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Harrison Medical Center’s real estate experiment pays off for Peninsula patients
February 3, 2010 @ 2:49pm | Michael A Moore
The visually striking building with its two story curving glass-fronted atrium connects seamlessly to the original 33,000 sq.ft. gray block building and gives the South Kitsap Medical Campus an exciting new look.
What few people realize is that the expansion of South Kitsap Medical Campus became an experiment in asset allocation and management for Harrison.
When the expansion project started in 2008, Harrison was the owner of the seven-acre property at the Tremont exit of SR 16 in Port Orchard.
By the time construction began, Harrison had sold the campus to Poulsbo-based Tim Ryan Properties, a sister company of project general contractor, Tim Ryan Construction. Harrison then signed long-term leases for the space they would need in the expanded facility.
“Hospitals are always struggling with the question of where to put their money, buildings or expanded services,” said Tom Kruse, V.P. of Strategy and Business Development for Harrison Medical. “The sale of the property and buildings to Ryan has allowed us to have both.”
The Harrison-Ryan deal freed up more than $7 million dollars in capital for Harrison Medical.
“We have been able to use that money to move forward with expanding our services throughout the Kitsap Peninsula,” said Kruse. “We have hired more staff for patient services and are investing in new technology and equipment. That’s a much better way to serve our community than maintain and staff for property and building management.”
Kruse says that this type of deal is becoming more common in the healthcare industry, but was still leading edge when the Harrison-Ryan partnership took place in late 2008.
“When we planned this expansion at South Kitsap, we wanted to make it something that everyone — the community, patients, doctors and staff, could be proud of.” Kruse stated. “When Ryan bought the property and buildings, they could have cut back on the design to save money but did not.
“Ryan chose to stay with Rice Fergus Miller’s dramatic design. They shared our belief that the expanded medical campus should be the premiere medical facility in south Kitsap County.”
Harrison’s decision to monetize its South Kitsap Medical Campus asset was probably helped by the fact that Tim Ryan Properties and Tim Ryan Construction are among Kitsap County’s largest developer/owner/builders of outpatient medical clinic and office buildings. Ryan developed and built projects include the Salmon Medical Building, home of the Doctor’s Clinic in Silverdale and the Poulsbo Medical Village in Poulsbo.
“Our focus is on the long term.” said Dan Ryan, president of Tim Ryan Construction and a partner in Tim Ryan Properties, LLP.
“We knew that Harrison’s vision for South Kitsap was to make it a place that patients would love to come to for medical services, and doctors and staff would be proud to work. We shared that vision,” said Ryan.
“Most developers would have looked on the two story glass atrium as an unnecessary expense. We saw the atrium as a positive asset. Harrison and RFM intended for it to visually and physically integrate the new and old buildings as well as provide a warm, dry, light-filled connection for patients and staff to get from part of the facility to the other. It has worked out really well over this last year.”
Tom Kruse agrees that the deal with Ryan has worked out well.
“We are very happy with our decision to do the sale/leaseback deal,” he says. “It has allowed us to focus on our core mission of providing more and better services to our patients and community without sacrificing the quality of the environment where those services are offered.
“The way I see it is that we do heart surgery much better than Tim Ryan Properties, and Ryan is a lot better at building, managing property, and negotiating with tenants than we are.”
Harrison has continued to expand their presence at South Kitsap Medical Campus in the year since the Urgent Care facility opened.
Tim Ryan Construction recently finished Harrison’s new 6,000 sq.ft. Primary Care facility in the new building, directly above the ground floor Urgent Care spaces. Harrison is in the process of expanding its rehabilitation facilities in the original building.
Harrison’s future plans for South Kitsap Medical Campus include opening medical offices for specialists to use on a rotating basis.
“That way patients won’t have to go to Bremerton or Silverdale to see their specialist, their specialist can meet them at South Kitsap,” Kruse explains. “We are always looking for new ways to bring docs closer to their patients.”
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