Hospital building boom gets boost
New law may hasten companies’ long-term expansion plans.
Ten years ago, there was no such thing as Free Standing Emergency Department in Central Florida. Now the there’s over a dozen of them open or in development, representing over $200 million in investment by the region’s three largest hospital companies.
And the health care building boon is just getting started. The Florida Legislature’s passage this year of a new law (HB 21) will accelerate construction of new hospitals in Central Florida and could bring new players into what’s now an open market to compete for a share of the state’s fastest growing economy.
The law, which went into effect July 1, eliminates the
requirement for hospitals to apply to the state Agency for Healthcare Administration for Certificates of Need to build new acute care facilities or add specialized services, such as organ transplant programs.
The region’s two largest hospital companies, Orlando Health and AdventHealth, told GrowthSpotter the change doesn’t necessarily alter their long term expansion plans, but it does kick them into high gear.
Because it operates across multiple states, AdventHealth already has experience in markets that don’t require CONs. Daryl Tol, Advent’s Central Florida CEO, said the CON process could add months, or even years, and hundreds of thousands of dollars to the cost of new acute care facilities.
Meanwhile, health care providers would land-bank sites for future growth or plant stakes in the ground with new Free Standing Emergency Departments throughout the region.
“In non-CON states, you don’t have that threshold, so it’s much more aggressive,” Tol said. “Think of our free standing emergency room dynamic in Central Florida right now. That becomes, in some ways, the acute care dynamic without CON. You have large and small things going everywhere, so we’re used to that.”
Orlando Health has new campuses planned in Lake Mary, Randal Park and Reunion. The repeal of CON doesn’t change those plans, according to Erick Hawkins, senior vice president for strategic management.
“We believe, however, that it will allow us to bring to market some of those assets sooner, because there won’t be the process of applying. And then, in some cases, the legal challenges that are put forth,” Hawkins said. “So for us, we’re excited to be able to get the Orlando Health value proposition out to the consumer
sooner through not having to have that extra step.”
AdventHealth recently opened a new hospital in Apopka and is building one in Winter Garden. The company also opened a FSED in Waterford Lakes in 2018 and just broke ground on another in Lake Nona. At least two more are in the pipeline near Disney and on U.S. 192 in the Kissimmee-St. Cloud market, according to plans filed in the last month.
The new rules give the providers more flexibility, too. So Orlando Health could add a modest number of acute care beds to allow for overnight stays at its new Tupperware FSED. And it could fast-forward the the full-service hospitals planned at Randal Park and Lake Mary.
At Reunion, Orlando Health recently paid $14.4 million for nearly 28 acres at the I-4 interchange. Earlier this month, HCA announced it had struck a deal with the master developer of ChampionsGate to locate a new FSED — it’s fifth — about a mile away, just north of the intersection of ChampionsGate Boulevard and Ronald Reagan Parkway.
Expect to see more of that head-to-head competition, according to Anne Spencer, director of office and health care brokerage for Cushman & Wakefield.
“Hospital growth is not driven by what the government says you can and can’t do. It’s driven by population growth,” she said.
And Orlando is one of the fastest-growing metros in the nation. Hospitals have already built facilities right across from each other - like AdventHealth did with its new FSED across from HCA’s Oviedo Medical Center on Red Bug Lake Road.
“I always draw parallels between health care and retail,” she said. “If you look at what a retail user is doing — a Starbucks or a Lucky’s Market, or whatever — they’re looking at demographics, and they’re saying who are our customers? Health care’s the same way. Who are our customers – our patients, what’s not here and what should be here. Who’s my competitor and do I make a defensive move or an offensive move?”