UCHealth is an innovative, nonprofit health system with over 25,000 employees, 12 acute care full-service hospitals, and hundreds of physicians across Colorado, southern Wyoming, and western Nebraska.
The health system partnered with Remedy to build an orthopedically focused hospital in the rapidly growing Pikes Peak Park neighborhood of north Colorado Springs. The 58,000 square foot facility is part of UCHealth’s strategic plan to expand its hospital network along the Colorado Front Range and beyond, and is also helping to address the state’s need for improved access to orthopedic and emergency medical care.
Grandview Hospital features 18 deluxe private patient rooms, a four-bed intensive care unit, three advanced operating suites, a comprehensive outpatient surgery center, and advanced imaging and laboratory services. In addition, the location includes a 24/7 emergency department with eight treatment rooms and a triage room, as well as respiratory technicians around the clock. Remedy successfully delivered the project on time and on budget, opening in July 2016.
“UCHealth Grandview Hospital was designed to deliver personalized service and care on par with a nice hotel. Our welcoming community atmosphere, combined with the most advanced medical care, helps ensure our patients receive the very best medical outcomes and are able to go home as soon as possible.”Andrew Ritchie
Chief Administrative Officer
Colorado Springs, the state’s second-largest city, is among the fastest-growing cities in the United States. Grandview Hospital’s location is adjacent to the booming University Village retail development and the University of Colorado at Colorado Springs. The site is on a high-traffic thoroughfare and is highly visible from I-25, a major north-south interstate highway connecting Colorado Springs to Denver and averaging nearly 100,000 vehicles a day. It’s just 15 minutes from the U.S. Olympic & Paralympic Training Center, as well as major recreational sports destinations like Pikes Peak, Garden of the Gods, and several golf courses.
The Pikes Peak Park neighborhood offers favorable demographics for healthcare consumption, with a population slightly older than the national average (38.3 vs. 37.1 within a 5-mile radius) and an over-65 population expected to increase at nearly double the national rate. Median household income is also higher, which is typically a good indicator of a more favorable payor mix.
To cater to these demographics, UCHealth leadership requested a high-end look and feel for the hospital similar to what might be found in a boutique hotel. The two-story atrium features a grand staircase with wood and granite finishes that continue into the common areas. Amenities include a children’s play area, a premium coffee station, free Wi-Fi for guests, and a cafeteria serving fresh-made meals and snacks daily. There are also separate entrances for planned procedures and the emergency department.
The location has proven to resonate with Colorado Springs residents. Since its inception, Grandview Hospital’s medical and surgical admission volume has doubled. In addition, UCHealth has been able to successfully align and integrate both employed and community-based orthopedic surgeons at the location.
The hospital performs both outpatient and inpatient surgeries, primarily upper and lower extremity joint replacement, such as hips and knees, as well as hand surgery, foot and ankle surgery, and sports injury procedures. The facility also features advanced surgical technology, including robotically assisted hip and knee replacement as well as minimally invasive foot and ankle procedures. The typical inpatient stay is one to two days, although more complex revision surgeries may stay three or four. Patient experience scores finished the most recent fiscal year in the 98th percentile in the country.
Two of the biggest reasons for Grandview Hospital’s success are convenience and access. “It’s the same doctors who work at Memorial North and Memorial Central; they rotate through each,” notes Andrew Ritchie, Grandview’s chief administrative officer. “But whereas you can wait to see a doctor at those hospitals for hours, at Grandview it could be just a few minutes in the waiting room before you’re taken back and seen.”
On the ED side, Grandview usually sees around 1,000 emergency cases a month, and totaled 10,227 in 2019. In spite of its small size, there is 24/7 emergency physician and nurse coverage—and as part of the UCHealth network, patients needing higher-level care, such as neurology or interventional cardiology, are easily transferred to the appropriate major hospital downtown.
“I wanted to thank each of you for the care I received when having a right total hip replacement. From the beginning when I stepped in the door at the registration desk, to those who got me ready for surgery, to those who performed the surgery, to those who cheerfully took care of me afterwards as well as those who cooked meals for me and gave me OT or PT. I appreciated everything you did to help me through this surgery and start me on the way to recovery.”UCHealth Grandview Hospital patient
Based on the success of the orthopedic hospital, UCHealth has partnered with Remedy again to develop an orthopedic- and sports medicine-focused medical office building on the campus. The new three-story, 65,000 square foot Grandview Medical Center will accommodate the high demand for orthopedic services in the Colorado Springs market and complement services provided in the hospital.
