In Health Care Real Estate, Creativity Abounds — It Has To

Health care is an ever-evolving entity, from the way patients are treated to where they are treated. In addition to the twin challenges of providing quality care and turning a profit while doing so, health systems are navigating regulatory pressure, accelerated project timelines and other real estate issues. 

On Thursday, Sept. 10, Commercial Observer gathered together capital planning executives, legal experts, construction managers and project leaders at its National Healthcare Forum, which was hosted in the Proshansky Auditorium of the City University of New York Graduate Center. 

During the event, experts discussed what it takes to shape the next iteration of health care infrastructure through strategies such as rethinking how funds are allocated to the best practices for revitalizing aging facilities. 

The day kicked off with a conversation between Vincent Grippo, senior vice president of real estate and facilities services at Northwell Health, and Mitch Green, senior vice president with AECOM Tishman. 

Grippo began by sharing his story, which includes a 25-year career across several client-facing organizations. Most poignantly, Grippo shared that he is seven years cancer free — a cancer developed due to exposure to toxic air caused by the 9/11 terrorist attacks. With that revelation, Grippo requested a moment of silence to honor those who had been and are still being impacted by that morning 25 years ago Friday. 

As the conversation got underway, Grippo and Green focused on the best strategies and the challenges to funding and improving aging infrastructure investments across hospital systems. One issue Grippo found that Northwell was facing — and something other health care systems deal with as well — was that it wasn’t moving fast enough when it came to maintaining that investment. 

“We were really running to fail on many systems, inadequate emergency power in many of our hospitals, inadequate cooling on emergency power, which was then creating operational challenges for the hospitals,” he said. “Some of these things are not easily solved because we have extreme limitations in the size of our plants and certain facilities, and of course in the amount we can invest. But one thing we had to do was start moving on spending the money. So we created an entirely different process to fast-track infrastructure investments as more of a maintenance expense than a true investment.”

To get operators to agree to this strategy, Northwell had to demonstrate that it was assessing the risks to the infrastructure in need of more investment, so the wrong projects didn’t skip the line. 

“When I got here, we were [investing] around $40 million to $60 million in any year,” Grippo noted. “Last year, I probably got myself in a little bit of trouble. We hit $170 million in infrastructure investments, but it was a long, long time coming. And it’s a combination of being able to get the process to approve these things, and to prove that we were putting the money in the right place.”

One area that Northwell has invested heavily in is the more than $1 billion redevelopment of Lenox Hill Hospital on Manhattan’s Upper East Side. When asked how the project was going, Grippo simply said, “We’re still working.” 

The conversation around redeveloping aging infrastructure continued with the second panel of the day. Andrew Weinberg, director of business development for LF Driscoll Healthcare, moderated a discussion on the planning of next-generation health care campuses. 

Weinberg was joined on stage by Daniel Ahn, vice president of planning and design for Catholic Health Services of Long Island; David Kontra, assistant vice president of real estate at the Children’s Hospital of Philadelphia; Justin Lundy, senior project manager at LF Driscoll; Richard Meilan, senior executive director with MG Engineering; and Christopher Prochner, senior vice president and Northeast health care lead for project manager Cumming Group. 

The panelists discussed transitioning from reactive facilities management — a crisis-based approach to maintenance repairs — to proactive strategic master-planning focused on outpatient expansion, infrastructure resiliency and capital prioritization. The speakers noted a significant shift in how outpatient services are delivered — particularly when it comes to location and convenience for users, as many patients want services that are closer to home — and the impact that has on real estate and capital decisions. 

At the end of the day, Kontra said it is about ensuring the right people are involved every step of the way in regard to the infrastructure requirements, particularly property management providers.

“My biggest concern when it comes to infrastructure, particularly outside the main hospital, is just that downtime,” he said. “Because the hardest thing for us is to have any kind of an issue where we’re canceling appointments, or we’re sending families to different locations. So it’s really involving the right people in that conversation early and building those lessons learned into future projects as they come up.” 

