How do you decide where to build your next ambulatory care facility?

Use a data-driven, stepwise process that aligns service-line strategy with market demand, regulatory constraints, capital costs, and delivery timelines—validated by clear financial thresholds, site criteria and service line analytics for any given location.

Why it matters

Ambulatory care has been steadily gaining share as procedures migrate out of the hospital, putting a premium on the right locations for access, payer mix, and growth. National healthcare real estate analyses show resilient demand for outpatient space and continued expansion of physician-aligned facilities, making poor siting decisions costly and hard to unwind. Independent market evidence indicates that systems capturing outpatient shifts earlier tend to defend referral channels and reduce leakage, improving downstream contribution margins in acute settings. JLL Healthcare Real Estate Outlook

At the same time, the cost of capital remains elevated compared to the pre-2022 era, so every project must clear stricter hurdle rates and timing risks. The Federal Reserve’s target federal funds rate reached 5.25%–5.50% in 2023, and rate conditions continue to influence borrowing costs and discount rates used in real estate decisions. This environment makes disciplined, evidence-based site selection a governance priority for CEOs, CFOs, and boards. Federal Reserve

How it works

Define the program first. Decide which services (primary care, imaging, ASC, urgent care, specialty clinics) will be delivered and at what scale, then translate that into a preliminary space program that meets clinical workflow and code requirements. Early concepting should be grounded in applicable planning standards to ensure exam rooms, procedure rooms, support spaces, and public areas are right-sized and code-compliant, informing block tests and site fit scenarios. FGI Guidelines for Design and Construction

Map demand and competition. Use drive-time analytics (10–20 minutes for routine care; tighter for urgent care), population growth, payer mix, referral patterns, and competitor locations to produce a weighted opportunity index. Layer in provider supply by specialty, existing scheduling capacity, and hospital leakage analyses to target submarkets where new access will convert latent demand into scheduled visits, imaging studies, or cases. These inputs create a ranked shortlist of trade areas for financial testing.

Evaluate delivery timing and capital. Model schedule and cost implications tied to location, considering entitlement complexity, construction method, and market capacity. For mid-size outpatient buildings, typical development paths include 6–12 months for planning, design, and permitting, followed by roughly 12–18 months of construction, with variability driven by scope and procurement approach; schedule assumptions should be validated against regional market data. Dodge Construction Network

Run the pro forma and sensitivity tests. Build location-specific cases that include land cost, shell and tenant improvement budgets, equipment, working capital, and financing costs. Use service-line ramp curves and payer mix assumptions to model net revenue, then apply rate and schedule contingencies to test IRR and payback under realistic delays or cost escalations. Governance-ready decisions hinge on clearing defined thresholds (e.g., minimum IRR, system cash-on-cash return) under base and downside cases.

Key considerations

Regulatory and AHJ constraints can change the economics. If your program includes imaging, ASC, or other regulated services, confirm Certificate of Need exposure and the impact of city, county, and state Authorities Having Jurisdiction (AHJs) on scope and timing. The design must anticipate life safety, infection control, and patient throughput requirements; early adherence to outpatient facility guidelines reduces redesign and permitting friction. FGI Guidelines for Design and Construction

Market momentum and construction capacity matter. In high-growth corridors—such as parts of Middle Tennessee around Nashville—land competition, utility extensions, and contractor backlogs can stretch schedules and elevate pricing. Use contemporaneous regional data to confirm whether your assumed 6–12 months for predevelopment and 12–18 months for construction are achievable, and whether alternative delivery (e.g., phased shells, warm dark space) can mitigate risk. Dodge Construction Network

Cost of capital shapes site choice. Locations that require complex off-site improvements, longer entitlement cycles, or higher land basis must earn their keep through stronger demand capture. In a higher-rate environment, time is expensive; even a quarter’s delay can erode NPV, so decision frameworks should weight schedule reliability alongside traditional metrics like visibility, traffic counts, and co-tenancy. Federal Reserve JLL Healthcare Real Estate Outlook

Actionable takeaway

Adopt a two-gate location scorecard before you spend design dollars. Gate 1 ranks trade areas using a weighted index of demand, payer mix, leakage reduction, and drive-time access; only the top quartile advances. Gate 2 evaluates specific parcels with a standardized rubric covering program fit, entitlement complexity, schedule risk, site work costs, parking and circulation, and total cost to serve. Pair this with a project pro forma that tests base and downside scenarios using realistic timing (6–12 months predevelopment, 12–18 months construction) and current cost of capital assumptions.

If you want a template to calibrate the scorecard to your system’s thresholds and service-line strategy, review our healthcare real estate services for site selection, portfolio planning, and development management, and see how our advisory approach integrates market analytics with pro forma discipline. You can learn more on our homepage and request a confidential discussion through our consultation page to pressure-test a shortlist of Nashville or broader Middle Tennessee submarkets. healthcare real estate services homepage consultation page

What is an AHJ and why does it matter?

An Authority Having Jurisdiction (AHJ) is the governmental body that interprets and enforces codes for your project, such as city building departments, fire marshals, or state health agencies. AHJs determine approvals for life safety, infection control, egress, and occupancy; misunderstanding AHJ requirements can add months and redesign costs, so engage them during schematic design to de-risk permitting.

How big should an ambulatory site be?

Size depends on the program, but sites must accommodate building footprint, required parking ratios, patient drop-off, and service yards, as well as future expansion. A planning test-fit grounded in outpatient guidelines helps right-size the building and circulation while ensuring room for utilities and potential additions if volume outperforms expectations.

What delivery method best balances speed and cost?

Local market capacity and procurement strategy often drive results more than the label, but integrating design and construction early can reduce schedule risk. Use competitive tension for pricing, lock in long-lead items, and align the guaranteed maximum price (GMP) only after design is sufficiently developed to minimize change orders and cost growth.

How should we account for equipment and imaging in site decisions?

Heavy imaging and procedure spaces require structural, shielding, and MEP provisions that affect floor-to-floor heights, vibration, and power, so not every site or shell building can accommodate them. Confirm loading capacities, service routes, and utility availability during due diligence to avoid costly mid-project redesigns and delays.

Do we need a Certificate of Need for our outpatient project?

Requirements are state-specific and service-line dependent; imaging, ASCs, and certain specialty expansions may trigger review even when physician clinics do not. Review your state’s official CON guidance early and align the project schedule to the published review calendar so the pro forma reflects realistic timing and contingencies.

Bremner Real Estate partners with health systems to align real estate strategy with clinical performance and capital efficiency.