Health care providers, after years of building on the periphery where land was cheaper and easier to obtain, continue to look for ways to get closer to customers and relieve pressure on their crowded emergency rooms. Increasingly, that involves turning to former retail sites.

“The conversations I have today look like they did 20 years ago, when we’re talking about retail settings — what are the traffic counts, what’s our visibility?” said Michelle Brokaw, owner and CEO of FSB Healthcare Realty in Greenwood Village. “We’re finding ourselves going head to head on some pretty expensive sites.”

Brokaw moderated a panel on June 26 called “The Great Ambulatory Care Migration” at the Colorado Hospital, Outpatient Facilities & Medical Office Buildings Summit in Denver, which was hosted by Corporate Realty, Design & Management Institute and the Association of Medical Facility Professionals.

Aurora-based UCHealth built a full-service emergency room offering 24/7 care in Green Valley Ranch in 2018 and another one in Littleton in 2020. Centura Health, now dissolved, added one in Arvada in 2018, and HCA HealthOne has added satellite emergency rooms in Lakewood, Parker, Littleton, Denver and Thornton.

The growth has continued despite pushback from Colorado’s Department of Health Care Policy & Financing, which oversees Medicare spending in the state. In 2021, the department offered to pay hospitals to shut down freestanding emergency rooms, which they argued targeted more-affluent suburbs and charged higher rates for care better handled at lower cost by urgent care centers, according to KFF Health News.

Most providers, except for UCHealth, largely ignored the offer, and free-standing emergency rooms continue to be added.

AdventHealth in late January revealed plans to build the first medical facility at The Aurora Highlands, a 4,000-acre master-planned community south of Denver International Airport. The project went vertical last month and expects to open its doors in fall 2026.

Residents remain sparse, but AdventHealth is planting the flag for a larger hospital campus with an emergency room on the first floor of an 88,000-square-foot facility costing $81 million. The three-story building, south of the Aurora Highlands Parkway near the E-470 exit, will have clinical spaces on the second floor and room for whatever comes next on the third floor.

“The Aurora Highlands is one of the fastest-growing areas in the Colorado market,” Michael Goebel, CEO of AdventHealth Parker and Aurora Highlands ER, said in a news release in January. “Right now, the closest emergency room is at least nine miles away. This facility will not only provide whole-person care closer to home but will keep families from having to fight traffic to get the care they need.”

Later phases will take the emergency room up to a Level III trauma center and add an acute-care hospital as the surrounding area gains population.

Most freestanding emergency rooms coming onto the scene, however, don’t intend to grow into something bigger. They are smaller and self-contained by design, trying to squeeze as affordably as possible into already built-out communities.

HCA HealthOne is exploring a freestanding emergency room on the northwest corner of 38th Avenue and Wadsworth Boulevard at the site of a former Midas auto repair shop and a still-active retail strip mall called the Wilmore Center, which is home to Duke’s Dog Wash and a Subway.

That location was the home turf of Lutheran Medical Center until last year, when it moved farther west to a new home at Interstate 70 and Youngsfield Street. Wheat Ridge has changed its zoning rules to allow for mixed-use development, including on the former Lutheran campus, opening up the door for HCA to claim a location where people have been going for decades to receive care.

Freestanding emergency rooms at HCA cost $15 million on average to build and run about 12,000 square feet, said Darin Long, construction manager at HCA Healthcare, who said business is booming.

Long and his team are working on 80 ambulatory locations, a mix that ranges from greenfield projects on raw land to scrapes of older buildings to adaptive reuse, or the repurposing of older buildings.

Freestanding ambulatory facilities reduce travel times and provide patients with more convenient access, he said. They also cut down on the traffic at traditional hospitals, which increasingly are struggling with backlogged emergency rooms, supporters argue.

Once a location is secured, a new building can go up in eight to 10 months, aided by standardized designs, pre-fabricated components and relationships with contractors who can hit the repeat button when it comes to building the smaller facilities, Long said.

“The barriers are just figuring out where to build these things. You know, they don’t make any more land. So it’s becoming more and more difficult to find locations,” Long said.

