Wolgast Blog

Medical Office Design and Construction for Savvy Docs

Posted by Cory Sursely on Wed, Sep 07, 2016 @ 09:07 AM

MedicalExpertsVid.jpg

For over 65 years, Wolgast has developed specialty design and construction services for Medical Practitioners and efficient use of their space.  We keep in mind the patient flow, staff flow, regulatory requirements, and design elements for comfort for all.  Please view the short video linked above that displays our experience and abilities to make your space great for everyone who uses it.  If you have plans for a new office or remodeling/adding onto your existing space, please contact me to discuss your plans at no obligation to you.  Build with Wolgast to Be in Business Faster!

Dr. Michael Shepard, Building Expert for Physicians, can answer your questions at:


800-WOLGAST  |  mshepard@wolgast.com  |  #godesignbuild  #theWolgastWay
855-WOLGAST  |   www.wolgastrestoration.com  |  Insurance Restoration – Fire/Flood/Wind

Tags: Design/Build, the Wolgast Way, Medical Office Construction, Professional General Contractor

How to Make Owning Your Medical Office More Lucrative

Posted by Cory Sursely on Tue, Jan 19, 2016 @ 10:34 AM

MedOwner.jpgFor most business owners, the short-term benefits of leasing their building are attractive, but we’re guessing that most owners would favor owning their building and having control of their business use at a fixed cost. For doctors who own their own practice and will likely stay in their location for 7 or more years1, owning their building can be a great investment for their future while allowing them to have a fixed expense until the building is paid off. As a contractor who specializes in both construction and leaseback services, we can educate doctors on how to leverage programs, accounting processes, and legal structures to make it more lucrative to own your medical office.

Note: we are passing along the knowledge that there are building ownership options and programs available, however, we recommend and advise that you contact your CPA and/or attorney before taking the steps featured here.

 

Help with purchasing the building

Most medical practices would qualify for the SBA 504 loan, which requires a lesser down payment (as low as 10%) then funds 50% of the cost through the Certified Development Company (CDC) at a lesser, fixed interest rate for 10 – 20 years. This program works well for small businesses who are growing, but don’t have a lot of working capital to expend on real estate, improvements or equipment. Being able to finance 80-90% of the cost couldn’t be a better deal for these businesses. For more qualifying information visit the SBA website or read our blog on the topic.

 

Lease the Building from Yourself for a Tax Reduction

By forming an LLC to purchase your medical office, your medical practice will be able to lease the building from your LLC, deduct the payment on the practice’s taxes, and your LLC members would be taxed on their individual taxes as a pass-through. This would eliminate the tax for your practice and LLC members would be taxed at a lesser rate for the building2.

 

Cost Segregation for Tax Savings

For business owners who purchase or build a building, a CPA can complete a cost segregation study to determine elements of a building that can be depreciated on a different schedule than the rest of the building. For instance, parts of your building that aren’t used for business can be segregated (i.e. desks, chairs, light fixtures, accent lighting, sidewalks, and landscaping). The cost of these portions of your building can be taxed on different tax schedules, 5, 7, or 15 years rather than the 39 year schedule your building will span. (Wikipedia) This will allow you to defer taxes and help you improve current cash flow3.  An even more indepth and professional explanation from a qualified CPA is included through the button below. Is there cash hidden in your building?

Accelerated Depreciation for More Tax Savings

Your building has a set period of time for useful life, by which the building depreciates each year. Accelerated Depreciation is an accounting process that allows you to depreciate the building more in the beginning of its useful life. Paying the larger amount in the beginning lowers your net income, which you are taxed upon. So having a lower net income in turn would lower your taxes. Good resources to better understand this process are http://crfb.org/blogs/tax-break-down-accelerated-depreciation and http://content.moneyinstructor.com/1509/calculatingdeprectiation.html .

 

Return on Your Investment

Probably the most enticing part of owning your own building is the opportunity to make a profit on the sale of it when you no longer need it. Another option would be to lease it to a new tenant when you retire and bring in ongoing income when you’re retired from the practice.

