This case study first appeared in Remedy on October 9, 2020.
Real estate can be a valuable tool for physician alignment, as Vail Health is proving with its new ambulatory care/surgery center in Dillon, Colorado. The new facility is helping the health system address not just one but three different alignment goals at once.
Vail Health is a nonprofit community health care system with locations across Eagle and Summit counties in the Rocky Mountains of Colorado. With several popular ski destinations in close proximity, Vail Health offers extensive sports medicine and rehabilitation services, and has partnered with two renowned independent orthopedic practices, The Steadman Clinic (TSC) and Vail-Summit Orthopaedics and Neurosurgery (VSON), to provide top-rated orthopedic care to the region’s active residents and visitors. TSC and VSON have each co-located clinics in Vail Health medical office buildings, and both perform surgeries at Vail Health Hospital in Vail Village and at the Vail Valley Surgery Center in Edwards.
Vail Health was interested in expanding its offerings in the submarket of Dillon with an ambulatory care center (ACC) and ambulatory surgery center (ASC). It identified a highly visible site in Dillon along Highway 6, next to a popular shopping district and close to the Dillon Reservoir marina and partnered with Remedy to develop the property.
Percival Health Advisors, an independent healthcare strategy advisory group within Remedy, conducted a detailed analysis of the local healthcare market to help Vail Health make key decisions about the facility’s size, design, and mix/scope of services. Percival also helped to independently validate the volume projections for TSC and VSON were they to become involved in the new facility. This objective, unbiased analysis gave both groups a comfort level in deciding to move forward with their lease commitments to the project.
Much-Needed Services for an Active Community
Of primary importance was determining the appropriate size of the state-of-the-art, orthopedics-focused ASC, which is a joint-venture between Vail Health and TSC. The surgery center will open with four operating rooms, and based on Percival’s projections for patient volume, two additional ORs will be shelled for future expansion based on Percival’s projections for patient volume by 2025.
“When developing a new facility such as this, you need to leave some flexibility in the design to be ready for future growth and leverage future market opportunities, as well as to serve as a barrier to entry for competitors considering coming into the market,” says Sam Sears, EVP of Strategy & Consulting at Percival Health Advisors.
In addition to the ASC, the three-story, 85,000 square foot building will offer primary care and specialty care, urgent care, medical oncology, a breast center, OB/GYN clinic, imaging center, and sports medicine and rehabilitation, and has been designed to accommodate future expansion. The new facility will also feature two patio areas with panoramic views of Buffalo Mountain, and Peak 1 in Breckenridge, as well as access to a walking trail.
There is currently no urgent care clinic in Dillon, and the region is underserved by primary care, as well as specialty practices, leading to patient leakage to Denver, 60 to 90 minutes east. The new facility will enable Vail Health to dramatically increase patient access in the community, as orthopedic and outpatient visits are projected to grow by more than 11% in the next five years.
“The New Dillon Medical Center will help increase access to world-class medical care through our Shaw Cancer Center, Howard Head Sports Medicine, Colorado Mountain Medical and Orthopaedics partnership platforms and will provide much needed, cost effective urgent care facilities in the eastern half of Summit County, which currently has no urgent care facilities.” — Craig Cohn, Chief Real Estate Development Officer, Vail Health
“It was important to recognize the unique dynamics of the local and seasonal patient populations as we developed this ASC and MOB,” Sears says. “We had to look not just at the standard demographics and socioeconomics but also the variable of skiers and other recreational activity on the mountain to determine the expected patient volume.” Skiers and other recreational enthusiasts were estimated to increase seasonal patient volume by about 10%.
Vail Health also explored the potential for a freestanding emergency department at the location to service ski injuries and other emergencies. Percival’s market analysis determined that patient volume would not be high enough to justify the costly addition.
“Percival’s recommendation against building a freestanding ED is a great example of the sort of objective, unbiased analysis the company provides,” says Peter Westmeyer, CEO of Remedy. “Although building it may have benefited Remedy in terms of rentable square footage, it would not have benefited the client, and it’s more important to us to have a long-term relationship than short-term gain.”
Three Alignments in One Building
Vail Health had recently partnered with Colorado Mountain Medical, a primary care and specialty care physician group located in Vail, Colorado. These were services not previously provided by Vail Health. Percival made recommendations on the layout of the clinic, which helped marry Colorado Mountain Medical’s approach to patient care with Vail Health’s operational style. The physicians will staff and manage the primary care and urgent care clinics in the new facility.
The new building also further aligns Vail Health with both independent orthopedic practices. TSC was interested in growing additional markets, and Vail Health was able to offer a larger site in a highly visible locale. The new facility more closely links the brands and provides both with additional avenues for referrals.
The Remedy Advantage
“Remedy is a full-service solution to navigating the complexity of standing up a new facility. Remedy has helped lead the way since early concept and will continue to guide us until opening, allowing us to focus on our ongoing healthcare operations, which has proven vital during the COVID-19 pandemic.” — Craig Cohn, Chief Real Estate Development Officer, Vail Health
Beyond helping with physician alignment, Remedy made several other contributions to the project’s success. While perfectly positioned for visibility and ease of access, the site selected by Vail Health for the new development posed unique challenges. The property is steeply sloped, with a 65-foot difference in elevation between the northeastern and southwestern edges.
The Remedy project team, including architect Davis Partnership and contractor Adolfson & Peterson Construction, engaged in a meticulous design process that turned this potential liability into an asset. By capitalizing on the steep slope, the facility will be able to accommodate two levels of underground parking with space for 263 vehicles—a major asset in a town that averages 160 inches of snow per year.
Furthermore, Remedy brought its creativity and experience to bear on the permitting process, instilling a sense of urgency that resulted in the granting of the first-ever phased building permit in Summit County so that construction on the facility could begin before design work was complete. This ensured the project could take maximum advantage of the limited window for construction.