remote work and hybrid models. People want a lower cost of living, greater outdoor space and room for a home office. States like Arizona, Col- orado, Idaho, North and South Caro- lina, Florida and Texas are all seeing an influx of people. Many health care systems are following this growth and building these outpatient facili- ties in locations where people are migrating. Similarly, there has been growth in hospital-partnered free-standing emergency departments and/or urgent care facilities, many with complementary physician space. These free-standing facilities often are more conveniently located and offer shorter wait times than a hos- pital-based emergency department or even scheduling a primary care visit. These facilities provide another option for care when patients are looking for greater flexibility and convenience and in a less costly set- ting. It is no secret that the events of 2020 caused significant stressors in the lives of people around the world, contributing to a greater need for dedicated behavioral health facilities. Hospital providers and clinical oper- ators are collaborating much more effectively to bring new facility solu- tions to this glaring health care need. These dedicated behavioral health facilities can provide greater flex- ibility in treatments and hopefully remove barriers to access, but these facilities will rely on an enhanced reimbursement model for the pro- viders and their clinical partners. Growth in outpatient facilities, hospital-partnered free-standing emergency departments and dedi- cated behavioral health facilities are important opportunities to allow greater access and flexibility for patients in the post-COVID-19 world. n Challenges in development under- writing. Supply chain issues have impacted the health care industry as much as any other industry, and this continues to be a challenge in new development projects. The pandemic has caused significant construction cost escalations, and it is more chal- lenging than ever to hold to con- struction pricing. The price for steel, fixtures and furnishings present pricing challenges to projects, and labor constraints in the construction industry make it harder to stick to a set timeline. When it comes to financing new projects, hospitals that want to occupy most of a new development typically are not seeking developer financing. Instead these hospitals are opting to fund projects themselves or use a less expensive third-party form of financing, like a nonprofit foundation structure. This form of financing can allow for faster tim- ing to market and much lower costs than with a third-party (for-profit) developer. At the start of the pandemic, it was predicted that health systems might look to monetize assets given their pandemic cash burn, but this has not been the case. Most hos- pitals are not selling any buildings or portfolios. Traditional debt rates remain at an all-time lows, and many hospitals struggle to justify a premium for third-party capital, resulting in more hospitals self- financing their own ambulatory projects and retaining direct project ownership. As the world continues to change and adjust because of the pandemic, the health care industry has a vari- ety of opportunities for development and investment due to the lessons learned from the past 18 months. There is a positive outlook for great- er flexibility and access in health care facilities. s jmarshall@hallrenderas.com Continued from Page 1 ture firsthand. A challenge the design team was sensitive to during design was bring- ing together a patient community with so many unique backgrounds, speaking different languages and dialects. How do you provide clear wayfinding to help navigate through- out such a large facility? We settled on numbers as a universal language comfortable across many cultures. Large-scale graphic numbers are implemented throughout the space, paired with colorful artwork and themed signage, all by Noyes Art Designs. Numbers are featured on reg- istration desks and adjacent to bright colors throughout the public hallways to help patients find the different clin- ics. After years of planning, design and construction, the Denver Health Out- patient Medical Center opened to the public in the spring. Unveiling a new medical building during the COVID- 19 pandemic necessitated some modification to the spaces, including the addition of plexiglass dividers at check-in and registration desks. Right after opening, the community benefited from a temporary vaccine clinic that was set up in the physical therapy gym. Today this centralized patient care facility provides access to primary care under the same roof as a pharmacy that is open seven days per week. Routine medical screenings, lab tests, X-ray, eye exams and den- tal care are all as close as an eleva- tor ride. Together with a large skilled design and construction team, we were grateful to be a part of this new state-of-the art building. s sparsons@gallunsnow.com bchrisman@gallunsnow.com Parsons Continued from Page 11