Buying a building doesn’t work for every doctor who owns his or her practice, but we wanted to make sure that you had considered all the facts. Whether it’s construction, remodel, or leaseback, we are able to accommodate your needs. Call Michael Shepard, Dr. PH, to discuss your building options. His background in the medical and construction industries will help guide you as you contemplate the future of your practice.

1 Fitsmallbusiness.com http://fitsmallbusiness.com/buying-vs-leasing-commercial-real-estate/

2 Beckner & Associates http://www.becknerassociates.com/Should%20I%20Own.htm

3 Ernst & Morris (www.costseg.com/cost-seg.html).

 

Tags: Medical Office Construction, Financing Construction, Dental Office Construction

Why Design/Build Works Well for Doctors

Posted by Cory Sursely on Tue, Jan 06, 2015 @ 08:27 AM
Medical OfficeIn this blog, I’ll explore how the Design/Build method of construction is well suited to medical doctors, more so than general construction.  To start, the D/B method was really created to suit the needs of busy business owners, which includes doctors, because it requires less attention from an owner and that owner can set their involvement as much or little as they see fit.  Some customers like to be more engaged in the process than others and we are happy to accommodate each client’s unique desires.

The basic difference of D/B over general construction, is the relationship between the architect and builder.  In this project delivery, they are on the same team.  A doctor only needs to work with one entity to design and then build his or her office.  Also in this scenario, the doctor is protected from any discrepancies from the architect’s drawings to contractor’s application.  With D/B, the contractor and architect are consulting on budget, application and material quality throughout design, so when construction starts there are very little interruptions or change orders.  Should there be a discrepancy, the design/builder will work it out without involving the owner unnecessarily.  This protection is valued by doctors who oftentimes aren’t as familiar with construction, nor have the time to deal with these issues on site.  All of these reasons are exactly why Design/Build was created as an alternative to general construction.

Additionally, medical offices are not simple buildings to design or build.  It takes a specialized architect and builder that each knows the regulations for HIPAA, med gases, ADA and Certificate of Need specifications to design your building correctly.  Also, an architect with knowledge of patient flow helps with the design for efficient productivity of your staff members and privacy of your patients.  On the same note, a builder who understands and is familiar with medical office construction will complete your project with fewer delays.  At Wolgast, we know how to prepare for specialized equipment and how to plan for your workloads on an occupied site.  Scheduling for make shift, yet private, exam rooms during construction will allow you to keep seeing patients without interruption when renovating or adding on space.

The final feature of the D/B delivery method is that it allows the design/builder to be the advocate for customers who aren’t familiar with construction.  We use our expertise, connections and resources to help our clients get the best value for materials and applications of those materials.  We design and manage the construction of your building as if it were our own and demand excellent performance from our subcontractors.

A design/builder will become your representative to handle your building design through construction.  You’ll be able to keep your daily schedule the same while your building is built and Wolgast will apply our medical expertise to deliver your building on time, by regulation and within budget.

Design/Build  the Wolgast Way

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Design, Dental Office Construction, Good for Business

The Benefit of Design/Build Phase I Drawings

Posted by Cory Sursely on Mon, Oct 06, 2014 @ 09:29 AM

plans and rolled plansPreliminary plans, such as those provided in a Phase I of the Design/Build process, are the most efficient and economical means to determine the budget for your construction project.

While there has been a shift in the numbers1, there are still many business owners out there who are skeptical of the Design/Build method of construction.  They are more familiar with the traditional Design/Bid/Build method where they hire an architect, then have general contractors competitively bid the project, and the contractor with the best price/value builds the project. 

Early on, when we’re discussing the benefits of Design/Build with those who are skeptical, they have a difficult time accepting that they need to pay the nominal fee for the preliminary drawings (Phase I Design) so we can estimate the construction budget.  Those who are accepting of it realize that they would be paying that and more at an independent architecture firm. 

