Scope Out the Landscape Prior to Building your Next UCB
In a recent webinar with The Ambulatory M&A Advisor, Nathan Palmer, Vice President of National UC Realty discussed the importance of location and understanding the surroundings of your Urgent Care Business. Palmer’s two biggest points were on competition saturation and physical characteristics and locations of clinics.
According to Palmer, trying to understand one’s surrounding means you need to examine where your competitors are, how they are located and how their clinics are positioned.
“This matters for a variety of reasons depending on a client’s specific interests. Whether that is adding new facilities, relocating, understanding risk factors. Maybe you had some new clinics open up nearby, how can you anticipate any effects that [competitors] will have on patient volume,” Palmer says, adding that not all competition is created equally.
Palmer says that some competitors you will evaluate are consistent with your practice, but then some other competitors like a U.S. Healthworks or a Concentra may have a bigger end game in their plans.
“There are different regional groups like them whose primary focus is the occupational health side of this piece. There are also pediatric after hours types of places. You can see they are only open during the evenings, no X ray, limited hours etc. So, really trying to understand the competitive landscape around you is important,” Palmer says.
Palmer stresses the importance of understanding the statistics of your demographics and surrounding locations. Palmer believes the best locations are in the best proximity to what he labels as a “regular traffic generator.”
“Regular traffic we like best are primarily your regular grocery store anchored centers. Nationally we know that the average family visits those 2.2 times a week. This is more frequently than any other big box retail that is out there,” Palmer says.
Palmer says that in his experience, clinics in these areas seem to do better quicker and stay successful for a prolonged amount of time. Palmer advises that when looking to expand or open up a new clinic, ask yourself why people are coming to this certain area on a regular basis.
“Obviously, wanting to be in those core retail areas is vividly important,” Palmer says.
“When you have an urgent care or have clinics that maybe aren’t in major retail pockets, it’s important to understand where those are around you. Maybe a mile or two miles in three or four directions is where people are going on a regular basis and really where you need to have some exposure. “
According to Alan Ayers, Vice President of Market Development for Concentra Urgent Care, one of the most common reasons consumers cite for using an urgent care center is its proximity to their home.
“So the first thing you should consider when picking a location is the number of households within one to three miles, as well as the demographic make-up of those households,” Ayers says on the importance of demographic knowledge when opening up your new clinic.
Going into the topic of demographic knowledge, Palmer says that although it is important to be near a retail location, potential owners need to keep in mind that a lot of times you start to cross over natural man made boundaries like bodies of water and highways.
“Realistically, what is the expectation that people are going to be willing to come see you based on proximity or access to other healthcare providers that may be more convenient?” Palmer asks.
“Someone could argue that somebody would be willing to drive 15 minutes for healthcare access. But, if you look at where this store is located relative to much of its population base, many of the people who live in that drive time distance have easier access to other providers. It’s really important to understand your reasonable trade area that you are going to be able to draw people from, not some fictitious number that you think people would be willing to come based on five miles. They might. But, they have got to cross the highway; they have to pass two competitors. What is the realistic opportunity that they may be willing to do that?”
According to Ayers, location and visible signage are crucial for a strategically placed urgent care center, but there are other factors that should also be considered.
Ayers says that if a center signs a lease at too high of a rental rate – no matter how good the space is – or if it spends too much money building out that space, the center may put itself in a situation where it can never be profitable.
“So while demographics and traffic counts are a consideration, they must be balanced with a business case that balances revenue potential and total costs. Because urgent care is a business, picking a community and location should be driven by business potential first,” Ayers says.
Palmer says when it comes to helping people select a site, he thinks it is important to show the differences in business potential and value based on the actual location of the site.
Based on Palmer’s statistics, a poor location is where the building is hidden and barely noticeable compared to surrounding buildings and also has poor signage.
“An average location would be where a building is end capped, but blocked from view until a patient is close. They have got some signage there but the shopping center has got some foliage on the road, kind of interfering with the success of the signage,” Palmer says.
A good location would have a pretty visible end cap, limited distractions between the road and the clinic. This goes all the way to the obviously excellent location where the clinic is a stand-alone building, is extremely visible and the signage is electronic and also extremely visible.
William Williams, COO at 7 Day Clinic says he believes a key part of a successful location revolves around people being able to literally drive up and walk in just like a retail store. This description coincides with Palmer’s ideal “excellent” clinic location.
“That helps with their convenience. They know right where they are going. They are greeted immediately at our clinics; they don’t have to climb stairs, take elevators or go to desks,” Williams says.
He adds that a clinic with this type of ease of location, patients are seen and served in a very prompt manner.
If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com.
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