Expanding medical practices can be both an exciting and daunting endeavor. Growth often signals a thriving business, but with it comes the complex challenge of finding the right real estate to accommodate the expansion and maximize your ROI. Choosing the right location, space, and real estate strategy is crucial to ensuring continued success while mitigating financial risks. Real estate decisions for medical practices require careful consideration due to the unique demands of healthcare operations, such as accessibility, patient experience, compliance with regulations, and future growth.
9 strategies for expanding medical practices and their real estate footprint.
1. Evaluate Your Current Space and Needs
Before diving into new real estate opportunities, it’s essential to conduct an in-depth evaluation of your current practice and its needs. Ask yourself key questions: Why do you need to expand? Is your current space insufficient due to an influx of patients, or do you need more specialized areas for new services? This introspection will guide the direction of your real estate decisions.
Additionally, assess your current location. Are you attracting the target demographic, or would relocating bring in more patients? Understanding your practice’s operational needs and limitations will help refine your search for the ideal expansion property.
2. Consider Future Growth and Flexibility
Healthcare is an ever-evolving field, and what your practice requires today may change in the future. Therefore, it’s crucial to think beyond your immediate needs and consider long-term growth. Real estate that allows for flexibility is a smart choice, whether it’s the ability to reconfigure internal space as new technologies emerge or the option to lease additional adjacent units.
When evaluating properties, prioritize layouts that can be easily adapted or expanded. Modular design, which allows for the easy reconfiguration of spaces, can offer the flexibility needed to accommodate different departments, treatment areas, or new services without undergoing costly renovations.
3. Leverage Demographic and Market Data
One of the most valuable tools for expanding medical practices is the use of data-driven insights. Leverage demographic and market data to help identify the best locations for growth. For example, a practice serving primarily pediatric patients should target areas with a high percentage of young families, while a specialty clinic may thrive in wealthy neighborhoods or areas near hospitals and medical centers.
Evaluate the competition in your desired locations as well. Is the area oversaturated with similar medical practices, or is there an underserved population that could benefit from your services? Conducting a thorough market analysis can make the difference between a thriving new practice location and one that struggles to gain patients.
4. Understand Zoning and Regulations
Medical practices are subject to many zoning laws, building codes, and healthcare-specific regulations. Before committing to a real estate deal, it’s critical to ensure that the space you’re considering is compliant with local zoning ordinances and healthcare standards. Medical offices often require special zoning designations due to the nature of their services, so consulting with local authorities or hiring an experienced real estate consultant can help avoid costly legal hurdles down the road.
Moreover, ensure that the property complies with healthcare standards such as ADA (Americans with Disabilities Act) accessibility and building codes for medical facilities, including ventilation, plumbing, and electrical systems, which may differ from general commercial spaces.
5. Location Matters: Accessibility and Visibility
In real estate, location is always a key factor, and for medical practices, it’s especially critical. A successful practice needs to be easily accessible for both patients and staff. Locations near major roads, public transportation, or with ample parking will increase convenience for patients and make it easier for staff to commute.
Visibility also plays a role. Being in a medical office building or near other health services can boost patient referrals and walk-in traffic. On the other hand, a prime spot on a busy street or near a community center can help your practice attract new patients who may not be familiar with your services.
Additionally, proximity to hospitals or larger healthcare centers can be advantageous for referral networks and collaborations with other healthcare professionals. For specialists, being close to primary care physicians or hospitals ensures continuity of care and better collaboration.
6. Lease vs. Buy: What’s Best for Your Practice?
One of the biggest decisions when expanding medical practices is whether to lease or buy the new space. Both options have their advantages and drawbacks, and the right choice depends on the long-term goals of your practice.
Leasing can provide flexibility, allowing you to move or adjust your space as the practice grows. It also involves lower upfront costs and frees up capital that can be used elsewhere, such as for equipment or staffing. However, leasing also means your practice doesn’t build equity, and you may be subject to rent increases over time.
Buying a property, on the other hand, offers the potential to build equity, and you won’t have to worry about rent hikes or negotiating lease renewals. However, it comes with higher upfront costs, potential maintenance expenses, and less flexibility if your practice needs to relocate or expand further.
7. Collaborate with a Healthcare Real Estate Specialist
Expanding medical practices require expertise beyond general commercial real estate. Healthcare real estate specialists understand the nuances of medical practices, such as compliance, infrastructure needs, and patient flow considerations. They can help identify properties that are specifically tailored to medical use, which can save time, money, and stress during the expansion process.
It is important to choose the right real estate professionals because they are also well-versed in negotiating favorable lease terms, navigating zoning and regulatory issues, and understanding the specific needs of healthcare providers, ensuring that you get the most value from your real estate investment.
8. Consider Co-Tenancy and Shared Spaces
With the rising costs of healthcare and real estate, many medical practices are exploring co-tenancy and shared spaces as a cost-effective expansion strategy. Sharing office space with complementary healthcare providers can create a more comprehensive patient experience, as well as increase referral opportunities.
For example, a pediatrician might share space with a pediatric dentist or family therapist, creating a one-stop-shop for family healthcare. Additionally, shared waiting rooms, administrative staff, or reception areas can reduce overhead costs and improve efficiency.
9. Plan for the Patient Experience
In healthcare, patient experience is paramount. Expanding into a new space gives you the opportunity to design an environment that enhances patient satisfaction. Consider factors like natural lighting, comfortable waiting areas, and soothing décor to create a welcoming atmosphere. Technology also plays a role; offering amenities like Wi-Fi, digital check-ins, and modern exam rooms can streamline the patient’s journey and leave a positive impression.
Additionally, make sure the space is designed to promote efficient patient flow. Exam rooms should be easily accessible from the waiting area, and there should be a clear separation between public and private areas to protect patient privacy.
Expanding medical practices is an exciting but complex endeavor that requires careful planning and strategic thinking. By carefully evaluating your current needs, considering future growth, and selecting the right real estate, you can set your practice up for long-term success. Whether you choose to lease, buy, or share space, making informed decisions based on data, regulations, and patient experience will help ensure that your practice thrives in its new location. Don’t hesitate to seek expert guidance, as healthcare real estate specialists can be invaluable partners in navigating the complexities of medical expansion.
If you are interested in learning more or if you need assistance with anything about healthcare commercial real estate market, feel free to reach out to us at ICRE Investment Team anytime. We’d be happy to help supply you with information on any relevant properties or markets, alongside any connections in lending, investing, brokerage service or consulting that you might need!