In the Design/Build process, the Phase I fee is nominal to cover the team’s time to complete a needs analysis, make necessary regulatory investigations, create a preliminary design and seek bidding resources for a preliminary budget.  Having a pretty accurate, yet ball park, estimate early in the process helps an owner obtain funding earlier.  The information gained during the Phase I is accurate and sufficient to take to a bank to secure financing.  Clients never get a separate bill for the Phase I cost unless the project doesn’t come to fruition, then the fees are billed to cover the team’s time at a fraction of the cost of a full set of plans.  Furthermore, if obstacles arise while a customer is planning to build a building that cause them to change their mind, it’s less risky to commit to a portion of the cost of the design while working through the initial process.

Additionally, having the flexibility to “tweak” the preliminary design so it fits within your budget is much more economical because you don’t have the engineering elements involved, yet.  Those get explicitly defined in the Phase II drawings.

When you add a Design/Builder to your team before you purchase property, they can assess the property and available utilities to provide the best use of space.  Also, prior to purchase, a Design/Build team can help coach an owner on contingencies in the purchase agreement as a buffer or a “get out of jail free card” if there are undesirable obstacles to using the property the way intended.

Those are the main benefits to committing to Phase I Drawings, but the Design/Build process has other benefits like completing construction faster, fewer change orders, open communication, and one entity having all the low bids.  Read more about the benefits of this method at in our White Paper, "Why Some Business Owners Don't Do Design/Build, but Should".

 

Why Some Business Owners Don't Do Design/Build, but Should

 

1 According to “Design-Build Project Delivery Market Share and Market Size Report” by Reed Construction Data and RS Means Intelligence, Design/Build construction delivery method has taken an additional 9% of the construction market since 2005 and General Construction has lost 10% of the market share in that same time.

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Scheduling, Financing Construction, Design, Dental Office Construction, Good for Business

Popularity Increasing for Design/Build

Posted by Cory Sursely on Wed, Sep 03, 2014 @ 10:58 AM

PlansAccording to the May 2013, “Design-Build Project Delivery Market Share and Market Size Report” by Reed Construction Data and RS Means Intelligence, Design/Build construction delivery method has taken an additional 9% of the construction market since 2005 and General Construction has lost 10% of the market share in that same time.

We recognize that the movement isn’t happening at rapid speed, but almost 10% brings it up to 40% of the overall market share.  Another study, “The State of Design-Build”, December 2010, by Design Build Institute of America uncovered that Design/Build professionals believe the biggest reason building owners haven’t rapidly adopted Design/Build is because it’s unknown to them and therefore seems risky.  Is that true? 

Wolgast was the first to bring Design/Build to mid Michigan in the 1970’s.  We saw early on the benefit of having the architect and the contractor on the same team.  It meant more continuity and collaboration, which would create a smoother construction project and therefore protect our clients from discrepancies in plans and change orders to remedy the parts that don’t translate during construction. Also, the cost for construction is determined earlier, so business owners can make an educated decision for their business without getting too far into the design process.

In actuality, Design/Build works so well because the construction experts are reviewing the plans while they are being drawn to ensure their constructability.  Therefore, once a shovel hits the dirt, there are very few setbacks, which in turn creates a quicker construction schedule, a reliable budget, and a happy building owner.

No setbacks mixed with the ability to get permits, pricing and materials earlier, makes Design/Build the fast track to construction delivery.  In some instances, the project can be completed months earlier than if it were delivered via General Construction Delivery Method.

As we are able to educate more people about what Design/Build is and the level of efficiency involved in constructing the building, we believe that it will continue to grow its market share.  To gain the insight that you will need to help you make a business decision, download our white paper, “Why Some Business Owners Don’t Do Design/Build, but Should”, or “Fast Track”.  We can also answer any of your questions, so please leave a comment or call us, 800-WOLGAST.

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Dental Office Construction, Good for Business, Risk Management, Manufacturing Construction

What is the Design/Build Method of Construction?

Posted by Cory Sursely on Mon, Aug 25, 2014 @ 11:17 AM

Design/BuildWe've been providing Design/Build services for almost 40 years and we're curious if it's a well known term among those who haven’t previously been involved with the construction of a commercial building.  Have you heard the term before?  In a nutshell, it’s a method of construction delivery in which the building owner executes a single contract with one entity to provide architectural/engineering and construction services.

