Hospitals Buying Real Estate, Revamping Clinical Space For Innovation Hubs

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In February, Pittsburgh-based Allegheny Health Network held a ribbon-cutting in Bellevue, Pennsylvania, to unveil a home for one of its newest ventures—AlphaLab Health, which the system hopes will spur innovation and improvements to community health.

The 10,000-square-foot innovation hub, a partnership with Pittsburgh-based startup incubator Innovation Works, is housed in a former hospital owned by AHN. It will serve as the home base for startups participating in AlphaLab Health, AHN’s healthcare and life sciences startup accelerator launched in fall 2020.

“It’s a demonstration of what you can do to repurpose these assets that are aged but have great bones,” said Dr. Jeff Cohen, AHN’s chief physician executive for community health and innovation.

The space gives AlphaLab Health startups access to wet and dry labs to develop products, as well as office space and areas to collaborate and meet with other startups. The startups also receive early-stage funding and opportunities to connect with clinicians and test products at AHN.

The project has involved more than two years and $5 million, including renovations and investments in startups and programing—of which AHN and its parent Highmark Health contributed $2 million.

“Accelerators and other innovation centers became more popular during the COVID-19 pandemic,” said Pam Arlotto, president and CEO of healthcare consultancy Maestro Strategies.

While hospitals have been setting up innovation programs for years, the efforts took on a new focus as the healthcare industry eyed consumerism and pushed to create new care models that engage patients at home and outside of the hospital. They’re expensive projects, usually involving investments in real estate and hiring staff to run the programs.

“Hospitals starting innovation centers have done everything from revamping old clinical or administrative space to building new facilities to house innovation programs,” said Rob Lowe, CEO of Wellspring, a software company that sells products for innovation and research and development programs. “It depends what type of work the hospital needs to do or the form of the incubator itself. Some hospitals create accelerators to identify startups worth partnering with or venture capital arms that invest. Some, like AHN’s, are partially funded through local government as part of economic development efforts. Almost in all cases of these hospitals that we work with around the U.S., we see dedicated space.”

A Hospital Makeover

The vision for AlphaLab Health started in 2019. Cohen, then president of the system’s Allegheny General Hospital, wanted to embark on a community health project. He requested that the health system let him start an accelerator at a nearby facility that Allegheny General was responsible for—a 240,000-square-foot facility about 6 miles away in Bellevue, which closed its inpatient units and emergency department in 2010.

The hospital, formerly AGH Suburban, had transitioned into a nursing facility, but that closed in 2019. AHN continues to operate an urgent care center and outpatient clinics at the facility. It required significant renovations to become AlphaLab Health.

The facility’s intensive-care units were transformed into lab space, patient rooms turned into office space, and waiting rooms became conference space. Startups aren’t charged rent while participating in the accelerator but can choose to continue to rent office space from AlphaLab Health after the six-month program comes to an end.

Cohen is curious whether this model, should it prove successful, could be used in other regions. He said many hospital closures have left vacant facilities in poor areas. In rural areas alone, more than 181 hospitals have closed nationwide since 2005, according to the North Carolina Rural Health Research Program.

But initiatives like AlphaLab Health could help turn around that blight by creating jobs in underserved areas, lifting community health and improving medical care with new innovations. Jobs could serve to decrease the cost of care, since research has suggested employment is a social determinant of health.

To renovate the former hospital, AlphaLab Health raised funds from government, philanthropy and AHN’s parent company Highmark Health. The funding included a grant from the Pennsylvania Department of Community and Economic Development, which will reimburse $500,000 in construction costs from its Redevelopment Assistance Capital Program. More than 181 hospitalshave closed since 2005 in rural areas alone, according to the North Carolina Rural Health Research Program.

Each startup also receives up to $100,000 in funding—half of which is provided by AHN, and the other half from Innovation Works. AlphaLab Health retains 2% equity. AlphaLab Health accepted its first class of seven startups in 2020, six startups in 2021 and received more than 100 applicants each year.

