Health Matters: Benefits of Converting Retail Spaces into Clinics

Dennis Vonasek, AIA, CID

10.27.14

Introduction

Big box retail spaces may seem an unlikely location for healthcare services, but with the rise of empty megastores in the wake of the Great Recession and retail closures, many healthcare organizations are finding cost-effective solutions to their facility needs by converting these former stores into clinics. The trend ties in with an industry-wide shift from centralized to decentralized care models that deliver services closer to the home.

Here are four benefits to consider when converting a former big box retail space.

Location Factor

Many former stores are in established communities integrated with existing public transportation, highways, sidewalks, parking and urban utilities. These empty stores--particularly the big box retail spaces--have posed potential blight on neighborhoods with their vacant parking lots and limited market potential. Converting them to clinics brings new uses to underperforming real estate while adding value to the community.

Cost-Effective Solutions

Retail spaces' open layout provides a clean slate to program medical services and consumer-oriented amenities, such as concierge service, plush waiting rooms, and upgraded finishes. The approximate 20,000-square-foot open floor plate often coincides with the clinic's programming needs, providing cost-effective solutions to building ground-up. Additionally, building owners and municipal development offices, eager to fill vacant space with tax-generating businesses, often will subsidize tenant improvements and mechanical system upgrades as incentives to sign extended 10-year leases.

Branding and the Community

Operating on a hub-and-spoke concept within a continuum of care, big box retail spaces allow the central healthcare system to branch out into the community in visible locations without the time and cost of building new. Rather than standing separate from the community within stand-alone healthcare campuses, these new clinics are more integrated within the communities with other daily businesses, such as the grocery store or hardware store. This offers real branding opportunities for healthcare organizations to present themselves as the healthcare provider of choice through strategic location, strong graphics, signage, advertising and community outreach programming that express long-term investment in the community.  

Return on Investment

As with any business, a healthcare organization needs to monitor costs, deliver targeted services, and make a profit. The hub-and-spoke concept is designed to increase market share. Although retail conversions are more cost-effective than building ground-up, they are still a major capital investment. Yet the right expenditure can produce immediate payback.

At HealthEast Maplewood Spine Clinic, for instance, the 16,000-square-foot conversion of a former outdoor sporting-goods store in suburban Minneapolis-St. Paul resulted in increased patient satisfaction score (95 percent from 37 percent from original location), increased patient volume (22 daily visits to 59 today since opening in September 2012), and nearly three-fold revenue increase. Similarly, HealthEast Midway Clinic, which converted a former two-level bookstore on a busy St. Paul street corner into an outpatient clinic, measured a 95 percent patient satisfaction score and 15 percent revenue increase in its new location.

Lessons Learned

Certainly strategic location is a deciding factor in a clinic's success. Yet design and planning also play a significant role. Big box spaces offer an empty canvas in which to plan efficient layouts and workflows. Patients usually are under stress because of a medical condition or pending procedure. A well-designed clinic in a familiar residential location helps patients feel welcomed and allows caregivers to work efficiently. At the Midway Clinic, for instance, clear wayfinding easily directs patients to their destinations while universal room design increased exam room utilization and centrally located staff zones improved caregiver collaboration.

Ultimately, retail conversions are a cost-effective way to bring high-quality healthcare services closer to the community and increase market share.