Plan going to city that would have 25 new doctors in MH business
park
An example of thinking outside the box is about to take off in Morgan Hill Ranch business park, offering physicians and dentists the chance to own, not lease, their office. The area, restricted for 10 years to light industrial and research and development uses, may be about to blossom as a medical center with a twist – professional condominiums.
But, this project could succeed at the expense of a four-year effort by the City Council to return medical services to town and of the Daughters of Charity’s work revamping the old Saint Louise Hospital on Cochrane Road into DePaul Health Center. It could also bring at least 25 new doctors, an MRI lab and an outpatient surgery center to town by December.
Robert Eves, president of Venture Corp. which developed the business park, and Brian Kelly, his vice-president for sales and marketing, both say they are excited about the project, which Eves believes is only the second of its kind.
Eves said doctors who have contacted him about his local venture have three problems with signing up with DePaul. They want new, up-to-code offices; they do not want to work within the restrictions a Catholic institution places on the medical profession and, above all, they want to own, not lease.
He said his doctor-owned space could work with DePaul instead of against it.
“Medical areas tend to feed off each other,” Eves said. “Doctors tend to want to locate near each other.”
In a series of meetings Friday with council members, DePaul officials and the press, Eves and Kelly laid out their plans and tried to allay fears that the new venture would short-circuit DePaul.
Councilman Greg Sellers said he doesn’t see a problem.
“We need doctors and anything that will help us get them should be encouraged, as long as the ancillary facilities will be complementary and it looks like they will be,” Sellers said. He sees a further benefit from Eve’s project: that doctors owning their offices provides an opportunity for long-term stability, giving them deeper roots in the community.
“If they refer patients to the other facility (DePaul), I’ll welcome them with open arms.”
Venture Corp. built a medical condominium in Hercules, near the Carquinez Straits and Martinez, after they got a call from that city’s mayor.
“She had an office full of doctors who promised they would leave town if they couldn’t find office space to buy instead of wasting money on rent,” Eves said.
Based on the success of the Venture Commerce Center in Morgan Hill, for small, non-medical businesses, and one Venture Corp. was building in Hercules, Eves and Kelly thought the idea was worth a try. And, he said, it is succeeding wildly.
Morgan Hill’s Venture Commerce Center is a series of buildings on Digital Drive, off Butterfield Boulevard and south of Cochrane Road, divided into separate spaces, as will be the medical professional center. Each has its own front door, restrooms and kitchen, and each is owner-occupied.
It wouldn’t be worth building small buildings for each business, Eves said – “that’s not what we do” – but he would build larger structures to be subdivided and sold, just like resident-owned townhouse condominiums.
Eves said he heard from a Gilroy man who had manufactured dental appliances in rented space for 10 years, and his father, before him, for 27 years.
“All that rent money gone with nothing to show for it,” Eves said. The commerce center was just the right deal for the dental appliance manufacturer.
ROUGH SHOALS
Two tricky bits lie in the way of doctors hanging up their shingles as owners: the DePaul Health Center and a change in the business park use permits.
The first is the most delicate. For four years, since Saint Louise Hospital closed in December 1999 and moved to Gilroy setting off an exodus of Morgan Hill’s physicians, medical services and urgent care clinics, the council has devoted time and money to bringing them back.
A joint effort with Gilroy’s Saint Louise Regional Hospital and the Daughters of Charity to return medical services to town, failed. The Daughters is an order of Catholic sisters that owns and operates Catholic hospitals. More recently, the Daughters have assigned the task to O’Connor Hospital, which has greater resources and which has had some success.
They plan to reopen the medical office building as DePaul Health Center and have already signed leases with several doctors and services. The old Saint Louise medical office building was built in the late 1980s and needs serious upgrading to current hospital codes; work is under way.
A medical development in the business park would offer a second choice to physicians wanting to locate back in Morgan Hill, but could dilute the effectiveness of the DePaul Center, said Joe Mueller, chair of the Morgan Hill Community Health Foundation
Mueller said the foundation is still evaluating what effect Eves’ project would have on DePaul. He would, at least, welcome the doctors’ offices in the Morgan Hill Ranch.
“More doctors in Morgan Hill would be a good thing, but the complications come with the two outpatient service units,” Mueller said.
MHCHF was given $500,000 by the city in 2001-03, to evaluate area medical service needs and to work with the Daughters in bringing them back.
A Venture Corp. project limited to doctors’ offices only would present little competition to DePaul, Eves said. The complication arrived when an MRI Lab and outpatient surgery centers wanted in on the deal.
Andrew Barna, director of strategic development at O’Connor Hospital, said Monday he supports the medical condominiums for doctors’ offices but the MRI imaging and surgical center could restrain future expanded services though DePaul intends to offer both services.
“We need those services at DePaul in order to build off,” Barna said. “We aren’t anti-competition but if he gets those services it will be a lose–lose situation.”
Barna said, in the economics of health care the physicians will lose.
“We have the insurance contracts and the relationships with referring physicians – the physician investors will lose their personal money.”
He said that without a radiologist in the building, the MRI service won’t be much use to doctors down the hall.
“The only radiologists in South County will be having a relationship with us,” Barna said.
O’Connor, he said, is in the planning process and expects to open MRI imaging and surgical centers within two years – closer to one, he hopes.
Councilwoman Hedy Chang, who led the fight, with Mayor Dennis Kennedy – backed up by most of the council – to restart Morgan Hill medical services, said she is pleased with most of Eves’ choices.
“There is no question that additional doctors coming to town is wonderful,” Chang said. “But, with the MRI, probably there is room for only one and whoever gets there first will probably be the one. You don’t want both of them to die.”
Many physicians who are interested in the condos, Eves said, are from out of town.
Eves said the surgical center is not necessary for the success of his project.
The second problem is easier to define.
The Planned Unit Development (PUD) secured by Venture Corp. when it began developing Morgan Hill Ranch says the area is for light-industrial and R&D only. The company must get a change to include medical offices (called a Conditional Use Permit or CUP) approved by Planning Commission and City Council.
“The question is this,” said City Manager Ed Tewes. “Should the city convert some land previously designated for industrial use into medical use? The council will decide.”
Medical offices require more parking per square-foot than does industrial space (5 per 1,000 square-feet versus 3.5 per 1,000 square-feet); Eves says that is acceptable.
In order to have the building ready for move-in by Christmas 2004, Eves said he would need to expedite the planning and permit process. Instead of waiting for the final word from the council on the CUP zoning change, he would submit his plans to the planning department (for plan check) at the same time and plans to do so before April 9.
Tewes said this is taking a bit of a risk because there is no guarantee the Planning Commission and council will approve the CUP change.
“We have two great competing proposals for a surgical center but the preferred site is at DePaul, if DePaul can deliver within their one-year time frame,” Kennedy said. “Above all, it’s important not to ‘shoot ourselves in the foot’ this early in the process.”
He said he would suggest a meeting between Joanne Allen, O’Connor Hospital senior vice president and chief medical services officer, Eves and himself, to discuss alternatives.
Meanwhile, Hercules Mayor Joanne Ward said Monday that their professional center is coming along nicely.
“The doctors are getting ready to move into the center,” Ward said. “Hercules is a small town and we’re running out of land. We’re happy about our little industrial/business development and look forward to the professional center.”
