Rene Larkin: My name is Rene Larkin. I’m a shareholder in our Denver office of Hall Render, and I do real estate transactions, general transactions, and work is kind of a general counsel for some of our small critical access hospitals in the mountain West. I’m going to turn it over to our panelists to let them introduce themselves. So we’ll start with Matt Crawford.

Matt Crawford: Thanks Rene. My name is Matt Crawford. I’m the vice president of real estate and ambulatory facilities for Bon Secours Mercy Health, a Catholic non-profit healthcare system located in Cincinnati, Ohio. I oversee our transactional activity in our real estate portfolio, as well as our ambulatory facility management platform and the administration of our portfolio at large. Glad to be here.

Kelly Adams: Hi, my name is Kelly Adams. I’m in-house counsel for SCL health headquartered here in Broomfield, Colorado. We have hospitals throughout Colorado and Montana. I provide legal support for strategic growth transactions in real estate matters and our joint ventures. My counsel on acquisitions, dispositions development work, and also negotiate leases as in timeshares. Also partner with our real estate management team CVRE to help improve systems that manage our real estate portfolio. I’ve been with the system for just over a year and prior to that, I was in private practice with the Denver office of Ackerman. Thanks for having me.

Cindy Black: Thanks Rene. My name is Cindy Black. I’m the director of real estate at IU health. We’re headquartered in Indianapolis, Indiana, and we have hospitals and we deliver care across the State of Indiana. I work with a team that manages all of the transactions, the asset management and the lease administration partner with internal providers who help us deliver construction services throughout the system. And just happy to be here and talk to you about what we’re doing.

Heidi Hohendorf: Hey Rene. My name is Heidi Hohendorf. I’m sooner legal counsel for Spectrum Health. Spectrum Health is a nonprofit integrated healthcare system serving Western Michigan. We have a presence as far North as Trevor city, Michigan, all the way down to the Michigan Indiana State border. With our corporate headquarters in grand Rapids, Michigan our real estate portfolio consists of approximately 12 million square feet. We’ve got about 10.5 million that we own. And 1.5 million lease that consists of 14 hospitals, including a dedicated children’s hospital, 11 urgent care centers, various different physician offices, and seven integrated care campuses. My role includes providing… I’m involved with reviewing negotiating drafting contracts throughout the system with a primary focus on providing legal support for our real estate team.

Rene Larkin: Great, thank you again for being here. So as we saw who registered, I think we have a wide variety and diverse attendees participating in the webinar today and signing in. So I think it’d be helpful and instructive if each of you would just kind of talk through your real estate department, how it works, how it interfaces with strategy, business development and finance. So as people are kind of hearing your responses they just might be able to take some application and move it forward with their institution. So we’ll start again just with Matt and kind of go in the same order.

Matt Crawford: Sure. As I mentioned, I’m the area of our department that deals with real estate and ambulatory facilities, sort of think of it as your shorter traditional corporate services platform, your transactions, your brokerage, your property management, maintenance, et cetera. And then the overall administration paying the rent, collecting the rent, dealing with expirations and options, et cetera. I’m oriented as part of a broader group, real estate development and construction. And we have in-house development capabilities, we have a design and construction arm and within my group we’re heavily outsourced. We have corporate partnership with Cushman and Wakefield where we outsource a lot of the blocking and tackling and the fundamental stuff we do in service of the organization. We report through finance and broadly interact with obviously our medical group, our hospital leaders, our group leaders, our market leaders, just a host of folks that perpetuate the activity of a system the size of ours. So fully integrated within the organization. But then again, heavily outsourced as it relates to the services we provide to our constituents both internal and external.

Rene Larkin: Great, thank you Kelly.

Kelly Adams: So our internal real estate team consists of VP over real estate, and then we’ve got a planning construction team, and then like Matt, we outsource a lot of facilities management, lease administration services, brokerage services, things like that to CVRE who’s our management company. They also provide some strategic input in terms of the context of new development and some of our existing assets. And then our leaders in various markets and our business development team work really closely together in tandem with this real estate team on projects and initiatives. I’d say generally speaking real estate is a little bit of an output of a strategy at my organization. There are times we sort of develop an operational strategy in terms of what markets we want to be in. And then the real estate team has really pulled in to identify potential properties or areas for development. And because we sort of have a leaner structure at my organization, I’m sometimes pulled into sort of the more front end strategy for the system as well.

Rene Larkin: That’s great. Thanks, Kelly. Tell us about IU Health Cindy.

Cindy Black: Yeah, so IU health has a really robust platform. We have a pretty well actualized real estate department. Our real estate department has a number of verticals. So we have our transaction management where we do all the leasing acquisitions and dispositions. We have another team that manages the lease administration. We have an asset management group that’s growing as we speak and bringing on more and more capabilities. We also in-house have a design and construction group who actually sits outside of real estate, but we partner with them on most of our transactions, wherever we’re missing capabilities. We bring in third party vendors. So again, all of the sort of support services that Matt and Kelly talked about. We’re bringing in brokers and developers and contractors space planners, architects, engineers, wherever we need them that kind of support so that we can deliver a complete capabilities to our team, as far as how we work with our strategy folks and our finance folks.

