D E VE LO PME NT PRO C E S S O VE RVIE W

Me d ical or O utpatie nt C are Facility

The D e ve lopm e nt Proce ss – Success Factors and Expectations

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing Ne e d : “Why”

1. R e cru itm e nt of Phys icians

2. C am pus D e com pre ss ion

• O utpatie nt S e rvice s

• Ancillary Ne e d s

3. Brand E nhance m e nt

4. Ne w Marke t Pe ne tration and G rowth

• Phys icians and C lin ical-base d S e rvice s

2

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing S trate gy

a) S trong clin ical re cru itm e nt s trate gy that d e fine s both im m e d iate and

long-te rm ope rational and cap ital ne e d s .

b) E vid e nce of com m itm e nt to bu ild the facility – “avoid ing fals e s tarts”

• D e ve lopm e nt or owne r’s re pre se ntative se le cte d to ach ie ve a “te am ing”

proce ss

• Marke ting and com m un ication s trate gy we ll-e s tablishe d and in place

• A bu ild ing that is conce ptually d e s igne d and constructe d to ach ie ve

m arke t e xpe ctations (e ithe r long or short te rm ) and is in sync with a ne ar-

te rm m aste r plan

• A fully ve tte d bus ine ss plan that asse sse s the hosp ital’s role from an

ope rational and financial pe rspe ctive (e stablish ing a h igh to low succe ss

factor)

3

“Recruitment of Physicians”

1. Medical Office Facility on or within a well-defined

market2. Requirements

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing S trate gy

a) S trong financial and ope rational le ad e rsh ip that d e fine s the bus ine s s plan re qu ire m e nt.

b) Assum e re ve nue ne utral but e nhance d financial capacity m ust be ach ie ve d through clin ical

e fficie ncie s , ope rational savings , im prove d clin ical outcom e s and e nhance d patie nt satis faction.

c) E vid e nce of com m itm e nt to bu ild the facility – “avoid ing fals e s tarts”

• D e ve lopm e nt or owne r’s re pre se ntative se le cte d to ach ie ve a “te am ing” proce s s

• Marke ting and com m un ication s trate gy we ll-e s tablishe d and in place

• A bu ild ing that is conce ptually d e s igne d and constructe d to ach ie ve m arke t e xpe ctations (e ithe r long or

short te rm ) and is in sync with a ne ar-te rm m aste r plan

• A fully ve tte d bus ine ss plan that asse sse s the hosp ital’s role from an ope rational and financial pe rspe ctive

(e stablish ing a h igh to low succe ss factor)

4

“Campus Decompression”

1. Assessing the hospital

2. Requirements

a) Asse s s ing the hosp ital’s d e live ry platform and d e te rm in ing what ke y s e rvice s or functions could be

m ove d to a lowe r cos t and m ore e fficie nt e nvironm e nt to se cure im prove d clin ical throughout and

quality outcom e (patie nt satis faction and clin ical m e asure m e nt ind icators ). The vacate d s pace

allows for inte rnal e xpans ion and re novation to ach ie ve othe r like kind obje ctive s .

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing S trate gy

5

“Brand Enhancement”

1. Assessing the hospitala) Asse s s ing the hosp ital’s curre nt m arke t d e live ry platform and

d e te rm in ing what ke y s e rvice s or functions could be re locate d into

facilitie s (e ithe r ne wly constructe d or e xis ting) to be tte r pos ition the

he alth syste m ’s im age with in its e xis ting m arke t. In e ffe ct, tactically

d e fe nd ing its m arke t.

2. Requirementsa) D e e p und e rs tand ing of your d e m ograph ics , patie nt use and re fe rral

patte rns , longe r-te rm com m unity growth and traffic patte rns and ,

finally, the re tail s trate gy of the in itiative .

b) S trong financial and ope rational le ad e rsh ip that d e fine s the bus ine s s

plan re qu ire m e nt.

c) S trong und e rs tand ing of “why” – s pe cifically, what could happe n if the

syste m d oe s not e nhance its brand or pre s e nce with in a d e fine d

m arke t are a.