The new medical office building will offer a seven-physician orthopedics clinic, sports medicine-focused primary care, multidisciplinary clinic featuring a variety of specialties, physical therapy clinic, and 7,500 square foot rehabilitation gym on the third floor with a dramatic view of the mountains. Treatment will be bolstered by a strong research partnership with the University of Colorado School of Medicine’s Department of Orthopedics.
Beyond giving UCHealth’s orthopedic surgeons a new site of practice with improved access to the OR, the new medical office building will improve community access to care. The Grandview Medical Center will also feature a full-service imaging center with the latest imaging technology, including MRI, CT scan, X-ray, ultrasound, and DEXA bone density scans. The imaging center will provide much-needed capacity to provide pre-admission testing services for patients prior to surgery—not just at Grandview Hospital but system-wide, for employed physicians as well as private practices that rely on UCHealth for PAT processing.
In addition to the imaging lab, the orthopedics clinic is designed around its own imaging suite, which includes three general radiology rooms and a CurveBeam HiRise weight-bearing CT machine, a relatively new technology that’s important for diagnosing foot and ankle concerns. The standing CT scanner at Grandview will be one of the first in the nation, and the room it occupies is designed so that it can be outfitted for double duty as a fourth-gen rad room.
“For a better patient experience, we designed the exam pods on the periphery of the centralized imaging rooms, so that people hobbling on crutches if they’ve blown out their knee or ankle have a shorter distance to travel,” says Catherine Demmitt, principal and senior project manager with architect BSA LifeStructures. The clinic was also designed to accommodate one-way directional flow in most suites to increase efficiency and limit disease transmission.
The new building’s placement on the site allowed for an additional 350 parking spaces to be added, alleviating concerns about access to the hospital. The end result is a medical campus that feels human-scaled and welcoming for patients.
“The new medical center will help us connect with patients by allowing us to show them their care journey,” Ritchie adds. “You can come here for your orthopedic surgeon appointment in the clinic, and you can literally see across the parking lot where you’re going to go for your surgery. For your follow-up appointment, you’re coming back to the same place. And then if you need PT, you just go up to the third floor.”
The project broke ground in August 2019, and the building is expected to be completed in the fourth quarter of 2020. Remedy worked with UCHealth to include design elements that create continuity with the health system’s other locations, including finishes, color palette, and its signature arch, which appears on the Grandview Medical Center as an entrance canopy.
“This is not your everyday MOB. Remedy is building quite a beautiful facility that in my opinion is far above and beyond what people used to perceive as a developer-built MOB. Compliments to Remedy for taking on that risk and moving it forward.”Catherine Demmitt
Principal and Senior Project Manager at BSA LifeStructures
As with every one of its developments, Remedy looked for ways to minimize wasted space and increase efficiency in the MOB. For example, an early floor plan for the first floor included a hallway leading from the elevator lobby to a side vestibule. However, this configuration split the orthopedic clinic into two sections. The corridor wasn’t required for emergency egress, and eliminating it resulted in a contiguous layout for the orthopedic clinic as well as a 464 square foot reduction in common area load. By lowering the common area factor to 13.6% from 14.6%, Remedy created a rent savings for UCHealth of $156,000 over the course of its 12-year lease.
“This project has been really well coordinated and managed—probably the least stressful construction experience I’ve gone through in my career,” Ritchie says. “There were some challenges during the planning phase, but Remedy has kept us on time while still remaining flexible. Having that level of trust and communication with your development partner is just tremendous. We sing their praises all the time.”
Real estate can be a valuable tool for physician alignment, as Vail Health is proving with its new ambulatory care/surgery center in Dillon, Colorado. The new facility is helping the health system address not just one but three different alignment goals at once.