Cindy Black: The strategies delivered both at a system level, regional level, and a local level it kind of depends on the type and the magnitude of the project. So if it’s a new billion dollar hospital that you’re contemplating that’s definitely going to sit at the system level. But we have smaller less large strategies that will be delivered on more of a regional local level, although we are integrated throughout the system. And as Kelly mentioned strategy really is the guiding light who with what it is we want to be doing, right. They make a decision with all the stakeholders that are involved. We provide input information so that they’re making, they have some real estate leaning information to make those decisions, but they make the decision and then kick that back to us.

Cindy Black: And they may tell us what they want and what in perhaps what geographic area or sub-market we tell them what corner there are opportunities on and what the cost of that’s going to be and how that could be structured, whether an own or a lease type of a model. And then with that information, they’ll go back and together we’ll make the decisions. Finances is feathered throughout all of those discussions. So they’re always at the table. It’s just a real dynamic kind of push and pull through as we deliver.

Rene Larkin: Great. Thank you. Tell us about Spectrum Health, Heidi.

Heidi Hohendorf: Yeah, so our structure is very similar to what Cindy just described. We also have an in-house real estate department. That’s comprised of five contract specialists, including two real estate service leads. We have an accountant dedicated to our real estate functions. They’re overseen by a senior director of real estate strategy and planning, and also a VP of real estate and facilities. So this team is very involved in the real estate strategy and planning. They’re often at the table in those discussions, providing input and actually, driving decision-making to and work very closely with our in-house plant operations and facilities teams. We also have an in-house construction team that includes on staff architects, design specialists. So those teams all work very closely together. We do also outsource construction. We engage with contractors for construction projects and whatnot, but we do have a robust in-house team.

Heidi Hohendorf: All of the senior leadership and our real estate department reports directly to the… Well up through the chain reports directly to our chief financial officer. So he’s very involved in decision-making processes related to real estate strategy as well. So that’s how we interact with facilities or with finance, but there’re processes in place where the operational stakeholders are brought in on relevant projects related to the service line. So I’m not involved in the day-to-day behind the scenes strategy, but the real estate team is very angry and in that process with our finance and our strategy teams.

Rene Larkin: Great. Thanks. Well, and so just let me kind of give a roadmap to our attendees of where we want to go today and use this time. We’re just going to kind of talk through trends, reimbursement. I mean, I think it’s been an exciting year in kind of health care in general. One way to put it and just talk through obviously the pandemic is going to come up, but also, normal kind of implications of regulatory reimbursement other industry trends that we’re seeing and how that’s impacting becoming the output for healthcare real estate strategy. And so feel free. There is a Q&A box at the bottom of your screen, feel free to post questions throughout if we can fit it in, we’ll pop it in timely. Otherwise, we’ll try to leave some time at the end for any questions that we didn’t get to but don’t hesitate.

Rene Larkin: We want to interact with you all as attendees and make this kind of as dynamic as possible. So just in that Q&A box feel free to throw any questions that you might have and we’ll do our best to answer them. So I think the first topic want to hit is… I mentioned obviously we’re seeing regulatory changes, reimbursement changes and those are typical without a pandemic. I think one thing we’ve seen this year too, is telehealth. There’s been a great, I think the pandemic was a catalyst for really pushing telehealth use both on the provider and the patient side. So I think that’s one component, but if you guys just want to talk through what you’re seeing in those areas, those trends and how that’s informing your strategy for real estate.

Kelly Adams: I think Rene as you mentioned, that pandemic has really accelerated out of necessity. Some of the telehealth initiatives that were already in place or that we were working towards as a system and right now we’re operating in a much more relaxed regulatory environment that might be tightened post pandemic. But I think telemedicine for us is going to continue to supplement our brick and mortar operations and is certainly a good tool for early consults and follow up visits. I think ultimately it may actually expand our medical office space because we’re able to reach more rural residents in our Colorado and Montana markets and provide consults that would lead eventually to in-person visits.

Kelly Adams: And then I think the other impact that we’re seeing is on construction. So I think there’s some considerations in terms of how our new spaces are designed and constructed to reconfigure facilities to provide technology enabled spaces and remote health monitoring services. And so it’s impacted space planning as well. But I think overall, I see telehealth really as a compliment to our traditional models of delivering care and not so much a replacement.

Cindy Black: I can kind of reiterate what Kelly said. I mean, there’s obviously regulations have a huge impact in our industry and they’re constantly changing. They impact where we locate and they impact how we deliver and how we design our space. And so everyone in the industry has been asking, how is telehealth going to impact your footprint? And early on in the pandemic, leaders that I was talking to felt that gosh, the advent of all of these relaxed regulations and increased use of telehealth would have the effect of reducing our footprint, but actually as we were starting to work through how care is delivered, some of the realities of that are kind of changing our attitude. And while it’s not fully informed yet, what we’re finding is that physician that is sitting in the office, that’s delivering telehealth care needs a PA or another assistant to set up that call and they both have to sit someplace.