AlphaLab Health is tracking a few metrics to gauge success, including follow-on funding that startups receive after the accelerator. Already, five of the first 13 startups have raised an estimated $10 million in additional funding, Cohen said. Six companies have started tests of their products and five have hired at least one new local full-time employee.

“We’ve been very early, but so far we’re very pleased with the direction of where this is going,” Cohen said.

Spinning Off Innovation

Milwaukee-based Froedtert and the Medical College of Wisconsin launched Inception Health, a program that develops innovations and evaluates digital tools in the market, seven years ago. It’s a separate company owned by Froedtert and MCW, housed in a 10,000-square-foot office space in the health system’s North Hills Health Center.

“The office was previously used for outpatient ambulatory services but was revamped to be a classic innovation space,” said Cathy Jacobson, Froedtert’s president and CEO. “The team needed dedicated meeting areas, since it’s often bringing in external partners and vendors. It couldn’t just be a conference room buried within a hospital. Inception Health was set up as a limited-liability corporation owned and funded by Froedtert so that innovative ideas wouldn’t have to compete for resources with the traditional health system.”

Inception Health’s projects must align with challenges and goals outlined in Froedtert’s strategic plan, such as patient access, consumer experience and population health. The company’s board is made up of C-suite executives from Froedtert and chaired by Jacobson. Inception Health’s annual budget has increased over the years, from roughly $2.5 million in 2015 to $10 million.

“The board evaluates return on investment across the portfolio rather than for individual projects, according to Jacobson. “That factors in care quality and consumer access improvements. We want the ability to experiment and fail.”

Inception Health doesn’t sell services to other health systems. It does have one hospital that pays to be a partner, which means it’s able to deploy tools that Inception Health has developed and assessed. Inception Health is working to onboard another hospital partner.

“Froedtert is still fine-tuning how to design innovations with full-scale deployment in mind, beyond the initial pilot or experiment,” Jacobson said.

While Inception Health’s charter is to develop innovations, it doesn’t implement them. That’s handled by Froedtert’s operations team. Once an innovation is developed, Froedtert’s team will work with Inception Health to pilot the new product or process at the health system. But Jacobson said leadership has realized they need to build up that implementation capacity and dedicate more staff to scaling an innovation across the health system after a successful pilot, similar to how IT workers home in on EHR work during a go-live or upgrade.

“You always staff an EHR implementation,” Jacobson said. “We weren’t doing it with the same rigor with Inception.”

Creating a business plan with next steps for after product development and piloting technology is critical for a successful innovation center, said Ash Shehata, national sector leader for healthcare and life sciences at consulting firm KPMG. That could include how to scale it across the health system for an internal return on investment, as well as considering whether to commercialize the intellectual property and sell to peers.

“Without that business plan, it’s easy to get stuck in a prototype phase,” Jacobson said.

A Pandemic Shift

Cedars-Sinai in Los Angeles has run a startup accelerator since 2016 to connect with early-stage companies.

“The Cedars-Sinai Accelerator provides an entry point for the health system’s work with startups,” said Jim Laur, vice president of technology transfer and business affairs at the system.

It’s a three-month program in which startups work with hospital staffers who have identified problems to develop possible pilots. Cedars-Sinai has hosted seven accelerator cohorts with about eight to 10 startups in each.

“Usually, each class has at least two or three startups that end up launching a pilot and subsequently providing services to the health system,” Laur said.

The accelerator is hosted in the Cedars-Sinai Innovation Space, a two-story, 10,000-square-foot building across the street from Cedars-Sinai Medical Center. Being across the street was important for the accelerator, making it easy for startup founders to walk to the hospital to talk with staff and see workflows in action.

“We thought it would be good to have a space that’s on its own for a specific purpose … while still being just across the street,”  Laur said. “People can still connect really easily.”

It’s a repurposed building that was originally a retail space, which meant Cedars-Sinai had to do some minimal renovations, like taking out the store counters and putting in conference rooms.

