What you need to know about the forces reshaping our industry.


October 16, 2017

Movie sets, schools, and condos: Here's what becomes of closed hospitals

Daily Briefing

    Across the country, hospitals that have closed down are being reinvented as schools, luxurious condominiums, and even scary movie sets—but the transformations aren't without controversy, Phil Galewitz writes for Kaiser Health News.

    How do providers view fixed asset strategies?

    Hospital industry consolidation leads to real estate value

    According to Galewitz, the trend of repurposing old hospital buildings comes as real estate values soar across the country and as some hospitals shut down, amid decreasing demand for inpatient services, growing investment in outpatient clinics, and increasing consolidation. In fact, the latest federal data indicate the overall number of hospitals in the country has dropped by 21 percent over the past 40 years, down to 5,600 nationwide in 2014, Galewitz reports.

    Moreover, David Friend, chief transformation officer at consulting firm BDO, explained that many older hospitals are too out-of-date to be outfitted to fit the needs of modern hospitals, such as large operating room suites and private rooms.

    But real estate developers say the shuttered hospitals are often located in attractive locations, such as the city center or spots near mass transportation routes. Further, the hospital layouts—including wide hallways and high ceilings—make them easy to renovate as condominiums and apartments.

    Friction with local communities

    However, people in a given community often have strong emotional ties to hospitals—where they and those they know may have been born, cared for, or passed away—so the trend hasn't come without controversy, Galewitz writes.

    For instance, the community in Greenwich Village, New York, voiced complaints when Rudin Management in 2014 redeveloped the shuttered St. Vincent's Hospital into high-end condominiums, one of which allegedly sold for $40 million. According to Galewitz, the community was upset that the local hospital, which had traditionally cared for low-income populations and had even treated Titanic survivors, had been converted into a residential building for high-income individuals.

    And there were also concerns about health care access, Galewitz reports. Jen van de Meer, an assistant professor at the Parsons School for Design and area resident, explained, "Now, if you are in cardiac arrest, the nearest hospital could be an hour drive in a taxi or 20 minutes in an ambulance across the city."

    But some of the renovations are welcomed by the local community, Galewitz writes. For example, residents of Capitol Hill in Washington, D.C., said they were pleased with how developers who converted Specialty Hospital Capitol Hill into an apartment complex preserved the original structure's architecture. Nicky Cymrot, president of the Capitol Hill Community Foundation, said, "They did a beautiful job."

    Not just apartments and condos

    According to Galewitz, not all of these old hospitals are turned into apartments and condominiums—some have slightly more unusual second acts.

    For instance, developers in 2016 converted a shuttered hospital in San Diego, which had originally closed in 2007, into a language school, which helped boost the local economy, Galewitz writes. And movie crews have made good use of the empty rooms and discarded medical equipment abandoned in the Linda Vista Community Hospital in Los Angeles, which opened in 1905 and closed in 1991—movies including "Pearl Harbor" and "Outbreak" shot scenes there. According to Francis Kortekaas—assistant superintendent of Amcal Multi-Housing, which bought the hospital in 2011—the property also attracted thrill seekers looking for haunted hospitals, including Boyle Heights Paranormal Project.

    Amcal eventually turned the former hospital into affordable senior homes, renovating the entire building while maintaining some of the building's historic features, Galewitz reports. "They really rescued a building with tremendous history ... while providing really needed low-income senior housing," said Linda Dishman, CEO of the Los Angeles Conservancy, a group whose mission is preserving and revitalizing historic buildings in the area. "It is such an iconic building in the neighborhood" (Galewitz, Kaiser Health News/CNNMoney, 10/7).

    From healthy food access to stable housing: The case for collaboration with community partners

    Population health leaders know that health care delivery is incomplete without addressing the social determinants of health. But effective patient management cannot only include tasking care teams with addressing patients' social needs on top of their complex clinical needs.

    Instead, providers should also partner with community-based organizations already providing quality non-clinical support for a range of needs, from healthy food access to stable housing, to scale patient management beyond traditional care settings.

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