Cindy Black: And if that physician is also delivering care in a clinical exam room to patients in the flesh, but part of his scheduled time is virtual care, then he’s got to have two places to be in that same office. So what those workflows look like and how that impacts the design of our space is really something that we’re trying to flush out. I think everybody on this call understands we’re all living in legacy space that was designed for workflows as they used to be. And so we’re just trying to get our hands around what those workflows are going to become and how that will impact.

Heidi Hohendorf: Yeah. To echo what both Kelly and Cindy said so far, we haven’t seen telehealth as having a major impact on any sort of reduction and it’s spate for clinical space that we need. Telehealth is important as a convenience for the patient. And we have been, and will continue to focus on quality of care and patient convenience. And the way that we’ve done that in the real estate world is still far as we have I mentioned earlier seven integrated care campuses. And for us that those are kind of a one-stop shop where the patients can come. They’re located throughout the service areas that we serve. So they offer a range of coordinated health care services from diagnostic to primary care to specialty care. So a patient comes in they are close to their home. They’re not having to travel an hour away to go to the hospital.

Heidi Hohendorf: They have convenient parking, they can come in and get a lab drawn, get an x-ray, go down the hall and see their primary care doctor. So with telehealth being convenient for patients, that’s kind of what we’re focusing on for real estate perspective is just making healthcare simple and affordable and convenient for the patient. So those are some means that we’ve been doing it. Again, I don’t see telehealth reducing the footprint but we can reconfiguring like Cindy and Kelly said to bring in technology to expand that and expand our convenience to the patients.

Rene Larkin: Yeah, I think that’s great. And really insightful. I think the man on the street would probably, if they were asked would assume the opposite. So another thing, and Heidi, you hit on this and maybe Cindy, if you want to talk about this because you and I had talked about it as we see this regulatory and reimbursement push towards really value-based care, I think you’re going to continue to see possibly the incentives to create more of kind of that integrated care. Cindy, can you just talk a little bit about some of the real estate implications you’re thinking through your team, they’re thinking through as that might become more of a reality.

Cindy Black: So value-based care and population health management they’re all kind of buzzwords that are flying around in the healthcare system. Obviously the goal is how do we improve the health of our patients and reduce the cost of care at the same time. And real estate kind of is a layer over that helps us accomplish that. And as I spoke previously, we’re all living in legacy space and legacy space has a workflow that’s designed around the way we used to deliver care. So now, if we’re looking for a model that Heidi was talking about, we were of an integrated model where we’re bringing all of the different provider types into one place. And for the convenience of the patient, we’re trying to drive them through all of the different service providers that they need and treat the whole patient. Then that looks at a different workflow and that’s going to require a redesign. And so I think this is work that was started pre pandemic, and I think it’ll continue post pandemic. But real estate is definitely at the forefront and helping to figure out how we can make that happen.

Rene Larkin: Thanks, Cindy. And a question just came in and I think one of them is really relevant. Here is those of you that kind of talked on how telehealth might be changing your spaces. Have you seen specifically kind of HIPAA compliance spaces? Is that a concern? And has that taken into consideration for kind of remodeling to ensure that the provider can be providing telehealth services without certainly a violation of HIPAA, maybe something we wouldn’t be considering in a day to day, because they’re seeing a patient in a closed room. Are we taking that same consideration to the telehealth implications for real estate?

Cindy Black: I think HIPAA compliance is always at the forefront of all of our minds when we design our space. We all have specialists and guidance in our organizations that are helping us make sure that we have security and safety in place in whatever form or fashion needed. So I can’t think of a specific example how the telehealth delivery would change that. I don’t know if one of my other panel members can think of something that-

Rene Larkin: I mean I’m thinking no longer… Maybe we’re not providing telehealth in the break room and knew we never were, but right as the pandemic happened, maybe that’s where you were providing it because we just haven’t thought for spaces, but it’s like truly that needs to happen in a private space. Even if the patient’s not there, the provider Neil’s still needs to be giving that in a private space. And I think you touched on that, Cindy I don’t know if anyone else has any other thoughts, but that’s kind of where my I jumped to.

Kelly Adams: And I mean, I think that supports I think Heidi’s comment as well regarding… We’re still using exam rooms to provide the tele-health services. So it’s not separate space. That’s just incorporating it into our kind of existing designs.

Rene Larkin: Right. But just because the patient’s not there doesn’t mean we need less space to deliver that care in a way. No, super insightful. So I think you know, let’s turn to the pandemic, what are the effects? I think there’s two kinds of different ways that we’ve talked about this, that we see it affecting. There’re the effects of the pandemic on non-patient facing space. Our admin space, our space where we don’t necessarily need people to be in a central location. What are the effects that your system kind of seeing because of that?

Matt Crawford: Yeah, it’s big, a little bit to the non-patient facing and even our administrative footprint. I certainly can’t say has it has experienced as much scrutiny as it has over the last year or so. And what I think the learnings are just, ever-changing ongoing. You find out something new about how it’s working or not working for groups, individuals, departments, almost every day, sometimes by the hour. I don’t think just because we’re in healthcare, we’re really any different than other or any other office occupying business. We’ve got administrative space that doesn’t include any clinical function and we’re analyzing how we can be more efficient in that space. It doesn’t mean you can get out of some lease locations that are become less necessary shirt consolidate into what we may have a longer term commitment to occupy.