Vail Health is a nonprofit community health care system with locations across Eagle and Summit counties in the Rocky Mountains of Colorado. With several popular ski destinations in close proximity, Vail Health offers extensive sports medicine and rehabilitation services, and has partnered with two renowned independent orthopedic practices, The Steadman Clinic (TSC) and Vail-Summit Orthopaedics and Neurosurgery (VSON), to provide top-rated orthopedic care to the region’s active residents and visitors. TSC and VSON have each co-located clinics in Vail Health medical office buildings, and both perform surgeries at Vail Health Hospital in Vail Village and at the Vail Valley Surgery Center in Edwards.
Vail Health was interested in expanding its offerings in the submarket of Dillon with an ambulatory care center (ACC) and ambulatory surgery center (ASC). It identified a highly visible site in Dillon along Highway 6, next to a popular shopping district and close to the Dillon Reservoir marina and partnered with Remedy to develop the property.
Percival Health Advisors, an independent healthcare strategy advisory group within Remedy, conducted a detailed analysis of the local healthcare market to help Vail Health make key decisions about the facility’s size, design, and mix/scope of services. Percival also helped to independently validate the volume projections for TSC and VSON were they to become involved in the new facility. This objective, unbiased analysis gave both groups a comfort level in deciding to move forward with their lease commitments to the project.
Of primary importance was determining the appropriate size of the state-of-the-art, orthopedics-focused ASC, which is a joint-venture between Vail Health and TSC. The surgery center will open with four operating rooms, and based on Percival’s projections for patient volume, two additional ORs will be shelled for future expansion based on Percival’s projections for patient volume by 2025.
“When developing a new facility such as this, you need to leave some flexibility in the design to be ready for future growth and leverage future market opportunities, as well as to serve as a barrier to entry for competitors considering coming into the market,” says Sam Sears, EVP of Strategy & Consulting at Percival Health Advisors.
In addition to the ASC, the three-story, 85,000 square foot building will offer primary care and specialty care, urgent care, medical oncology, a breast center, imaging center, and sports medicine and rehabilitation, and has been designed to accommodate future expansion. The new facility will also feature two patio areas with panoramic views of Buffalo Mountain, and Peak 1 in Breckenridge, as well as access to a walking trail.
There is currently no urgent care clinic in Dillon, and the region is underserved by primary care, as well as specialty practices, leading to patient leakage to Denver, 60 to 90 minutes east. The new facility will enable Vail Health to dramatically increase patient access in the community, as orthopedic and outpatient visits are projected to grow by more than 11% in the next five years.
“The New Dillon Medical Center will help increase access to world-class medical care through our Shaw Cancer Center, Howard Head Sports Medicine, Colorado Mountain Medical and Orthopaedics partnership platforms and will provide much needed, cost effective urgent care facilities in the eastern half of Summit County, which currently has no urgent care facilities.”Craig Cohn
Chief Real Estate Development Officer, Vail Health
“It was important to recognize the unique dynamics of the local and seasonal patient populations as we developed this ASC and MOB,” Sears says. “We had to look not just at the standard demographics and socioeconomics but also the variable of skiers and other recreational activity on the mountain to determine the expected patient volume.” Skiers and other recreational enthusiasts were estimated to increase seasonal patient volume by about 10%.
Vail Health also explored the potential for a freestanding emergency department at the location to service ski injuries and other emergencies. Percival’s market analysis determined that patient volume would not be high enough to justify the costly addition.
“Percival’s recommendation against building a freestanding ED is a great example of the sort of objective, unbiased analysis the company provides,” says Peter Westmeyer, CEO of Remedy. “Although building it may have benefited Remedy in terms of rentable square footage, it would not have benefited the client, and it’s more important to us to have a long-term relationship than short-term gain.”
Vail Health had recently partnered with Colorado Mountain Medical, a primary care and specialty care physician group located in Vail, Colorado. These were services not previously provided by Vail Health. Percival made recommendations on the layout of the clinic, which helped marry Colorado Mountain Medical’s approach to patient care with Vail Health’s operational style. The physicians will staff and manage the primary care and urgent care clinics in the new facility.
The new building also further aligns Vail Health with both independent orthopedic practices. TSC was interested in growing additional markets, and Vail Health was able to offer a larger site in a highly visible locale. The new facility more closely links the brands and provides both with additional avenues for referrals.