In other words, a building owner hires one company to interpret and define the project scope, provide architectural design, bid the project, obtain permits, and then construct it.  The Design/Builder handles the entire project on the owner’s behalf per open communication and agreed upon contractual parameters.

This method uses the same qualified and licensed architects that a building owner would use in other construction delivery methods and provides the same caliber of design.  However, with the architect and contractor as one entity, there is frequent collaboration on the constructability and the budget during the design phase, which helps the project run smoothly or with very few surprises during the construction phase.  Fewer surprises equals a budget and schedule that you can rely on throughout the project.

This team collaboration during design allows for permitting, material ordering, and when needed demolition or site work to start earlier than with the traditional General Construction method (a.k.a. Design-Bid-Build).  That’s why it’s considered the fast track to construction, which means the project can be completed, months faster than with General Construction.

Design/Build is best suited for busy business owners including doctors, dentists, manufacturing, banks, and other businesses who don’t have their own construction department on staff, or who may not be familiar with commercial construction.  The Design/Builder becomes the construction department for these busy firms and the advocate for all things construction.

Hopefully this blog has clarified how the Design/Build method can help business owners efficiently build or renovate their office or plant, if not, here is the perfect opportunity to ask your questions.  Or for more information on the benefits and how Design/Build saves time and money, download our white paper “Why Some Business Owners Don’t Do Design/Build, but Should”.

 

Why Some Business Owners Don't Do Design/Build, but Should

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Scheduling, Dental Office Construction, Good for Business, Risk Management, Manufacturing Construction

Certificate of Need and Your Design/Build Contractor

Posted by Cory Sursely on Tue, Sep 17, 2013 @ 09:16 AM

Ambulatory Surgery CenterWhether you’re in support of the Certificate of Need (CON) program or feel constricted by it, it still governs the expansion of Michigan’s medical industry.  And as we discovered recently from the government’s response to McLaren’s public grievance after being denied relocating from Pontiac to a new hospital in northern Oakland County, the CON isn’t going away any time soon.  The debate seems to be getting more and more heated lately with those against it arguing for an open market approach to drive down cost and those for it are claiming that the medical industry needs to be regulated to keep a high standard of care at an affordable cost.

Furthermore, as we hear in the news more often, medical groups are having difficulty securing their CON in saturated Metro Areas of Michigan because a premise of the CON is to drive medical care to regions where there is less medical access.  A positive note is, due to regionalism and urban sprawl, there are new populated pockets where medical services are less saturated and CONs are still available.

As a design/builder that has been through this process several times with our medical group clients, we wanted to offer you some insider tips to getting through the CON application.  First and foremost, it’s important to build your team of CON/Design/Construction experts before you even look for your property.  Enlist your CON consultant and contractor to help you find an area that has CON capacity and also will accommodate your building/parking lot size.  Additionally, you’re architect plays a big role during the application period as you’ll need to submit schematic drawings, project narrative, site development plan and design fees, in the CON submittal package.  The contractor provides the estimated cost of the project, which is also required with the application.  And, obviously, having a CON consultant on the team provides an expert when navigating around the requirements and bringing all the necessary documentation together with accuracy, so that there are no setbacks from missing or incorrect information during the application process.  It could save you two weeks or more in your review time and provide insider know-all and advantages.

When you work with Wolgast Corporation as your design/build expert, we already have an established team of architect, engineer, medical construction specialists and CON consultant that has been through the CON process together.  We’ve helped doctor groups find suitable locations with available CON credits and also with renovations, additions and new builds to help them grow their surgery centers.  Through our Design/Build construction service, we satisfy all necessary requirements to help you move through the application process as efficiently as possible.

Learn more about our Design/Build construction services below, or call Dr. Michael Shepard to discuss how we can help you expand, 800-WOLGAST. 