Resilience was a core theme of Thursday’s forum, and the third session of the day — moderated by Jaimee Nardiello, a partner with law firm Zetlin & De Chiara — got to the heart of how the demand for greater clinical performance impacts hospital system upgrades. 

Nardiello was joined by Keith Marks, project executive for Gilbane Building Company; Georgina Lalli, director at architecture firm Kohn Pedersen Fox; and Colin Barrett, vice president of infrastructure and special projects at Mount Sinai Health System. The panel discussed breathing new life into an older health care infrastructure, using a current Mount Sinai project as an example.

“The Tisch Cancer Center Hospital project is a new inpatient and outpatient cancer center that we’re building inside of an aging 1960s-era hospital building on our Upper East Side campus,” Barrett said. “The cancer hospital will have 72 inpatient beds. It’ll have outpatient services such as apheresis, an oncology care unit and a medical spa.”

Being that this is an older building, the project presented unique infrastructure challenges, including low ceiling heights and outdated HVAC and mechanical systems, Barrett said. The hospital is also partially occupied by some of the network’s sickest patients and houses some critical support services, including a blood bank and stem cell lab.  

A project like this requires communication, flexibility and adaptability, according to Marks.

“We’re nimble, and realistic,” Marks said. “We’re learning as we build, or in this case, learning as we demo.”

The bulk of the forum focused on the buildings. But another aspect — highlighted by the day’s conversation between Suzanne Marie Musho, corporate director at New York-Presbyterian Hospital, and Rahul Tikekar, senior vice president at Loring Consulting Engineers — was the human element behind all the infrastructure. 

“The most important thing in health care is the human connection,” Tikekar said. “We want to build spaces that are appealing, that have a visual effect, and not just for the patients themselves, but also the caregivers and the staff.” 

To achieve this, Musho said, designers, architects, engineers and owners need to ask themselves what it takes to make sure anybody who walks through the doors feels welcome and comfortable. One way to achieve this is through a consistent experience. 

“Something that we do need to continually ask ourselves as architects, engineers and as owners is, ‘What are we really trying to achieve?’” she said. “Because if we can do that, if someone is walking through a hospital door and from the moment they enter, they know not only that they’re going to receive excellence of care, but that they’re being considered and taken care of the second that they walk through the doors, then we’ve done our jobs.” 

Zetlin & De Chiara’s Nardiello moderated her second panel of the day, concluding the event with Tyler London, vice president at Sheridan Capital; Ryan Kiefer, director of design and construction at Memorial Sloan Kettering; Christina Grimes, partner at NBBJ Designs; Dejan Bratun, director of capital project management for Columbia University Irving Medical Center; and Christopher Botsch, director of design, construction and facilities development at Northwell Health. 

The panel discussed the financial and operational drivers of transforming commercial and legacy buildings into high-performance specialty care facilities, diving into the requirements needed to navigate these complex projects and deliver quality solutions.

Determining whether a building is suitable for repurposing for health care use depends on the clinical plan and clinical program, Bratun said. It all comes down to what type of health care the facility will ultimately provide. 

“Then we develop a program that involves all the spaces that they’re going to need, but also back of the house requirements, and then we start from looking at the portfolio of buildings that might be available in the market for that particular clinical need,” he noted. “Once we establish that, then we proceed into more due diligence of the floor plates … and see if the workflow, patient workflow and the clinical workflow, fits within the building.” 

The assets that get repurposed will again depend on the clinical need — there is no one particular asset that can be converted into every type of health care property. Older hotels and some multifamily buildings tend to be repurposed mostly into senior housing, said London, while a hospital might be converted into a skilled nursing facility. Even buildings the general population might never consider could be converted for health care use. 

“One of the projects we’re working on is an old cigar factory, and we’re putting MRI and eye acuity clinics in it,” Grimes said. “Each one has a slightly different set of criteria as far as what those most important things are. It really depends on where we’re talking about [repositioning] as far as what we’re seeing more commonly.” 

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.