CHALLENGE

Baptist Health System (BHS), an independent system with four hospitals in metropolitan Birmingham, was fighting shrinking reimbursements in an extremely competitive marketplace. Global Healthcare Services (GHS) was engaged to review BHS’s real estate usage and costs across multiple campuses in an effort to identify cost-reduction opportunities.

ACTION

GHS evaluated BHS’ space uses, needs, contractual obligations and working relationships with practitioners and landlords to craft a long-term space use plan for the hospital. The GHS team then leveraged competing landlord interests, external market factors, and the building owners’ underlying business drivers to create a compelling business case for the hospital’s primary landlord to renew BHS’s leases early. The leases were renewed roughly 2 years early.

RESULT

As a result of GHS’ leveraged renegotiation, BHS will save roughly $445,000 annually through the term of the extension. Additionally, BHS received over $1.8M in Tenant Improvement monies to be used for improvements across the campus as the system sees fit. Finally, the leases have built-in flexibility to accommodate a number of potential business scenarios of concern to BHS.