UT Orthopaedic Institute in Knoxville, Tenn., achieves multiple goals
By John B. Mugford
Locally based Realty Trust Group (RTG) LLC, a longtime HRE firm, led the development of the soon-to-open UT Orthopaedic Institute across the road from the sprawling UT Medical Center campus in Knoxville, Tenn. The facility, which includes a 32,500 square foot ambulatory surgery center (ASC), is operated and occupied by a partnership of University Health Systems, University Orthopaedic Surgeons and OrthoTennessee. (Rendering courtesy of RTG)
In the healthcare real estate (HRE) sector, relationships matter.
A good example of this can be found in Knoxville, Tenn., home to the University of Tennessee (UT) and its 710-bed Medical Center (UTMC), an academic medical center that is part of University Health Systems and whose Graduate School of Medicine (UTGSM) oversees residency and medical student education.
For more than 20 years, a well-known local firm, Realty Trust Group (RTG), has had an ongoing relationship with the university’s health system, as well as locally based University Orthopaedic Surgeons and OrthoTennessee. RTG, which was founded in 1998 by President Greg Gheen and is focused on the HRE and life sciences real estate (LSRE) sectors, is based in Knoxville, and has offices in six other cities in Tennessee, North Carolina, Florida and Texas.
In recent years, as UTMC, University Orthopaedic Surgeons and OrthoTennessee began evaluating the feasibility of developing a new joint venture (JV) operated ambulatory surgery center (ASC), medical office building (MOB) and research facility to replace the Advanced Orthopaedic Center, RTG assisted and offered its HRE expertise.
After all, RTG has completed more than $2.4 billion worth of HRE transactions, including developments, and currently manages more than 16 million square feet of HRE space.
When the entities decided to move forward, they chose RTG as the developer through a competitive request for proposals (RFP) process.
Construction started in October 2020 and a ribbon cutting is planned in July 2022 for the new 91,000 square foot Orthopaedic Institute at 1600 Accelerator Way, which is in the University of Tennessee Research Park at Cherokee Farms. The new Orthopaedic Institute is just across Alcoa Highway from the sprawling, massive UT Medical Center campus. The medical center campus, as well as the research park, are on a thumb of land framed by the Tennessee River and are just across the river from UT’s main campus.
According to Chad Simpson, executive VP with RTG, and Mr. Gheen, RTG is involved in the ownership of the facility in a partnership with University Health Systems and OrthoTennessee, including physicians.
“The facility represents an ongoing partnership by University Orthopaedic Surgeons, OrthoTennessee and UT Medical Center to collaboratively meet the changing medical needs of the greater community in East Tennessee,” Mr. Simpson tells HREI™.
“The JV accomplishes several goals,” he adds. “First, UHS desired for continued alignment of interests with the physicians; and OrthoTennessee wanted all physicians across their organization to participate in the real estate ownership, and this project was an anchor project for a newly formed physician real estate ownership platform.”
The facility has been fully pre-leased since construction started, and it contains a 32,500 square foot ASC; a walk-in orthopedic urgent care center; an after-hours injury clinic; an imaging center; physical therapy; and, on the top floor, 17,000 square feet of space for orthopedic and other medical research, which, according to UT Medical Center, is “the ideal fit for the mission of the research park.”
Preparing for the project
During the feasibility phase of preparing for such a project, RTG helped assess and find the right site.
According to Mr. Simpson, the key drivers for the chosen location include that it is in UT Research Park, which is “highly visible to the community.” It is also part of a destination for those traveling to UT Medical Center and, because of its close proximity to the hospital, it is convenient for trauma surgeons. Also, the facility’s ownership partnership was able to enter a ground lease for the land, which is controlled by UT.
“The research park where the orthopedic institute is located consists of 16 building sites, seeding partnerships with nationally recognized companies and entrepreneurs and start-ups,” Mr. Simpson notes. “Investments in the park are being made in material sciences, advanced manufacturing research and life sciences.”
Building the new orthopedics institute so close to the UT Medical Center also allowed for the relocation of the University Orthopedic Surgeons’ clinic from the main campus at UT Medical Center and into the new facility, freeing up inpatient surgical capacity for orthopedics and other specialties in the main hospital while also moving outpatient cases and surgeries to a “lower-cost setting,” according to Mr. Simpson. “This project also allowed the physicians to consolidate and expand their clinic, physical therapy and imaging space into one location.
“Because of the location, UTMC considers the project to be an on-campus one, given the easy access and connectivity for physicians back and forth to the hospital.”
The first floor of the three-story building serves as the ASC, which includes five operating rooms (ORs) – with an expansion to seven ORs planned for the future – three procedure rooms and an advanced imaging center.
Among the services and procedures to be offered in the facility are: sports medicine; shoulder and elbow; hand and wrist; minimally invasive carpal tunnel surgery; in-office, simple hand procedures; foot and ankle; outpatient joint replacement surgeries; and orthopedic oncology.
“The project was delayed for two months during the pandemic,” Mr. Simpson notes. “However, both organizations decided it was the right project at the right time given various needs in the community and organizational strategic goals. We were able to start construction on the project in October 2020 and were able to re-bid and save significant dollars during the ‘soft spot’ in construction pricing as the market was re-setting itself.
“As the project comes to a completion, we’ve been able to overcome several supply-chain challenges to open the building as scheduled and on-budget.”
So far, “the feedback from physicians has been overwhelmingly positive,” Mr. Simpson says. “Some of the most pronounced feedback has been around the quality of the facility and the ease of access to be provided for patients to services in one location. The University of Tennessee collaboration also continues to strengthen on the research side as well.”
“This new facility is designed to provide comprehensive orthopedic excellence to meet the changing needs of this community for years to come” said Jon-David Deeson, CEO of OrthoTennessee, in a news release. “Every part of this project was intentionally planned to improve the patient experience and reduce cost of care without compromising our commitment to provide the best care possible.
“The team at RTG did an outstanding job working with our design and construction partners to help bring our vision to reality. This is the only facility of its kind in the region, and we are thrilled to make this resource available to our patients.”
Update: UT Orthopaedic Institute, which officially opened July 14, 2022, was delivered on time and 7 percent under budget. The building is 100 percent occupied on 15-year leases with long-term fixed-rate financing of less than 3 percent. The project was named a Finalist (Best New Medical Office Buildings and Other Outpatient Facilities (50,000 to 99,999 square feet) in the 2022 HREI Insights Awards, which recognize excellence in HRE development and executive leadership.
University of Tennessee (UT) Orthopaedic Institute
1600 Accelerator Way, Knoxville, Tenn.
STATS
■ Project cost: $37.6 million
■ Project Size: Three stories, 91,354 square feet
■ Location: UT Research Park at Cherokee Farms
■ Start of construction: October 2020
■ Opening: July 2022
■ Contains: ASC, urgent care center, physician offices, research space, underground parking
■ Occupancy: 100 percent
PLAYERS
■ Developer/co-owner: Realty Trust Group
■ Client: University Health Systems, University Orthopaedic Surgeons and OrthoTennessee
■ Designer: BarberMcMurry Architects
■ Contractor: Christman Company
■ Leasing/property management: Realty Trust Group
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