Design/Build  the Wolgast Way

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Design, Good for Business, Risk Management

Leaseback: Get a New Building While Keeping Capital in Your Business

Posted by Cory Anderson on Thu, Aug 01, 2013 @ 02:37 PM

Build to Suit

Build to SuitWhen the time comes to move your business to its own brick and mortar (or any other building material) building, or expand to a bigger building, you have an option to keep your capital in your business rather than spend it on a loan to cover construction costs.  This new building can be built to suit your operational needs rather than trying to fit your operation into an existing floor plan, and with limited risk to your business. 

Leaseback is a construction delivery method that provides the best of both worlds to qualified business owners and even though it may sound too good to be true, it’s legitimately a great, low risk option for presidents or CEOs to remain focused on their business while a building is created for their use.  I’ll explain more about how it works below.

By definition, leaseback is a construction delivery method whereby a developer builds, finances, and leases a facility back to a business owner, allowing him or her to keep capital in the businessThis method is perfect for newer, up-and-coming businesses or those that are established and experiencing rapid growth because there is little risk to the business and there is a lot of flexibility in defining the provisions with the developer.

How it Works

The developer reviews the business owner/lessee’s business financials and determines that he or she is a qualified candidate to take on the risk of building a building.  The building owner then enters into a contract for the lease, which is flexible in the terms of the duration of the lease, who will handle maintenance, and who will cover taxes and insurance payments among other things.  The developer will then work with the business owner to find the most optimal location for the business.  Then they both work with the architect to design a building suited to the business’ use (i.e. square footage, floor plan, finishes).  Once the floorplan is determined, the developer works with the general contractor to ensure that construction goes as planned, leaving the business owner time to focus on business without the interruption of making decisions because, let's face it, they likely have enough of their own work to do without adding on construction management. 

Early in the design process, the developer will be able to determine the lease payment amount, so the business owner will know quickly what the leaseback will cost per month.  Also, the terms are negotiated in the contract and the lessee has flexibility to negotiate many of the terms with the developer.  Typically, the finishes chosen by the lessee have the most direct effect on the monthly rent of a leaseback.  By working with the architect, developer and general contractor, a lessee can choose the interior look and feel that's in their budget.

Key Benefits to Business Owners

You’ll notice that there are numerous benefits and most of them have the underlying theme of risk aversion to business owners.  Here are the key benefits:

  • Lease payments are fully deductible as a business expense by the lessee
  • Terms of the lease can be flexible to allow the lessee the option to renew the lease or purchase the building at any time during the lease
  • No large cash investment is necessary, so leaseback saves capital and keeps debt off the balance sheet of the lessee
  • The cost of land can be amortized in the lease payment thereby preserving cash by the lessee
  • You can choose a prime location that you may otherwise not be able to afford
  • There are no financial covenants on a lease, which gives the lessee greater control over its own business and operations
  • Owners would be able to keep financing options open for future opportunities
  • Rather than worrying about all the moving pieces of construction, you can focus on your business

This is a simplified explanation of the leaseback method.  For more detailed information, call Michael Shepard at 800-965-4278 or 989-790-9120.  Or click the link below to find if Wolgast's leaseback services are right for you.

 

Wolgast's Leaseback Services

 

 

Tags: Medical Office Construction, the Wolgast Way, Financing Construction, Leaseback, Dental Office Construction, Good for Business, Manufacturing Construction

To Use or Not to Use a Pre-Engineered Metal Building

Posted by Cory Sursely on Mon, Jun 17, 2013 @ 08:15 AM

Pre-engineered metal buildingWe have had all kinds of business owners from varying professions ask us about using a pre-engineered metal building when they’re fact finding about new construction for their business.  We tell them a general rule of thumb to consider is that metal buildings are best for businesses that want an industrial look, or have a big enough budget to dress up a pre-engineered building with brick or EIFS (for example) to mask the industrial façade.