“Remedy is a full-service solution to navigating the complexity of standing up a new facility. Remedy has helped lead the way since early concept and will continue to guide us until opening, allowing us to focus on our ongoing healthcare operations, which has proven vital during the COVID-19 pandemic.”Craig Cohn
Chief Real Estate Development Officer, Vail Health
Beyond helping with physician alignment, Remedy made several other contributions to the project’s success. While perfectly positioned for visibility and ease of access, the site selected by Vail Health for the new development posed unique challenges. The property is steeply sloped, with a 65-foot difference in elevation between the northeastern and southwestern edges.
The Remedy project team, including architect Davis Partnership and contractor Adolfson & Peterson Construction, engaged in a meticulous design process that turned this potential liability into an asset. By capitalizing on the steep slope, the facility will be able to accommodate two levels of underground parking with space for 263 vehicles—a major asset in a town that averages 160 inches of snow per year.
Furthermore, Remedy brought its creativity and experience to bear on the permitting process, instilling a sense of urgency that resulted in the granting of the first-ever phased building permit in Summit County so that construction on the facility could begin before design work was complete. This ensured the project could take maximum advantage of the limited window for construction.
The Orthopaedic Institute (TOI) was poised for growth. In 2018, it was the second-largest independent orthopedic practice in Florida, with 30 physicians and 4 medical offices in Alachua, Gainesville, Lake City, Ocala, and one coming soon to Orlando, as well as an orthopedic surgery center in Gainesville co-owned in a joint venture with AmSurg, a national surgery center operator.
TOI averaged more than 106,000 annual patient visits, offering services covering the spectrum of musculoskeletal care, from prevention and diagnosis to treatment, surgery, and rehabilitation.
The buildings were all built in the 2000s or later, and comprised 103,393 square feet. The properties were 100% owned and anchored by TOI and its JV partner.
TOI was actively seeking a private equity partner to help take its plans for expansion to the next level, and in anticipation, the physician owners felt it was a good time to sell its properties in order to gain additional liquidity.
Remedy offered to purchase TOI’s portfolio of five existing buildings from the physician-owners and long-term lease them back to the organization. Remedy also worked with their joint venture partner, AmSurg, to guarantee their interests were taken into account and any concerns were being met.
In the midst of negotiations, TOI was successful in finding a private equity partner: Varsity Healthcare Partners, a private equity investment firm specializing in healthcare with expertise in growing care provider platforms. Remedy adapted the lease structure to accommodate TOI’s new capital structure and worked with TOI and Varsity to ensure the sale was timed appropriately with the private equity transaction process.
“It’s becoming more common for larger physician groups to partner with private equity investors to support expansion goals. Private equity firms can help expedite negotiations, because they often speak the same language as real estate investors.”Krysta Bavlsik
Under the new lease agreement, Remedy allowed TOI to continue self-managing the medical office buildings and surgery center as they felt was most appropriate. Meanwhile, Remedy took steps to reduce operating expenses by leveraging a national insurance relationship.
Because of the success of the initial acquisition, TOI extended its relationship with Remedy a year later with a sale-leaseback of its newly constructed medical office building in The Villages, an affluent suburb of Orlando, bringing the total square footage in the portfolio to 121,787.
“We were able to extend our relationship with The Orthopaedic Institute by purchasing the new facility in Orlando,” says Joe Magliochetti, CIO of Remedy. “It’s evidence of their successful growth plan following their strategic change, and we are pleased to grow alongside them.”
Thanks to the private equity infusion from Varsity, TOI has been able to expand in Florida and now operates 13 locations throughout the state just two years later. The practice also forms the foundation for Orthopedic Care Partners, Varsity’s orthopedic-focused platform investment company. Varsity made equity investments in six high-performing regional orthopedic practices, including The Steadman Clinic, giving them the power of a national operator. Through its relationships with TOI and The Steadman Clinic, Remedy is Orthopedic Care Partners’ largest real estate partner.
Remedy’s platform and long-standing expertise in healthcare real estate enabled it to be patient and accommodating to meet the exacting requirements of the private equity transaction.
“As private equity takes a greater interest in investing in physician groups, this type of scenario is happening more and more. Remedy has the experience and expertise to help practices navigate the process successfully.”Joe Magliochetti