Product Focus: Medical Fitness Centers (September 2006)

Hospitals look to get ‘fit’

MEDICAL FITNESS CENTERS ARE A GROWING TREND

 

By Sonja Pedersen-Green

 

Not only do medical fitness centers have the ability to keep people healthy, but they have the capacity to make hospitals feel better – financially and image-wise – as well. That’s because medical fitness centers are typically affiliated with a health system and can bring in added revenues while giving a hospital a good name and extra business  in the local community.

The fitness centers we’re talking about certainly can resemble traditional gymnasiums or today’s newfangled fitness club, with all of the exercise machines, aerobics classes, cafés, day spas and pools. But where these centers go the extra mile is in integrating medical services such as physical therapy and cardiac rehabilitation with exercise and fitness.

In fact, in many cases the classes and exercise or rehab programs offered at medical fitness centers are often approved, even designed, by medical doctors affiliated with sponsoring hospital. The people who use the services at medical fitness centers are often those who are just beginning to incorporate exercise and a healthy lifestyle into their routines and do not want to be part of the “health club” scene, with all of its spandex and “beautiful” people. There are also programs and classes for people looking to lose weight, to prevent certain illnesses and diseases, or to recover and rehabilitate from cardiac problems, surgery or serious injuries.

Some in the healthcare industry believe that a medical fitness center – because of its affiliation with a hospital – might just be the best place to attract such clients.

Humble beginnings

As far as industry experts can ascertain, medical fitness centers had their start in Texas back in the 1970s. The Cooper Fitness Center, which is part of the larger Cooper Clinic in Dallas, is thought to be the original medical fitness center. The Cooper Clinic concentrates on preventive medicine.

By 1985, there were an estimated 79 such centers in the United States. Later, after medical fitness centers gained steam in the late 1980s, the Medical Fitness Association (MFA) was formed in 1991.

The MFA, which is associated with the American Hospital Association, is an organization aimed at assisting, representing and promoting medical fitness centers.

While there are no hard and fast rules about what constitutes a medical fitness center, the MFA defines one as a facility owned or co-owned and operated by a hospital or other healthcare provider. Such a fitness facility must also offer clinical care with a medical staff – the major distinction that defines such a facility as a medical fitness center and sets it apart from a typical health club. Medical fitness centers are becoming part of what is known as the continuum of medical care provided by hospitals and clinics.

Typically, medical fitness centers focus on overall health and wellness. The goal is individual health, with disease prevention, rehabilitative services, or other individual needs, thrown in. Often, a program is designed for each member.

In addition, medical fitness centers can also offer exercise programs and a variety of services for a broader range of clients – much like the programs, classes and equipment offered at typical retail fitness centers.

Yet, the exercise equipment provided at medical fitness centers typically can accommodate patients with specific needs, such as those in physical therapy or rehabilitation programs. For example, a medical fitness center will often provide low-impact exercise machines or treadmills with very low speed options. It can offer pools and aquatic centers specially designed for rehab patients.

Moving off campus

In some cases, medical fitness centers are attached to a hospital. But increasingly, the facilities are being moved off campus to locations that are convenient for consumers, according to Allison P. Wilson, vice president of Wilmington, Del.-based Anchor Health Properties. In such cases, however, the medical fitness centers remain affiliated with a hospital or health system.

“They’re being moved off of hospital campuses and into areas where people live, similar to a regular retail fitness center,” says Ms. Wilson.

Clients at medical fitness centers “feel they have a lot of attention,” she says. “The focus is on total wellness, not on just looking good.”

Robert Stauble, co-founder and chief development officer of Glastonbury, Conn.-based Healthtrax, says there are three different models of medical fitness centers.

“Every time a hospital gets involved with a fitness center,” he says, “it’s called a fitness center, but there are really a couple of different models.” 

Stauble says those models are: facilities that are attached to hospitals; stand-alone facilities flagged with hospital’s name; and what Mr. Stauble calls the latest trend, a “wellness MOB.”

A wellness MOB, according to Stauble, is a “new breed” of fitness center, one “where a hospital-partnered medical fitness center anchors a medical office building” that contains other medical-related tenants. Stauble says such a facility is the fastest growing of the three models.

Healthtrax is involved with 17 medical fitness centers in the East. In most cases, Healthtrax is the co-owner of such a facility with a hospital. The real estate is typically owned by a third party to which the hospital and Healthtrax pay rent , according to Mr. Stauble.

“We run the gamut from owning zero percent of a fitness center and managing it for a hospital to owning 100 percent of it but having an affiliation with a hospital, which then is involved in providing some of the equipment and staff to help design programs and classes,” Mr. Stauble says.

For example, a medical fitness center might offer a class aimed at getting snow skiers ready for the upcoming season. An orthopedic physician might design the exercises, which are then administered in a class setting by the fitness centers trainers.

An example of how Healthtrax’s partnership with a hospital might work can be found in North Haven, Conn. There, in the fall of 2005, Healthtrax and the hospital opened, as 50-50 partners, the 35,000 square foot Gaylord Medical Fitness Center. The fitness center is the anchor tenant of a 45,000 square foot MOB that is home to other medical tenants as well.

Growth on horizon

The AHA estimates that there are about 855 medical fitness centers across the country. In all, there are about 3 million members at such facilities.

