As the summer comes to a close, we are still hot on the trail of the WellPath Health story, our fictional composite based on nearly 90 of our clients’ experiences.

Last month, the local business journal published an article reviewing the last year of WellPath’s L.A.S. (Life after STRATUS) at the organizational level. This month, we will be speaking with the Director of Real Estate, Nick Massey, about the difference that STRATUS has made on the real estate side in speeding up approvals and implementation of projects.

Can you describe your role at WellPath and a bit of your background?

Before WellPath, I worked in commercial real estate for a long time, working mostly within the retail, banking and telecom industries managing large real estate portfolios of up to a thousand locations. That was really a big part of why they brought me here two years ago; to bring a bit more sophistication and experience to the real estate process for WellPath.

Before STRATUS, can you explain a bit about how your team worked?

When I came, the organization had 35 locations and really no one at the helm of the real estate department.  As you can guess, there wasn’t much of a planning process to speak of and most activity was reactionary at best.  I added two dedicated real estate planners to my staff and we outsourced the basic functions to become more efficient.  However, it was still very difficult to pull off real estate transactions with any success because we could not get the business leaders to make decisions or give us clear direction…everything was a guess or resulted in a stalemate. I was really beating my head against the wall.

How was the organization making decisions before and moving into implementation?

It was either based on the opinions of the business leaders, broker recommendations or existing relationships. Like I said, we had very little factual data to back up where we should locate our ambulatory facilities. The business leaders have financial responsibility for the outcomes, but with the lack of data combined with a lot of political pressure it meant we didn’t get to a lot decisions….good or bad.

Can you give us some examples of the biggest challenges/issues with that process?

Speed to market was the biggest issue we faced. Let’s say one of the execs decided we needed a multispecialty clinic in a particular submarket. So, the next step would be for our real estate team to go out to find available properties. We would come back and present the sites after months of looking, then the waffling would occur…everyone forgot what they asked us for and why…no consensus on the need, and the whole process would flounder. A few months after that we would come to a decision, but by that time, the properties we identified would no longer be available…either leased to a competitor or another retail business. Then we would have to start the whole process again.  Add to that the fact that our brokers got burned from doing a ton of work with no completed transaction and you have a pretty vicious cycle.

Now that your organization is using STRATUS, how has that process changed in regards to getting approval and moving to implementation?

It’s as different as night and day.  Now, when our real estate team gets a request to find properties, there is already consensus within the organization on what service lines have opportunity, the number of physicians needed and therefore the approximate size of the real estate required. All this is provided by STRATUS and all of our business leaders have full faith in the outputs generated. Our strategy team works with them closely to build 3-5 year strategic plans and our real estate team greatly benefits.

Now, I am able to engage our brokers with very concise instructions: Find me all options that fit these requirements within 1 mile of this particular intersection. With this specific direction, our brokers can spend their valuable time finding true opportunities for us rather than wrangling us for a decision.

Additionally, now we are trying to solve for a network of optimal locations across a market, not just the next best site. This allows us to be proactive in creating real estate opportunities for the future…even if sites are not available today.  It sure makes prioritizing sites across the market much easier as well. Not only can we compare the expenses like we have done traditionally, but now we can layer in accurate revenue projections to get a true ranking.

How would you compare STRATUS to other similar systems you have seen?

STRATUS is unlike any other system I have seen in the past.  It’s a complete package for ambulatory planning…others just give you bits and pieces.  Its amazing RES could accommodate the complexity of our organization with all the specialties and has given us the flexibility to create our own scenarios and build solid business cases from that. The underlying complexity and reliability of the results makes it defensible so we can present, decide and move quickly into the market and site selection.

How would you compare real estate for healthcare to retail world you came from?

Healthcare is going through a similar evolution that retail and banking industries went through over the last several decades. Healthcare continues the shift to a more retail-like environment with the focus on convenience to the consumer, i.e. patient. As it relates to real estate, now we aren’t just competing with other healthcare organizations, we are competing with retailers who have had this nailed down for a long time. With STRATUS, we can compete even with those guys. And, as hospitals continue to consolidate, STRATUS will be critical for the consolidation of portfolios and identifying opportunities in an extremely competitive environment.