“The goal for the Cedars-Sinai Accelerator is to bring solutions to clinicians and business leaders at the hospital,” Laur said. “It’s not expected to drive a financial return for the health system.”

Laur’s team has found ways to measure the accelerator’s performance and whether it’s succeeding in identifying high-impact startups. The team tracks the number of employees that a startup has before and after the program, to see whether the company has grown. They also track funding the company raises after the program.

Cedars-Sinai took a break from using the innovation space during the COVID-19 pandemic, when the accelerator shifted to a virtual model. During that time, the building was used to create supplies like hand sanitizer and face shields during shortages.

Moving forward, the accelerator plans to take some lessons from the pandemic. Leaders are looking to maintain a virtual option for startups that may not be able to relocate, only bringing them to Los Angeles for a portion of the program focused on things that are hard to replicate remotely, like walking through the hospital floors. It will continue to offer educational sessions virtually, which leaders hope will create opportunities for entrepreneurs with families or other responsibilities that make it challenging to move for three months.

“We’re able to now accommodate a broader range of individual circumstances,” Laur said. “It’s really been an exciting refresh for the program.”

The pandemic’s push toward more remote and hybrid work could lead to more innovation centers, KPMG’s Shehata suggested. As organizations downsize office space where back-office employees used to work, that space will need a new purpose.

“Health systems need to reconsider what they want to do with it,” Laur said. “They could offload it to reap the savings or transform it into something new.”

Building From The Ground Up

Peoria, Illinois-based OSF HealthCare has operated a 168,000-square-foot innovation center, dubbed the Jump Trading Simulation and Education Center, since 2013.

“It was new construction,” said Dr. John Vozenilek, vice president and chief medical officer for innovation and digital health at OSF HealthCare.

Jump Simulation, which cost an estimated $55 million to build, is attached to the system’s St. Francis Medical Center in Peoria The building was funded through a $25 million donation from trading firm Jump Trading, as well as private donors and OSF HealthCare. It’s a partnership with the University of Illinois College of Medicine at Peoria.

The building’s first two floors comprise simulation spaces, including an operating theater, inpatient and outpatient settings, and a home environment with an ambulance used for medical training, The floors above are innovation spaces, where teams of engineers and clinicians design and build solutions—and then test them in the simulation spaces below. The innovation spaces house seven labs focused on research and development for topics like children’s healthcare, data science and informatics, and advanced imaging and modeling, among others.

OSF HealthCare’s Jump Simulation innovation hub houses a simulated operating theater and inpatient and outpatient settings for medical training.

The labs often work with external partners who have expertise in their given focus area, as well as professors and students from nearby universities.

“The labs almost serve as a beacon, letting outside experts know that this is an area OSF HealthCare is investing in and is interested in expanding,” according to Vozenilek. “That’s really accelerated our whole process. For the model to be successful, the work in the lab can’t just stay there. It has to be translated back into hospital operations or patient care,’OSF leadership monitors the labs’ progress based on whether they’re producing new ideas and the extent to which those ideas are getting disseminated into the hospital and throughout the industry.”

“The vision behind Jump Simulation is to improve outcomes and cut costs through innovative training, as well as finding better ways to perform clinical care,” said Dr. Lisa Barker, chief medical director at the Jump Simulation center. “To demonstrate the value of Jump Simulation’s work to health system leadership, the team often measures ROI based on cost avoidance. That includes figuring out how programs at the center contribute to reductions in medical errors and complications or creating efficiencies when onboarding new medical professionals. Not only do we have a qualitative impact, but we can have a tangible benefit as well.”

 

Source: Modern Healthcare

‘Medtail’ Is Making Its Name In North Texas

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Changing consumer and practitioner mindsets are aligning with landowners to bring more healthcare tenants to the retail space.