Matt Crawford: Absolutely. But I think it extends into how we use our existing space and what we need to keep. I think for us what we found is that for a lot of people, this has been okay. It hasn’t been as shocking or as disruptive or as uncomfortable relative to being productive at work. I think there’s a lot of people might’ve anticipated. And I think the question for again, not just us many, many, many other office using companies is what level of this should continue to achieve either cost savings, flexibility, or perhaps more importantly. These days associate retention, just because we are a Catholic non-profit healthcare organization doesn’t mean we don’t want to think like organizations that have to recruit talent, just like we did. When forwarding a work environment or an option to work in a way that’s not everyday onsite in an office makes sense.

Matt Crawford: Then that’s something I think we want to be able to pivot towards. So how we use the space, what we keep and what we don’t, what level of work can be done just as productively from a low room, like the one I’m sitting in right now. I think our questions that are definitely out there and that continue to be answered with new information every day was certainly probably not an end in sight, at least in the next 12, 18 months.

Heidi Hohendorf: I can speak to how it’s affected our administrative space too. And we were actually Spectrum Health was taking a look at how we were going to reimagine use of administrative space before COVID hit. We had been involved in conducting a study where sensors were installed in some of our spaces to see how often the administrative space was utilized and found that in some instances, people were using their space less than 50% of the time. Whether that would be they were offsite and attending meetings and whatnot. And we still do intend to build a new center for innovation and transformation where we’re playing to co-located various different administrative departments. Now COVID has definitely impacted how we’re rethinking, how that’s going to be designed before COVID. So these statistics just came out last week.

Heidi Hohendorf: Our workforce showed that in February 2020, we had less than 1% of our workforce working virtually. So that amounts to about 200 employees as of February 2021, it was 20%, which was 7,000 plus. So we don’t see remote work going away. In fact surveys showed us that 97% of our employees want it to have the option to work remotely, at least part of the time have some flexibility. So COVID has definitely been an accelerant and to use a term that our senior director of facilities planning and strategy says he calls it a positive disruptor. So it’s causing us to think about getting out of the conventional use of space, where one employee had one office and focus more on shared space hoteling space spaces that give people the flexibility. Like I said maybe I don’t need an office in a building dedicated to myself full-Time.

Heidi Hohendorf: Maybe I’ll work from home two days a week and I’ll share it with one of my colleagues. So we’re looking at how we’re going to reimagine, redesign our administrative space. And it’s definitely going to result in a reduction, especially when we have this new building built, because of, as I mentioned, we’re going to be co locating various different departments, and that’s going to free up some space and some cost savings that and if we own that, the space that’s being vacated, then we can repurpose it for other clinical purposes. But I think the work from home really more than anything is showing how administrative space is going to be impacted going forward.

Kelly Adams: Yeah. I think like Matt and Heidi described STL health too, is sort of exploring different ways to consolidate our office space and reconfigure the space to move away from individual offices or cubes and move towards kind of collaborative workspaces. And our response I think, is not primarily being driven by cost. I think that’s certainly a secondary benefit. But we like others have kind of surveyed our associates and recognize that it’s really important for employee satisfaction and retention and recruitment that we allow for that, that flexibility. And so our space planning is really just being responsive to that. And another thing we’re sort of factoring in is, so we are co-located with a technology company on a campus and depending on what their strategy is in terms of return to work that impacts, some of the shared amenities on campus, like cafeteria and gym and things like that.

Kelly Adams: So that’s certainly being taken into consideration as well when we’re planning. I think Rene, you mentioned too, just like other trends from a patient facing perspective. And I think I’ll just add a little bit in terms of what I’ve seen in the market. We are in the process of building a new campus for one of our existing hospitals. And I think as a result of the pandemic and the economic impact developers I think are eager to work with us because we’re financially very strong and we’ve seen, definitely proposals with some very competitive cap rates which has been good to see and is working to our advantage. And then I’d say the other area we’re sort of looking at is retail space. And I think there’s an opportunity there where landlords are eager to get us in as tenants, and we’ve been able to negotiate some pretty strong terms for leases there.

Matt Crawford: Kelly, I would edit what you just said relative to the creativity of landlords across the board. Whether it’s honing in on healthcare as an industry that’s has to survive, or whether it’s just thinking of ways to repurpose space that’s recently become vacant. We’ve certainly been, I would say the beneficiary of some tremendously creative ideas owners in our various markets who are obviously trying to attract a tenant to a property. But frankly, properties that we hadn’t traditionally thought about. As Cindy may have alluded, when we get down to that zip code or that corner what maybe we considered before, because it hasn’t been available or haven’t considered before, because there was tremendous competition for the space. I think there’s certainly a trend towards those properties being put in front of us in a more significant way. And us being forced to evaluate those a little differently than we have in the past.