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing S trate gy

6

“New Market Penetration and Growth”

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing S trate gy

7

“New Market Penetration and Growth”

1. Assessing the hospitala) Asse ss ing the he alth syste m ’s curre nt m arke t d e live ry platform and d e te rm in ing what ke y

s e rvice s or functions could be re locate d into facilitie s (e ithe r ne wly constructe d or e xis ting) to

“tactically incre ase ” m arke t s hare with in a com pe titors we ll-d e fine d m arke t. In e ffe ct, going

on the offe ns e .

2. Requirementsa) D e e p und e rs tand ing of your d e m ograph ics , patie nt us e and re fe rral patte rns , longe r-te rm

com m unity growth and traffic patte rns and , finally, the re tail s trate gy of the in itiative .

b) S trong financial and ope rational le ad e rsh ip that d e fine s the bus ine ss plan re qu ire m e nt.

c) S trong und e rstand ing of “why” – s pe cifically, what could happe n if the sys te m d oe s not

incre ase or e nhance its brand or m arke t s hare with in a d e fine d m arke t are a.

d) S trong und e rs tand ing of the tactical im plications of your sys te m ’s actions .

e) U nd e rs tand the s ubs id y re qu ire d to grow m arke t s hare and the RO I im plications base d on a

“h igh to low” outcom e as s e ssm e nt.

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing Ne e d

8

“Financial and Capital Requirements”Recruitment of Physicians and Campus Decompression: Medical or

Outpatient / Diagnostic Office FacilityOwned by S ys tem or Non-related Party:

a) Non-re late d Party (RE IT, private inve s tor, e tc.)

I. Bu ild ing bu d ge t re le vant to m arke t-base d re turns

II. G round le ase and e ase m e nt im plications

III. Pre -le ase re qu ire m e nts to avoid the false s tart synd rom e

b) O wne d by the S yste m

I. C ash im plications

II. The d e s ire for MD s to inve st in owne rsh ip

III. C om pliance m atte rs

IV. Avoid ing the “ove r constructe d ” synd rom e

D E VE LO PME NT PRO C E S S O VE RVIE W

D e fin ing Ne e d

9

“Financial and Capital Requirements”Branding & New Market Strategy: Medical, Clinic or Outpatient / Diagnostic

Office FacilityOwned by S ys tem or Non-related Party:

a) Non-re late d Party (RE IT, private inve stor, e tc.)

I. S pe culative nature will e qual pe rce ive d h ighe r re turns base d on the

un ique nature of the facility

II. G round owne rsh ip re qu ire m e nt (or not)

III. Pre -le ase (or m aste r le ase ) re qu ire m e nts to avoid the false s tart

synd rom e or to ach ie ve lowe r occupancy costs

IV. H ighe r costs are jus tifie d by the ab ility to e xit a faile d s trate gy

b) O wne d by the S yste m

I. C ash im plications

II. The d e s ire for MD s to inve st in owne rsh ip

III. C om pliance m atte rs

IV. Avoid ing the “ove r constructe d ” synd rom e

V. Is sue s of a faile d spe cial purpose asse t

D E VE LO PME NT PRO C E S S O VE RVIE W

Tram m e ll C row C om pany

1 0

History & Overview

Trammell Crow Company Timeline:– Found e d in 1 948

– D e ve lope d or acqu ire d ove r 525 m illion square fe e t

and ove r $55 b illion in value

– Broad ge ograph ic cove rage with 1 5 m ajor

d e ve lopm e nt office s - prim ary focus

Mid Atlantic/Me tro Northe ast and H ouston/ D allas

– Divers e product expertis e in: O ffice , H e althcare ,

R e tail, Multi-fam ily R e s id e ntial, H ighe r E d ucation,

Airport Facilitie s , Mixe d -us e and Land D e ve lopm e nt

for all of the above

– Progre s s ive G re e n bu ild ing in itiative

– Acqu ire d by C BRE in 2006

– $3.2 b illion com ple te d or in proce s s d e ve lopm e nt proje cts

– H as d e ve lope d or has in proce ss 1 8 hosp itals and 49 non-hosp itals (AS C s , Me d ical O ffice Bu ild ings ,

and S pe cialize d Me d ical Facilitie s )

Trammell Crow Company

Trammell Crow Company Healthcare