So-called “medtail” is a growing trend in North Texas, in part due to hospital systems and real estate brokers both transitioning new developments away from large community hospitals and stand-alone healthcare buildings and into pared-down medical centers and retail locations.

The rise of medtail accompanies the growth of online shopping, decreasing the need for brick and mortar retail locations for consumer goods. But most healthcare services can’t be done online, making them great candidates for retail locations to drive foot traffic in a development.

Dallas-based Northwood Retail, which operates the Shops at Park Lane, has been at the forefront of this trend, signing retail leases with seven healthcare providers and nine wellness locations last year.

Retail is less about soft good clients, says Northwood President Ward Kampf, and much of that is due to a perfect storm of demographic changes. Aging baby boomers are in greater need of healthcare facilities, and younger Millennials and Gen Z consumers bring a heightened awareness of health and wellness to their discretionary income. While the older generation is looking to slow the aging process, social media growth means that young people today have more eyes on them than past generations. They want to look healthy and beautiful on camera, leading to a focus on health and wellness.

Consumers want convenience as well. Medtail allows them to get in and out quickly and avoid large medical centers and shopping malls with inconvenient parking. Ferrari Orthodontics in Lakewood and Westlake Dermatology across the street from SMU are new examples of health and beauty retail developments reflecting demographic shifts.

“Kids today are more aware of appearances,” Kampf says. “These businesses play to younger consumers.”

The growth of urgent care has been a beneficiary of this growing trend in North Texas. Children’s Health, Baylor Scott and White Health, Texas Health, and Medical City Healthcare all have their own outpatient urgent and primary care brands, which can be found in retail locations around DFW. Urgent care is meant to be convenient and efficient, and retail makes excellent sense for patients.

“As you look at the expansion of facilities, and what types of facilities we talk, the retailization of healthcare is about really two things: visibility of the brand and accessibility for the patients,” says Ethan Garner, senior vice president for JLL.

Foot traffic is an integral part of the equation too. Because of how we consume healthcare today, health and wellness locations can be significant drivers for shopping centers, so landowners are tapping health, wellness, and dental locations to fill empty retail space. Retail giants CVS and Walgreens have also launched their own health clinics, adding more providers to retail developments.

“Mindsets are changing,” Kampf says. “A doctor can drive traffic. People are asking, ‘Does it fit?’”

Concierge medical practices are another model that lends itself well to retail, and their growth has been a driver of the medtail trend. Administrative hassles and shrinking reimbursement rates have led many physicians to strike out independently and operate outside of the health insurance market. These physicians don’t want to retire but are tired of dealing with red tape, and if they can attract enough well-off patients, it can be lucrative.

“Doctors want to do their own thing and to get their own clientele,” Kampf says. “For families and older people, they want that ability or access 24/7 because they know they’re getting older, and they want quick access.”

Highland Park Village, one of the state’s most luxurious retail spaces (and its first), is not immune to the trend. Dr. Barbara Sturm recently opened a med spa offering wellness and skin care services. A generation ago, it would have been outlandish to find a physician’s office in between Prada and Gucci, but healthcare is increasingly seen as a prestige tenant.

“They’re going to be careful that their strip center is not going to get run down or have a vape shop next to them,” says Thomas Allen, CEO of Practice Real Estate. “They’re going to pay the rents to get the nice centers.”

Both luxury and mid-level retail landowners continue to see healthcare as an asset rather than an option of last resort because of the way we consume healthcare today.

“This is for all spectrums. Whether it’s the highest-end center or it’s about convenience, people want these services to be part of the retail mix,” Kampf says. “People want retail presence, footsteps, and awareness.”

 

Source: D CEO Magazine

Why Amazon and Bank of America Are Supporting Parkland’s RedBird Health Center

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By almost any measure, southern Dallas is medically underserved, resulting in worse health outcomes Measurements of life expectancy, diabetes, asthma, insurance rates, and even COVID-19 outcomes are all lower for communities south of I-30.