HCA has a dedicated team scouting for locations and locking them down so the company can move quickly into design and construction.

That’s where retail locations come in. Although retail vacancies are low and new retail construction is undersupplied, several large-format retailers have closed in recent years, putting space back on the market. Abandoned big box stores are popular, given that they tend to have lots of room, a high-profile location in a high traffic corridor and ample parking.

Scott Becker, publisher and chief content officer of Becker’s Healthcare, told those attending the summit that hospital infrastructure in many parts of the country is 50 to 100 years old — that was the case for the Lutheran Medical Center before it completed its new hospital last year.

The problem is that about 40% of hospitals are not profitable, and many of those that are operate on thin margins, Becker said. There isn’t a lot of money to support hospital reconstruction.

Intermountain Health spent $685 million and four years to build the new Lutheran hospital, which is about 400,000 square feet smaller than the original. Such heavy lifts add to the appeal of bite-size outpatient facilities that can be put up in a year or two, that attract new customers at higher profit margins and that offer employees shorter commutes.

The Denver-based Center for Improving Value in Health Care, however, argues that most of the conditions treated in freestanding ERs would be better handled at urgent care centers at up to one-tenth the cost. True emergency care requirements are less common than what the surge in emergency room capacity would suggest.

An emergency room typically operates 24/7 with more advanced imaging equipment and maintains a higher level of staffing, including physicians and specialists. Urgent care centers have more limited hours and rely more heavily on physician assistants and nurse practitioners. Their diagnostic tools and the procedures they can undertake are more limited.

Emergency rooms charge much higher hospital rates, while urgent care centers charge lower clinic-based billing rates. The more emergency rooms that are out there, the more likely patients will turn to them for issues that urgent care can handle, and the more state and federal governments will have to reimburse those receiving assistance.

The rise of outpatient facilities represents a market penetration strategy, a way to attract new customers and hopefully build brand loyalty in a highly competitive field, said Derek Ortner, director of health care strategy at Boulder Associates, an architectural firm specializing in health care facilities.

“I want to be where the people are, right? I love the convenience. I want to be where Target is, where Chick-fil-A is. I want to be on the corner of Main and Main,” said Ortner, who used to run outpatient centers.

Although the region has upgraded much of its health care infrastructure, it has come at the cost of a less-centralized system. New hospital campuses are typically on the periphery, where land is affordable.

Metro Denver has three Level I trauma centers, which are the top of the line in emergency care. All three were once easily accessible to someone living in central Denver. Only one still is — Denver Health. Getting to CommonSpirit St. Anthony’s emergency room used to require a 2.3-mile trip from downtown to 321 W. 16th St. Now the trip to 11600 W. Second Place in Lakewood is 9.6 miles.

The drive from downtown to University Hospital, the third Level I trauma center, has gone from 3.3 miles to 8.3 miles. Likewise, the drive from downtown to Children’s Hospital, once in the heart of Denver, has gone from 1.5 miles to 8.5 miles. That said, adding more freestanding emergency rooms, which don’t provide Level I care, won’t change that gap when it comes to Level 1 care.

Denverites still have options, such as St. Joseph Hospital, and the far-flung relocations do benefit suburban residents who live nearby. But even some suburban hospitals have moved farther out. CommonSpirit St. Anthony North, which used to be near 84th Avenue and Federal Boulevard, is now 59 blocks to the north at 14300 Orchard Parkway.

Locating to underserved perimeter areas can provide a more protected territory for a hospital and put it in the path of future housing growth. But longer driving times represent a hassle for those living in well-established neighborhoods, which is the majority of the population.

Long argued that the trend of building freestanding emergency rooms has more room to run, while Ortner thinks that standalone facilities over time will shift to providing primary care with a focus on wellness. And there is an argument to be made for specialized care becoming more disbursed.

Chris Martin, vice president of ambulatory services at Children’s Hospital Colorado, identified orthopedics, infusion centers, and neurophysiology, especially sleep centers, as having significant growth potential when it comes to standalone care facilities in the future.