Business is certainly not stagnant, according to the AHA. For example, in 2004, there were 715 medical fitness centers and 1.9 million members. By 2010, however, there will be an estimated 4 million members and a significant increase in facilities, according to the AHA.

“The involvement of medical professionals (in the fitness industry) continues to grow,” says Dave Borland, president and CEO of Hospital Fitness Corp., an Evanston, Ill.-based medical fitness center developer.

“Not too long ago,” Mr. Borland says, “Fitness centers and medical professionals were not involved with each other.”

Even though medical fitness centers are expanding to various parts of the country, the major concentrations remain in larger cities in the Midwest, such as Chicago, and in Southeast and Northeast, Mr. Stauble says. In addition, there is growth taking place in smaller markets, too.

Mr. Stauble notes that medical fitness centers have not taken hold on the West Coast, adding “it’s one of the few health trends that didn’t start in the West.”

In most cases, medical fitness centers do not necessarily compete with other medical fitness centers, according to the MFA. This could be due, in part, to the average age of the members at such facilities.

There are certainly a variety of reasons why the number of medical fitness centers will continue to grow, according to those involved in the industry. Ms. Wilson notes: “We’ve see a lot of physical and cardiac rehab centers combined with medical fitness centers. We’ve seen a lot of growth with our clients. Rehab facilities are being remarketed to a consumer-oriented base.”

Mr. Stauble adds that medical fitness clients are, typically, those who do not want to be, for a variety of reasons, members at the large, national chain health clubs. Those clients range from people who need rehab services or therapy, those who consider being a member at a hospital-affiliate fitness center to be a healthier choice, and those who consider a medical fitness center to be more “civilized.” Those folks don’t feel comfortable working out amid people wearing spandex outfits, he says.

The perks of medical fitness

Adding a medical fitness center can be a strategic move for a health system or hospital. That’s because such centers might appeal to and attract the consumers who rarely need a hospital’s services: healthy people.

Adding a medical fitness center, in other words, can compensate for a hospital’s recent reductions in insurance and Medicare reimbursements.

Mr. Borland notes that hospitals often add medical fitness centers for two main reasons: “economics and image.”

“Most hospitals say that prevention is a key part of their mission,” he says, “but even when it’s built for an altruistic reason, the hospital needs to prove it will make money.”

Ms. Wilson notes that by adding a medical fitness center to its list of medical services, a hospital “can do something good for the community. It can also build a loyal customer base. And because the fitness center attracts customers who might not need acute care, adding a medical fitness center is another good way for a hospital to get its name out there.”

Mr. Stauble says that adding a medical fitness center can help a hospital “eclipse its competition.”

“This is especially true if their building’s more dramatic,” he adds. “It’s a strategic distinction.”

About the only negative that Ms. Wilson can perceive for a hospital adding a medical fitness center is that it’s often hard to “make the fitness industry work economically.” She cautions that hospitals “need to be careful with their costs and strategy. They have to be strategic about how they market medical fitness centers.”

But Ms. Wilson says that when hospitals partner with companies that specialize in medical fitness and know how to market them, the arrangement can be beneficial. Ms. Wilson also notes that because the concept is relatively new, some hospitals “go in and learn about the industry, and then gradually phase out their partner.”

Medical fitness centers are making money. The MFA says that the average medical fitness center generates $36 a square foot in revenue each year.

 

Small town fitness

 

Major growth in the industry happened in the 80s and 90s – mainly in larger cities, according to Mr. Borland.

However recent trends show that medical fitness centers are cropping up in smaller cities as well.

Mr. Borland goes so far as to say, “Medical fitness centers are a phenomenon of smaller cities in America.” He attributes the trend to the mission statements of hospitals in such areas.

“Community hospitals are more focused on the health and well being of their patients – they are able to focus on the total health of their patients,” Mr. Borland says, “They feel a sense of responsibility to their community.”

On the other hand, larger urban-based hospitals often need to focus more on providing acute-care rather than the total health of their patients, he believes.

Mr. Stauble, however, says that the biggest growth potential for medical fitness centers is in suburban areas, mainly because in rural areas “it’s harder to make the numbers work.”

He believes the trend, as noted earlier, is toward more wellness MOBs in suburban areas. In fact, Mr. Stauble says that for a medical fitness center to exist and thrive in a rural area, the hospital/owner would need to own and manage the medical fitness facility on its own – something he believes is a trend of the past.

Mr. Stauble says that one project his firm is involved in represents at least two new trends in both medical fitness centers and mixed-use real estate development. Healthtrax is forming an affiliation in a medical fitness center with Hartford Hospital in Hartford, Conn.

The 35,000 square foot medical fitness center will be the anchor tenant of a four-story, 110,000 square foot “wellness MOB” within the newest portion of the 310,000 square foot, mixed-use Blue Back Square lifestyle center being developed by an LLC composed of three real estate developers. Healthtrax will be the 100 percent owner of the medical fitness center and will pay rent to the owner of the lifestyle center. Hartford Hospital will be partners, with physicians, in a surgery center within the MOB and will have an affiliation with the medical fitness center.

“I think this represents the latest in several trends,” Mr. Stauble says. “Lifestyle centers are a new breed of mixed-sue development, with residential above retail, and wellness MOBs are a new breed of medical facility with a center atrium, healthcare tenants involving wellness and a medical fitness center. I think it represents the future.” q