Rene Larkin: Yeah you’re seeing just nationally kind of this reuse of space that the pandemic probably accelerated like a shopping mall right. I mean, we’re seeing healthcare tenants take advantage of that and move in and repurpose that for maybe integrated care model or what have you. But just with fresh new eyes, looking at that for maybe something you wouldn’t have considered in the past and landlords willing to work with you from the TI prospective or what it may be to make sure that that meets your needs. Cindy.

Cindy Black: I could just jump in there. We’re looking for… We’re trying to be opportunist. Opportunistic and so pre pandemic, everybody was trying to move towards more of a retail model in the delivery of care, get closer to the patient. And retail was very attractive, but anybody working in the real estate industry knows that your retail is pretty high priced. Those corners of prime. And so it’s difficult for some of our operations to support that kind of cost. But as retail starts to see, how it starts to feel some pressure we become more attractive as target tenants.

Cindy Black: And so we’ve we are our long hold tenants. We go into space, we don’t leave and we pay the rent on time and landlords really appreciate that. So if a landlord is under some pressure that might create some opportunity and I’ve seen some really unique applications where they could shopping centers have been turned into corporate headquarters, administrative space. And then again, there are those typical outlaw opportunities or inline retail, where I’d love to put primary care there, but it’s just a really high cost, but maybe there’s a some softness in some particular areas that we could take advantage of at this time.

Rene Larkin: Yeah. And Cindy I know we’re stepping back a little bit, but I thought you had just an interesting experience with kind of the work from home and how the surveying of people kind of changed as the pandemic went on depending on age group too. Do you mind talking a little bit about that?

Cindy Black: Oh, sure. Yeah. Heidi was talking about serving and everybody in the market healthcare typically relies on high-skilled employees. And so we are all in the business of trying to retain those employees because it’s hard, it’s costly to have that turnover going on. So we’ve been serving and we’ve delivered several surveys. And at the beginning of the pandemic my staff, I can speak anecdotally. They were ready to go back, waiting to go back and we have several generations represented on our team. And over the course of time, as our capabilities of working remote have shifted and changed, and people have really come to appreciate the work-life balance that has come along with this. Some of the unexpected discoveries we’ve gotten to know each other better.

Cindy Black: In fact, we as panelists talked about that earlier that I now know who has a cat and who has a dog and what their names are because onscreen. And I hear them in the background and we know each other’s children’s names and that’s been really refreshing. And so and we are also those of us who have any kind of a commute we’re realizing we can have two to three hours added back in our day. Now some of us choose to put that into our work and we never get out of our seats and the others choose to have a little more work-life balance. But my team specifically has now really grown and decided that this isn’t a bad model, but we’re seeing really is a demand by our employees for a hybrid model.

Cindy Black: And what does that look like? That’s the head-scratcher and how do you manage that? So people sharing space in a safe environment, pre pandemic, we were going to more, we were densifying our space. And so we were taking out the walls and pushing people closer together in fewer private offices. And that was wonderful, but we’re not sure how that works in this new environment now. And how many days a week and how do we manage who comes in and out and how do we reserve that space? And so there are a lot of challenges with planning for that hybrid approach, but that does seem to be the preferred model, at least what we’re seeing evolve.

Rene Larkin: And just the question from one of the participants that I think tags onto the end of this, and you guys all touched on it, but do any you at this point have a return to work strategy or that’s still in flux?

Cindy Black: Yeah, I’ll finish and then I’ll throw it to some of my partners here to see what they’re doing. I think it depends and it changes. So earlier in the pandemic, everybody said we were going back at the end of 2020, and then it was June of 2020. And now it’s maybe December, I’m sorry. Now it’s June of 2021. And now it’s maybe December of 2021. And so I guess my answer is we don’t know when we’re going back and we don’t know how we’re going back. I’m speaking for generally for my system, understanding that our healthcare providers they have never gone home. That we are continuing to work and we’re all working. It’s just this remote for workforce. We don’t know when we’re going back and how.

Heidi Hohendorf: Yeah, that’s the same for us too. Like Cindy said, it’s continuously changing. Plans are being put into place, but it’s all science driven based on what is going to be happening with the vaccine. What sort of the herd immunity and what we’re seeing come out of the vaccine and how it’s going to impact people. We kept having guidelines and the targets have shifted. The last I heard was earliest return would be January of 2022 for those of us that are working at that kind of work at home, we’re still having to work from home. And then when people do come back, flexibility will be implemented, and it’s going to be a role based to who has the ability to do this work at home without having to be onsite.

Heidi Hohendorf: So there’s just lots of variables and I think there’ll be pilots put into place. So what does the return to work look like? What’s the space going to look like from a safety perspective. And so I think different groups will kind of come back at like a phased in basis.

Kelly Adams: I would just echo Cindy and Heidi’s comments from our perspective from STL health perspective. Really the plans have continued to evolve over time and just continue to be responsive to new research that’s out there. And then the data that we’re collecting internally as to people’s preferences. I think generally speaking a hybrid model is probably what we’re moving towards, like others have mentioned. But I think it just continues to be something that we’re working on and trying to implement.

Rene Larkin: One question that we’ll ask before we move on from this topic, we’ve all talked about kind of all admin being sent home, the administrative offices. They specifically asked, did that include kind of the administrative associate, so kind of your assistant type, have your systems been able to mobilize them such to work at home or were they returned back to work?

