Why Site Location Matters for Healthcare Outpatient Buildings

Steve Christoff looking at a wall with images and renderings of NexCore projects

Healthcare planners have grown weary of hearing “location, location, location” when it comes to site selection for medical outpatient buildings. They know about the ‘retailization’ of healthcare, and that ambulatory healthcare patients are looking for convenience and good access.  

However, when confronted by the problems of finding high-quality, affordable sites that are capable of receiving timely municipal approvals, these planners frequently accept compromised sites.

NexCore is an expert in site location search and acquisition. We have been involved in site location projects for 40+ years, having performed selections and/or given second opinions for health systems such as Johns Hopkins, Sutter Health, MedStar, CommonSpirit Health, and HCA. Given our experience, here’s how we think about medical outpatient building site selection.

Patients desire convenient outpatient care

Cost and quality of service typically rank as the top determinants of patient provider choice. That said, word of mouth often defines quality of care, and costs are often unknown until after a visit. This places more immediate importance on location. 

Patient surveys support the idea that site location is paramount to success. In fact, a JLL study shows that patients ranked location as second only to cost as the most influential factor in choosing a healthcare provider. 

A patient’s preference for a given location may be related to whether the site is deemed to be convenient, which is often measured by answering the question, “Is the site on the way to or from locations that are a part of the patient’s typical pattern of movement?”

Specifically, per the survey, more than 50% of respondents visited multiple locations as part of their trip for healthcare, including pharmacies, grocery stores, or restaurants. This data indicates that selecting sites close to retail hubs is ideal.

Patients are likely to be making other stops when they travel for healthcare.

Methodology to identify the best healthcare site

Retailers determine what consumers want through frequent analysis of their purchases and where the consumers are coming from to access their stores. This technology has affected healthcare providers, who are looking at how retailers select sites. As such, we begin our site selection process by defining the service area in an identical methodology to big box retailers, using cell phone data and observing the consumer patterns of retailers with multiple sites. Then we identify the optimal site vicinity in the targeted service area and go to work looking at specific sites.

7 criteria to guide the site selection process for health systems 

1. Access

  • Can patients safely and easily drive on highly trafficked roads to the site?
  • Can a healthcare provider describe wayfinding to the site in a few words?
  • Can patients enter and leave the site with the benefit of a traffic light, and without backtracking?

2. Convenience

  • Is the site on the way to or from locations that are a part of the patient’s typical pattern of movement?
  • Is the site positioned to facilitate multi-purpose trips, i.e., going to the grocery store and to the healthcare facility?

3. Visibility

  • Is the traffic count in front of the site of sufficient quantity and speed to be considered adequate for most retail criteria?
  • Is the location obscured by topography or other buildings, or in a development where it blends in with other users so as to be difficult to see?

4. Cost

  • Will the cost of the land fit into a market-based cost of occupancy?
  • Will the cost of the off-site and on-site improvements fit into a market-based cost of occupancy?

5. Entitlements

  • Will the time period to receive full planning and building department approval for the site fit into the project schedule and strategy?
  • Will the cost of the development and permitting fees fit into a market-based cost of occupancy?

6. Configuration

  • Will the shape and quantity of the site accommodate the initial and subsequent program for the project?
  • Will existing conditions (including utility easements, wetlands, conservation requirements, soil issues, and topography) accommodate the initial and subsequent program for the project?

7. Competition

  • How does the site compare to the competitor’s site today?
  • How does the site compare to a future competitor’s opportunities?

Where healthcare planners can turn to select an optimal site

NexCore Group can enhance a health system’s real estate team and broker relationships when conducting a site search by doing the following:

  • We study a site, taking into consideration the costs associated with entitlements, site improvements, the ability to fit the designed program onto the site, and the relationship of site cost to cost of occupancy by understanding market lease rates.
  • We are in the business of real estate. The buying of land is a core competency, one that we do every day. We frequently appear to the sellers as an unknown buyer, and we don’t pay a premium associated with a brand name hospital or physician group.
  • We assess how the site fits within the current and future ambulatory network plan of the provider. Does the site sit in the path of growth, does it pull the demographics the healthcare provider is seeking, does it complement the other clinics in the network, will it allow the provider to increase their market share?
  • We understand the entitlement process is essential for speed to market. We have been involved in a wide variety of entitlement processes with states, counties, towns, and municipalities, which included zoning variances, special use permits, consolidation/subdivision of parcels, cross access easement agreements, land swaps, and a thorough understanding of parking regulations for medical uses. This comprehension of the complexity of the entitlement process can significantly reduce delays in a project and increase the speed to market for a healthcare provider.

Putting it all together: site location is critical

Site location is an important piece to a successful healthcare project. Selecting the best resource to lead the site selection process will increase success. We’d welcome the opportunity to partner with you to choose a site that will move your healthcare network forward.

Written by: Tim Oliver, Director, Strategic Planning & Development and Jeremy Allen, VP, Investment Research