The development of Parkland Health’s RedBird Health Center will be joining the fight against health disparity and has two massive allies in Amazon and Bank of America. The lack of insurance and quality healthcare options mean that Parkland Hospital’s emergency room is often inundated with patients whose issues could be solved in an urgent care or primary care clinic.

Parkland has the busiest emergency department in the country, serving 750 patients a day, often addressing symptoms of chronic health issues suffered by residents of southern Dallas county, where many households are at or below 200 percent of the federal poverty level. All this means that one of the best predictors of success, chronic disease, and life expectancy is one’s ZIP code, a troubling notion to the next generation.

A crowded emergency room is compounded by a lack of providers in southern Dallas, transportation hurdles, a need for child care, and other obstacles for a population that has been neglected for generations. The RedBird Health Center will provide access to needed services closer to home as part of the mixed-use development Reimagine RedBird. The center will be offering adult and geriatric primary and women specialty care, behavioral health for all ages, pharmacy, social work, and other services.

While most of what Parkland does is publicly funded, private philanthropy has significantly impacted the health center’s final version. That’s where Parkland Foundation Michael Horne comes in. A former charter school principal who started a KIPP Campus across the street from RedBird, Horne’s passion for the community and ability to advocate for its advancement have allowed him to secure critical partnerships. He wanted the foundation to be a part of what was happening and grow existing partnerships and add new ones But it isn’t as easy as asking for a blank check from Amazon or Bank of America. The conversations needed to be centered around a particular need that appealed to both sides of the equation.

Seeking the advice of community leaders and clinicians, the foundation found cancer identification as a key area to keep patients from arriving at the ER with stage III and IV cancer symptoms. Horne found a private donor to give $1.5 million toward mammography services and found willing partners in some of the nation’s largest companies. Using tools like Parkland’s Community Health Needs Assessment, Horne can tell a story to connect partners to the reality of health disparity in Dallas, looking for common ground.

“Companies have a series of pillars they want to promote from a corporate social responsibility standpoint,” Horne says. “I download that information and look for any kind of connective tissue between where they are globally and how they want to invest their billions of dollars and what they want to do in Dallas.”

In Amazon’s first partnership with the community health worker program, the company contributed $150,000 toward a community health worker program in the area. Amazon’s philanthropy is wide-ranging and worldwide, and the company was swayed by the data about uninsured rates in Dallas and felt like community health workers would be a targeted way to address a need. These workers would develop relationships in the community to educate and build trust, helping people identify and manage the disease and chronic conditions before they become emergencies. The workers would allow community members to utilize RedBird earlier and more often, identifying and addressing problems along the way.

“It’s all about community outreach and education around chronic health conditions, but it’s peer-to-peer, so the public health workers live in the community,” says Vickie Yakunin, Amazon’s external affairs lead in North Texas who met Horne while they were in the Leadership Dallas cohort. “That’s what builds trust between the community this new health clinic that opened up in the community.”

Bank of America has been a longtime booster of Parkland, and their $1 million anchor grant is meant to address the disparity in Southern Dallas. The gift will be used to bolster preventative and primary care services. Quality healthcare is essential for achieving upward economic mobility, which is one of BoA’s focus areas. When residents are consistently plugged into the health system, they are more likely to adhere to medications, avoid the hospital, and improve outcomes.

“The research highlighting the needs of specific ZIP codes in southern Dallas was impactful for BoA,” says Jennifer Chandler, the Head of Philanthropic Solutions for Bank of America and Dallas Market President. “If you look at the data, the transportation challenges, and the fact that they can help solve for that in an efficient way through the community, that was a standout for us.”

RedBird Health center wants to be a place in and of the community, offering connectivity to healthcare that doesn’t exist in large swaths of the city. The facility will balance quality services with education, outreach, and community involvement. Without the latter, the former won’t be accessed.

“Let’s teach you how to be stewards of your health, empower you with information that you want, and then we have a space you can come back to as your medical home,” Horne says.

 

Source: D CEO Magazine