A branch of Marks & Spencer is probably not the first thing you expect to see inside the main entrance of your local hospital.
But at Bristol Royal Infirmary, M&S occupies a proud location near the door – and it is trading well. Next door, inside a new 9,400 sq ft Welcome Centre, Costa Coffee, WH Smith and special hospital fashion chain Stock Shop are also enjoying brisk business.
The £5m glass-fronted entry point to the hospital opened at the beginning of this year and, along with shops and
cafés, includes more usual facilities, such as hospital maps, signs and a reception desk.
The Bristol mini-mall is one of a small but growing collection of in-hospital retail facilities in the UK. University Hospitals Leicester, Lewisham Teaching, Hillingdon Hospitals, Oxford Radcliffe and Barts are among the NHS trusts that are working on such plans. They are all following in the footsteps of US hospitals, which have been developing retail and hotel facilities for decades.
Meanwhile, another US-style innovation is being trialled in south-west London – the health mall. The Raynes Park Medical Centre combines a GP practice with staff from Kingston Hospital, who provide outpatient services, including antenatal, ultrasound and phlebotomy.
The building’s second floor is occupied by St Anthony’s Hospital, which provides private outpatient services, and the top floor will provide a range of complementary services, including pilates and physiotherapy.
The health centre is effectively a vertical health mall.
Capita Symonds designed the Bristol centre and project-managed the initial stages of its construction, as well as helping to let the units.
Shane Dineen, director at Capita, says hospital and primary care malls only work in very high-footfall locations.
“Retail will work well in some of the bigger hospitals where you can use shops and pharmacies, but it would need high footfall to work in a primary care centre or GP surgery,” he says. “That would determine viability.”
US specialists say it is important not to expect too much straightforward commercial return from hospital retail. Instead, they say the main gain is not turnover, but improved facilities, which help win and retain medical business (see panel, below).
Dineen says this is also true in the UK, albeit with modifications to allow for our less market-oriented health service.
“As a proportion of turnover, the income from retail leasing is always going to be small – say £500,000 a year for a hospital with a £450m turnover,” he says. “But it is still an income line, and, importantly, it is an income line that the hospital can control.”
Bristol Royal Infirmary chose to develop its retail offer itself – an approach Dineen recommends because it allows more control and, as a public-sector body, the hospital can borrow at advantageous interest rates.
Some hospital trusts have preferred to take developers as joint-venture partners – or simply hand the entire project to the private sector.
But creating new retail spaces is not necessarily easy, especially in the primary care sector.
John Hicks is director of global health for construction consultancy AECOM. His team has worked on US projects including the Mayo Clinic’s 1.5m sq ft Gonda Building in Rochester, Minnesota. It is a highly flexible building that allows for expansion, redesign and accommodation of evolving technologies and biomedical discoveries.
Hicks says: “In primary care, we have gone from effectively corner-shop-style GP practices, where a lot of the equity was wrapped up in the real estate the surgery occupied, to more entrepreneurial groups of GPs who don’t want to be bothered with real estate issues. These groups are happy to do deals with developers, often cross-subsidising the building of a new surgery by selling part of the site for other uses.”
This opens up the prospect of adding pharmacies, cafés and, potentially, shops. “The NHS allows roughly £25 per sq ft for new primary care development,” says Hicks. “That is the funding envelope, so the bigger centres can really make extra retail work for them.”
Hicks points to examples in the Netherlands. “Health centres there are badged as health villages, and it looks more like a hotel reception area than a GP surgery,” he says. “Turn left for healthcare, right for hotel, cinema and public spaces.”
At the same time, Hicks expects NHS surgeries to learn from the experiments of private-sector operators such as Virgin Active and Nuffield Health, private health clubs that have been adding facilities to their gyms. Well woman clinics, sports injuries specialists and other health-related facilities mix well, both financially and demographically.
Richard Taylor, senior director at GVA, is also watching closely. He thinks the hospital mall – first developed in the free-market US – can grow in the unique ecology of the UK’s public sector-dominated health sector.
“We have seen small-scale retail arcades in hospitals since the 1990s,” he says. “A WH Smiths or Boots or a coffee shop is not unusual.
“It’s an income-driver for the trust and, where you have a lot of inpatient beds, it can work, especially where the food and beverage offer is on turnover-based rents.
“It’s a growing market, but limited because the NHS won’t allow the sale of tobacco, alcohol or fast foods. And for primary care centres to get a pharmacy is an achievement, because of the difficulty of getting licences to operate them, and a café on the premises is a great win because you need large footfalls to make it work.”
The hospital mall can grow in the UK, but it might not grow quickly, and may never go beyond fairly modest floorspace and turnover. But it is here – and more are on the way. A trip to the mall and a trip to hospital may soon seem remarkably similar experiences.
The US experience
Hospital retail malls of 45,000 sq ft or more, including food, fashion and convenience goods, are increasingly common in the US. Unlike hospital retailing in the UK, there are no restrictions on what can be sold. If you want a glass of wine with your meal, or a burger for lunch, so be it.
Jeff Cooper, New York-based managing director of Savills Studley, says malls are developed and expanded in order to improve hospitals’ customer appeal, rather than to generate income.
“It’s still a relatively new phenomenon,” he says. “Trading used to be restricted to small gift shops – somewhere to buy books, magazines, candy, flowers – but it is changing because healthcare is getting more competitive.
“Hospital operators want to create a better experience for visitors, patients and staff, and for the surrounding community.”
That community link is increasingly important because hospital campuses are often in urban areas with relatively poor retail and leisure facilities. The hospital can improve its own reputation – and appeal – by improving the locality.
Cooper points to Chicago’s North Western Memorial Health Care System as a case in point. “The mall there has become a destination for the community,” he says.
The next trend that could be heading across the Atlantic is hotels on hospital campuses. Small hotels, with 75-150 beds, are currently being developed in several locations in the US.
“Hotels are becoming more popular, and even necessary,” says Cooper. “Hospitals see hotels as a real opportunity, but again the aim is not so much to make money, but not to lose money. It’s about enhancing the hospital’s appeal.”
