Mark Samples, president of Prime Healthcare Properties, a development firm in Huntsville, Ala., identifies five significant ambulatory surgery center development mistakes.
1. Not discussing the investment objective. "The ASC real estate developer needs to understand the investment objectives of each partner," Mr. Samples says. If one investor intends to sell his share in a year or two, it would endanger other investors' plans to keep everyone's shares in place for at least 10 years.
2. Not researching the location. The neighborhood around the ASC could change dramatically during the center's life cycle of the next 15-20 years. Look for clues about what the future would look like, such as a proposal to build a new highway or a new school nearby. "Conduct your research before committing to a site," Mr. Samples says.
3. Not researching regulations. Planners who don't adequately research zoning permits and development costs for their ASC may be in for a rude awakening. For instance, they may be shocked to learn they have to build an expensive retention pond or they may find out too late that authorities have a reputation for dragging out zoning and permit processes for months. "You have to do your due diligence in each market," Mr. Samples says.
4. Choosing expensive real estate. Retailers such as CVS and Walgreen's buy expensive property on high-profile intersections because they need to attract high volumes of customers, but you don't have to. Since ASC patients are referred, the center can be a short distance from the intersection in a lot that costs 2-3 times less. "You don't need the visibility of a high profile retail corner," Mr. Samples says.
5. Overbuilding the ASC. Buying too much acreage and building too much square-footage are common mistakes for ASCs. Mr. Samples has seen owners build a 20,000 square-foot facility when only half that space was needed. He also advises against building grand waiting rooms, entrances and other common areas. "This can be inefficient space," he says. "If the center is ever vacated, it could be difficult to re-lease."
Learn more about Prime Healthcare Properties.
Read more about ASC development:
- Developing a Spine Center: 3 Reasons Why Now is the Time
- 10 Cardinal Sins in Surgery Center Design
- 19 New Surgery Centers Announced in February