It’s certainly a viable and economical option when a business owner is looking for new construction.  However, the expense of masking the industrial look can be cost prohibitive and could actually make it more economical to choose building a stick-built building instead.  To see examples of how a pre-engineered metal building can be “dressed up” visit Kirby Building Systems website. Additionally, the larger the building, the better the economies of scale become for metal buildings.  The price per square foot gets more attractive the bigger the building vs. stick-built construction.  On the same note, the smaller the building, the bigger the square foot price will be, which can make stick-built construction the more economical option.PreEngQuote

The time you have to complete construction can also play a factor on your choice between metal and stick-built construction.  Both methods start with an architect designing the building and getting through approvals.  Once the contractor has a signed contract with the owner, stick-building construction can start, however, when using a pre-engineered metal building this is the point where it gets ordered from the manufacturer.  From there, it takes time for the manufacturer to complete their engineering and planning for the support of the structure per your design.  Then they put it into production.  Your contractor can begin site work and foundations prior to the arrival of the metal panels, but that could take 8-12 weeks for most jobs (simple jobs can take less time).

A final consideration is future expansion.  If your site allows it and you have plans for expanding your building in a few years when you’ve doubled your business or another reason, then starting with a smaller metal building can provide cost savings during an expansion.  If you design it with the intention of adding space later, it should be easier and more economical to do so with a metal building compared to a stick-built building.

In summary, if you’re looking to build a large building and don’t mind that it looks like an industrial building (such as operations for warehousing, manufacturing and some retail), a pre-engineered metal building will be your most economical choice.  For those who need a smaller building, less than 10,000 s.f. or so (doctors, dentists, restaurant owners, service providers), who'd rather not have an industrial look, or don’t have the budget to mask an industrial look, then a pre-engineered metal building most likely isn’t your best economical choice.

Either way, Wolgast is skilled in designing and erecting pre-engineered metal buildings as much as we are in designing and constructing stick-built buildings, so please contact us with your questions about what type of construction will work best for you.  800-965-4278.

Tags: Medical Office Construction, Professional General Contractor, the Wolgast Way, Auto Dealers, Design, Dental Office Construction, Good for Business, Manufacturing Construction

Warning: Adding on to Your Building May Not Be Possible

Posted by Cory Anderson on Thu, May 30, 2013 @ 11:15 AM

What you should know before expanding your business

Expansion

Many of our clients begin their business expansion quest by attempting to add on to their existing building rather than moving their operation, and most of the time they’re able to move ahead without any problems.  Expanding their existing space to make more room for additional manpower or machinery could be more affordable than building new or renovating another building.  However, there are times when it’s just not possible to expand where they want or at all.  Below we discuss the possible caveats to consider when expanding.

Setbacks & Zoning

Like I said, adding on to a building could be the most economical option for a business owner to expand his or her business as long as the property site will allow it.  However, there are limitations to consider when expanding on an existing site.  Each municipality is different in their requirements and the type of business, whether it’s a commercial office, retail or a manufacturing company can make a difference to setback and zoning provisions.  Each municipality sets how close you can be to curbs or property lines, which will determine where a building expansion can be on a business’ property, if allowed at all.  An architect or design/builder can help you identify zoning and setback requirements.

Utilities

The location of existing utility lines on a property can also restrict where construction can occur on a site.  In most every case, a building can’t be built over a utility line, so it may be cost prohibitive to relocate utility lines that can’t be built over.  It depends on the desire and budget of the client.

Parking

Also, depending on the type of business, many times, the municipality will require additional parking spaces if the business is adding staff (or at least not lose any space), which can limit the size or location of an addition should a business owner intend to build on his or her parking lot.  An architect or design/builder can help determine the parking lot requirements of the municipality and the location and layout of the addition.

Materials

The final consideration isn’t prohibitive in a regulatory sense, but depending on the age of the existing building or the materials that were used, it may be difficult or impossible to match the aesthetic of the new construction to the existing building.  This is simply because the exact material or color may no longer be in existence.  To some, a complimentary look will satisfy them, however, others want it to match exactly.  This is fine if the budget includes the cost of a full exterior remodel.

Wolgast as your design professional and contractor will work with your municipality to ensure that all codes and regulations are met and negotiate with your municipality to the fullest extent possible to help you accomplish what you’d like to do with your business.  Please share with us any questions you may have about expanding your building.

Tags: Medical Office Construction, Design/Build, Professional General Contractor, the Wolgast Way, Dental Office Construction, Good for Business, Manufacturing Construction