Matt Crawford: I would offer yes and with great success with. I think my one time I was going to say earlier when Cindy was talking about and I said this earlier to this group. It’s almost a shame that it took a pandemic for us to come face to face with our shared humanity. I think that we’ve realized that while we may do it begrudgingly in largely it can be done. And it’s been from the top down certainly in our organization as everyone has alluded to. It’s to what degree will that persist in sort of around the story. And it seems like more than less.

Rene Larkin: Thanks. Well, let’s move on into… I’m going to switch you guys up a little bit, but I think you guys are ready. Kind of just driven by some of the questions I’m seeing in the Q&A box. Let’s talk kind of the pros and cons of leased space versus owned space and especially in light of a pandemic and how that might kind of kind of change the way you look at things moving forward.

Matt Crawford: I have to take a swing at that a little bit as it relates to [inaudible 00:38:52] and the activity across our portfolio. I think in years past the mantra was if you need the flexibility and you’re generally off campus broadly leasing makes sense here too for have we had to take advantage of that flexibility sometimes, but not very often. I think there’s a lot more of these days. We’re analyzing certain locations and saying, nice short remaining lease term. It gives us an opportunity to do something to help ourselves. And I just think that’s really writ large these days, especially as it relates to our newly acquired lease locations. It’s all of those flexibility benefits that come with leasing a space are evermore important. On the ownership side again, it’s really the same analysis.

Matt Crawford: And I think these days, if we’re going to be there long enough, will it make financial sense? Well, once you figure that out, you’re analyzing your capital options, internal, external, et cetera, and trying to figure out whether it makes most sense to deal with something internally and try to control that piece of real estate or whether it makes sense to bring in a partner. And you’ve got an environment now where Kelly, I think you said earlier cap rates are changing rapidly. Demand is increasing substantially and properties are trading at a velocity that it’s startling almost to see that it happening during a pandemic against [inaudible 00:40:20]. And then it’s that type of activity you thought would largely slow down. I don’t know if it’s healthcare specific, but it is most assuredly picked up.

Matt Crawford: And to the extent we can participate in that opportunity to own our own real estate that we populate, you know, we do, I think a lot of organizations do. And again, as it relates to the leasing, just finally taking advantage of that rainy day flexibility that you always wanted but very rarely pulled the string on. And I think that demand for flexibility when you’re negotiating new leases, that demand… I saw a question actually that I might take a swing at answering. We’re seeing a lot of landlords more and more willing to extend the period of time during which we’re obligated to spend [inaudible 00:41:03]. And that’s really nice frankly. Thanks to all you landlords out there.

Matt Crawford: Thank you very much. It’s it gives us the flexibility because the TIA allows doesn’t always go all the way for us. We have to put some of our own capital next to it gives us a chance to wait to spend some of our own money. And if we have to give a little more term in order to gain that flexibility, that’s a hugely beneficial thing for us. Again, going back to what I said earlier, flexibility, the leasing scenario expanding a little bit relative to our own portfolio, I think has as benefit on both sides. And I think as it might’ve said has been accelerated by the pandemic environment.

Heidi Hohendorf: Yeah, I know with our system, we, we definitely have been seeing advantages and owning as of late and for several reasons, one being able to control costs and operating expenses. If we’re leasing five different buildings, we got five different landlords. They’re using five different cleaning companies. They all have their own, different protocols that they put in place. Whereas if we own the building, we can use our own internal environmental services to save just some, efficiencies they’re familiar with our spaces. And with regard to reduction in costs, as far as flexibility goes, I think it goes both ways. There’s definitely flexibility in leasing, but there’s flexibility and owning too. We’re not tied by restrictions that the landlord might have in place.

Heidi Hohendorf: We can use the space within, regulatory confines, how we want to use it without having to get permission from the landlord. We there’s certainty and knowing that what the lease term comes up, we might have to negotiate with the landlord. They we might be at a disadvantage, they might charge higher rent, whereas when we own it we have the certainty that we will have that space available to us. And like I said, it goes both ways. There’s pros and cons for both we’ve been seeing pros in lease or in owning outweighing the cons.

Cindy Black: Yeah. I would add to that from an operational perspective. There are definitely some pros to owning during a pandemic as well, just in terms of having more control over the building and other tenants and really just from an infection control perspective as well. So helpful in terms of enforcing, social distancing mask wearing you know, air flow, HVAC issues, things like that. And, and even cleaning and disinfection processes. And so when the pandemic hit in the spring for the buildings that we own where we have third party tenants, we instituted pretty strict supplemental building rules and regulations around kind of best practices which helped create standards that ultimately, protected our patients that were coming to visit us at those locations. So I guess the flip side to that is that this required deploying a lot of resources on our end.

Cindy Black: Whereas, if we were leasing, the landlords would kind of bare. There are some of those burdens. So another kind of challenge I think has been for us as landlords has been dealing with various issues that have come up with rent, deferral and rent abatement requests for our tenants. And so we’ve had to manage that and we’re in the business of healthcare and not real estate. And so certainly that has, that has shown to provide some challenges for us. And it’s more complicated from a regulatory perspective as well.

