When Doctors Hospital acquired a five-story medical office building adjacent to the hospital for $16.34 million last month, it marked the latest manifestation of an on-going expansion.
The 120,000-square-foot Sarasota Medical Center deal is also part of a larger plan to improve patient services and accommodate growth, hospital officials say.
“The timing for this is good because of all the substantial growth we're seeing in this area, particularly in the University Park and Fruitville Road areas,” says hospital CEO Robert Meade. “And we're looking to the future, in part, because of the larger economic picture in Florida. Last year we really found ourselves scrambling for beds.”
In all, the Hospital Corp. of America health care facility will spend about $45 million to add a new emergency room and a pair of state-of-the-art operating rooms, upgrade private patient rooms, outfit its new space and acquire the 5741 Bee Ridge Road office building.
The new space — Doctors' emergency room will grow to 5,700 square feet and have a dedicated ambulance entrance — will add significantly to the Bee Ridge campus, which is tucked behind groves of trees and a series of retail buildings.
“People don't think we have a very large institution here, until they see it firsthand,” Young says. “We have a lot of square footage here.”
When the expansion is completed in April 2016, Doctors' new emergency room will also contain more private rooms for waiting patients; a nearby radiology department for increased efficiency; a television monitor that will keep track of patients in waiting rooms and their status; and bigger supply rooms and physician offices.
Changes could be in the offing at the Sarasota Medical building, too, where Doctors currently maintains a first-floor surgical center, breast care and wound care clinics and an auditorium capable of seating 130.
The building, completed in 1995, also is connected to the 155-bed hospital through a covered third-floor walkway.
And while many hospital physicians have orthopedic, cardiac, plastic surgery and other practices on the building's upper floors, Sarasota Medical is just 70% occupied presently.
Meade and Young say that will provide the hospital with needed flexibility going forward.
“It gives us the opportunity to grow more services to the hospital,” Meade says.
Doctors had a ground lease on the building before buying it from Healthcare REIT of America, and exercised a right of first refusal in acquiring it. At least three other potential buyers had expressed interest.
“It was a very attractive deal for them in terms of price, but they wouldn't necessarily look at it as a real estate investment,” says Ken Hughes, president of Bradenton-based CNK Realty, which specializes in medical-related real estate and represented Healthcare REIT in the Doctors' transaction.
“For Doctors, I think it's more of a situation where if the price was right, it was cheaper than adding additional space adjacent to their main building,” Hughes says.
He estimates it would cost Doctors about $24 million to build the same offices today.
“Resources are scarce, and we want to put our money into direct patient care when possible,” he says. “If we went the route of new construction to add office space here, that would be a very expensive proposition. So it's a good business decision for us to buy the building.”
- K.L. McQuaid