Kelly Adams: Yeah. I could just add tag on to that. Some of the things that we found ourselves trying to manage during the pandemic is, hey gosh, we need to stand up a daycare immediately for our employees so that we can deliver date deliver care to our patients. We need to get an infusion going so that we can start delivering some of these different treatments that are now available. We need drive-through testing and we don’t own the building, but hey landlord, do you mind if we start putting tents up and start routing patients through, and we’re bringing them from all over the city, and by the way, we need to change our hour of operations. And we want to control who can come in and not come in this building and under what circumstances they can come in. So you don’t mind if we put controls in, on your building.

Kelly Adams: So these were all interesting conversations that we had, especially when we might be the majority tenant, but we’re not a hundred percent tenant in those buildings. So those were some of the challenges we began to face. I would say that whenever we’re trying to figure out how we’re going to deploy our cash, we have to do have a trade-off question. Do we drive our money first, we assess our financial health. And then are we going to put that money in for business? Or are you going to hire more doctors or providers? Are we going to buy, you know, more x-ray machines and MRIs. So once we get past that hurdle and we have managed our core business, then if there’s still money available, I would say some in response to some of the other comments I’ve heard, I guess we’re developing a framework on when we want to own and when we want to lease and right.

Kelly Adams: And I think a lot of systems kind of had loose framework anyway. And so now we’re just tightening that up. So if it’s on our hospital campus, if it’s attached for a hospital, gosh, our preference would probably be to own. If it’s in an emerging market we’re not sure and we want to retain flexibility. That might be a place where we want to stay flexible in lease. And then there are different product types. Do you want to own your surgery centers, it’s a high cost delivery of care, but it is dealing with landlords who’d maybe don’t manage those buildings to the standards that you would like. It creates that push and pull. And so we are developing that framework so we can better deploy our capital.

Rene Larkin: On that capital question. That question came in and I do think it’s interesting. We didn’t hit it on it feel free to pass, but presumably we might see a lower cost of corporate capital. To your point, Cindy, there might not be a big of a pool of money such that we can then use that for real estate. Is that impacting or hasn’t yet even come into the consideration of maybe a reverse monetization strategy instead of buying back your buildings are you going to now considering going back, has that even entered the realm yet?

Cindy Black: I think the pendulum is always swinging, right. We went through a period of time when everybody monetized. And so we’re now all living through the great reality of working with our re partners. And what challenges those bring. So I do think you’re starting to see some conversations bubble up. I don’t know if that’ll bear fruit. I don’t know if any of my partners on the call have thoughts on that.

Matt Crawford: I think what it’s done relative to analyzing the lease versus own decision and analyzing individual deals is amplified the financial transaction aspect of it. Real estate is a location. It’s a quality of building, it’s a presentation to the community and your patients, but moreover, it’s a deal it’s dollars and cents. You’ve got to understand the very small, changes and things like cap rate that can have tremendous impact on value. And, when the internal cost of capital fluctuates by a half a point that makes a material difference in the way you’re analyzing your given transaction, where there’s that’s always been the case. That’s not new news being ever more important today when those half a point ticks can be daily, weekly, certainly monthly. And so I think the emphasis on considering these real estate deals as financial transactions, far more, really detailed level, far more than really ever before, as at least be prevalent for the workload.

Rene Larkin: Okay. Thanks. That’s helpful. Well, I think we have about five to 10 minutes left, and there’s quite a few questions that are kind of just random if you guys are okay with it, I’ll kind of take through those. And to the extent any of you feel comfortable responding, feel free. I think we answered that one. One of the questions I think that came up when we were talking about reutilizing space in light of the pandemic is how are you guys addressing the need for more technology as it relates to wifi coverage, et cetera? How is that impacting… I don’t think we hit on technology. So maybe if you guys can hit on that expanded use, and if that’s impacting the way you guys are looking at your existing and reutilizing the space.

Matt Crawford: Well, nobody else is jumping ahead. I’m not even sure what I’m going to say, but, what came immediately to mind is something so silly as printing. So many people working from home printing and whether or not you’ve got adequate wifi access whether you can maintain an unfettered video connection for hours and hours on end. I guess what I would say is just challenges nobody ever really thought we think about before and how real estate interacts. We interact with our HR department a lot as it relates to again, that associate experience. I can commend my colleagues certainly in our organization for really paying attention to that, thinking through those things. Whereas you look at a real estate person’s square feet, TEI, the difficult stuff we deal with, having to figure out whether or not the people who work around those administrative locations really can do so effectively from home.

Matt Crawford: Now, how do we accommodate a group that needs to come in and print out a high volume? How do we accommodate a group that has a scanning function that shouldn’t be done in their home office? What are the IT considerations connecting your home printer to your company laptop, things like that. I can’t profess to indicate that we’ve got a solution or that we’ve even begun to answer these questions, but they’re just new challenges that we’re trying to figure out. I would argue that a personal opinion certainly, but the benefit of remote work again, as we said earlier as it relates to being a retention tool, as it relates to attracting talent, as it promotes sort of counterintuitively the work-life balance as some people have experienced.

Matt Crawford: I think those benefits far outweigh the challenges associated with figuring out how to securely print something. And look at those roles require those types of activities, they shouldn’t be remote all the time. And then again, doesn’t that all speak to the flexibility of what we’re trying to provide and still get the work done that is requisite for our organization. I couldn’t tell you the color of the cabling and our office spaces, but I can sure tell you that we’ve thought about what it meant to not have that available in your house in rural Virginia, for example. Certainly something we need to address and tackle that everybody knows.

Heidi Hohendorf: Yeah. Along those lines and I don’t know the answer to the solution either, but I know that we’re certainly considering technology that will allow for a seamless connection between virtual off-site workers and those that are onsite. I know there’s been some struggle with say there’s two folks in an office, and then they’re on a teams call and trying to get everybody and the sound and the interaction between the two that are offsite and the ones… I know that’s been talked about and will be looked at and being implemented into our facilities is how to get some sort of seamless analogy between the off-site workers, the remote workers and the onsite workers.

Cindy Black: All I can say is it hasn’t been an issue for my teams and the teams I work with. So maybe that speaks to the fact that our system and specifically our ISIT folks are handling it really well. I mean, prior to the pandemic, we all migrated to a single platform. Our company uses teams, it’s a really robust platform. It works really well. And I think in healthcare, we’re all used to hand-offs and working as teams to deliver care and our administrative teams are doing the same thing. Somebody’s microphone doesn’t work, cameras are working, or they can’t figure out to do this or that everybody’s been jumping in. So I really has not been an issue for us. I think the question was wifi coverage. And I’ve really not had any experience with anybody in our system, but I don’t work in IT. So I’m sure there’s somebody out there and that is an issue for the ISIT department.

Rene Larkin: Yeah. And to your point, it’s probably driven more by the areas that you serve, rural, urban, et cetera. And then where your colleagues are. Let’s just hit on maybe one last question that we have a couple of questions relating to lease concessions, TI repayment, TI allowances reduced rent, kind of what were you seeing as a landlord, what are you offering especially peak of the pandemic related to those terms if you guys are willing to share.

Matt Crawford: Months and months and months of free rent, unlimited TI, bargain basement rates across the board, it’s been smart it’s been non-skid. I mentioned that again, we’ve been successful in working with our partners and landlord partners to get again, longer periods of time to spend TI allowances. Some of those flexibility provisions we talked about, some of your typical deal terms, termination on longer-term deals with termination options with penalties, et cetera. Maybe it’s not a deal term, but something Cindy, you said earlier, that kind of stuck with me more over the landlords would be great. Maybe that’s a shocking thing to hear from the mouth of a tenant, but it’s true. Landlords have been great as it relates to the difficulties we’re experiencing in the healthcare system and what we have to do to keep our patients safe in buildings, where we might not be the only occupant or whether we might be the only healthcare organization using the space.

Matt Crawford: I can honestly say that we’ve got 12 and a half million square feet of ambulatory real estate alone, not including the hospitals. The number of landlords we interact with is incredible. And I could not make any single one, nor would I that was anything but accommodating as it related to our need to set up a tent or to provide testing or to lock down a door to make sure there was a temperature taken, those sorts of things. We really enjoyed a lot of really nice collaboration. I think it made a substantial difference, or it changed our interaction with a lot of our landlord partners, largely for the positive.

Matt Crawford: Again, maybe that’s just another positive unintended consequence of having to deal with something like this. That’s worked out great. But generally speaking, I think maybe more of a willingness to accept the short-term going on the middle Eastern stuff. I mentioned the flexibility. I’ve said it a thousand times, but we don’t always do the five-year deal. I’m not going to do a three-year deal. And a lot of times it’d be a short conversation when that came out. That’s not the case anymore. And really any term commitment associated concessions is on the table whether it’s helping the organization because demand has been impacted accordingly. I’ve surely observed that in our lease portfolio.

Cindy Black: So yeah, to Matt’s point, I can tell you our landlords have generally taken the stance that short term is better than no term. And because of the pressure that they’re seeing in the market, they have more of an appetite for those shorter term leases. And obviously we as the tenants were looking around saying, are we at the top of the market here? Do we really want to go long in a lease right now at this rate? So we’re both sides of the table are seemingly willing to take that shorter term. They’re also willing to again, extend the amount of time to deploy, attend improvement dollars, recognizing that when you have pandemic restrictions in place, you can’t start swinging hammers if you can’t even go in the building.

Cindy Black: So they’ve been very amenable to that and they’ve been very good to work with. You’re starting to see some softness in the market in particular assets and particular asset classes, perhaps. But I would say healthcare real estate is healthy and there seems to be people with money that they want to deploy and invest, seem to want to flock to healthcare, because it seems to be a stable market in this economy and that’s putting upward pressure on rates. So I can’t see that we’ve seen really any kind of softening in rates as of yet, hopefully, but I haven’t seen it.

Rene Larkin: That’s great. Thank you all the panelists, it’s been a great and robust discussion.