As The Quincy Mall Suffers Retail Losses, A Surgical Center Offers A Cure | KBIA

As The Quincy Mall Suffers Retail Losses, A Surgical Center Offers A Cure

Jan 23, 2020
Originally published on January 23, 2020 5:04 pm

In August 2018, the Quincy Mall was in crisis. A few years earlier, JCPenney, one of the mall’s three large department store anchors, had closed. That month, the two remaining stores, Sears and Bergner’s, closed within weeks of each other.

“It left us with just this huge big-box vacancy,” said Mike Jenkins, the property manager at the 500,000-square-foot mall in Quincy, Illinois. 

The loss of such major tenants has been a death sentence for many malls. But the shopping center had a stroke of luck. The same time the department stores closed, one of the small city’s two large medical providers was looking for a space to house a planned outpatient surgery clinic.

The Quincy Medical Group soon after leased the building to house its cancer institute and outpatient surgery center. When the clinic opens later this year, patients will be able to go to the mall to receive colonoscopies, chemotherapy and ambulatory surgery procedures such as tonsillectomies or hand surgeries.

The importance of anchors

As more people shop online and brick-and-mortar stores close in shopping malls, property managers like Jenkins have to innovate.

“Our focus is to start trying to attract those segments of retail that can not only survive against the internet, but thrive against the internet,” he said. That means places like restaurants, party venues and spas.

Anchor tenants — the large retailers that initially draw people to a shopping center — are indispensable to a mall’s success, said Anaise Berry, director of marketing and communications at Cullinan Properties, the Peoria, Illinois-based company that owns the Quincy Mall.

“The anchors have always been considered the main draw," she said. “But now we’re starting to see a lot of retail settings where the anchor spaces are kind of evolving.”

That’s where medical tenants come in. Malls need tenants, and medical providers are looking for space. And unlike other tenants, such as the smaller furniture store that occupies part of the former JCPenney space at the Quincy Mall, medical tenants can utilize an entire 100,000-square-foot space, Berry said.

“We’ve got to get creative to help draw people to the mall, and health care is one of [the ways],” she said. “We call it med-tail, where you blend retail with medical.”

Medical centers have started moving into malls across the country, from the Dana-Farber Cancer Institute’s outpost at Boston’s Chestnut Hill mall to a UCLA-operated primary care provider at an upscale shopping center in north Los Angeles. Even the Mall of America welcomed a medical center last year.

The ‘craziest thing ever’

“We are trendy; we just didn’t know we were trendy,” said Quincy Medical Group CEO Carol Brockmiller. “That was really not the intention.”

For Brockmiller, the math was simple: She needed space for the medical group’s new free-standing surgery center, and the mall could provide it by the yard.

Most Quincy residents thought the idea to conduct surgery in the shadow of a former Clinique makeup counter was “the craziest thing ever,” she said. “But we just saw it as a big empty box. Yes, it’s formerly known as Bergner’s, but now it’s our new location known as 3347 Broadway.”

Vacant big-box stores are great venues for medical centers, Brockmiller said. After they’re gutted, they provide a huge amount of empty space ripe for customizing into surgical suites or other uses. They’re usually close to major highways and easily accessible. And they're much cheaper than building a brand-new facility.

“I think there’s value in these old buildings,” she said. “Because we had looked at properties, and because we had looked at other buildings, we knew there [weren’t] great options unless you buy a big old field and start a building from scratch, and that’s just uber-expensive.”

The changing character of malls is also lining up with the changing character of surgery, she said. More surgeries are able to be completed in a single stay with minimal hospital time. That means the need for ambulatory surgery centers is growing.

Additionally, providers can usually charge lower prices at free-standing outpatient centers, which means happier patients, she said.

New competitors

The new surgery center has split the small city’s medical community in two.

For decades, Quincy Medical Group physicians have worked alongside physicians from Blessing Hospital at a building attached to the Quincy Medical Group. The 327-bed, acute-care hospital has leased the space from Quincy Medical Group to perform surgeries.

After the Quincy Medical Group announced its plans for the mall facility, Blessing officials announced they would not renew the lease and would build their own surgery clinic near the existing hospital, to open in 2021.

Instead of sharing space under the same roof, they’ll be competing for patients, and hospital officials are worried there aren’t enough potential patients in the region to go around.

The outpatient surgeries help the nonprofit hospital provide free care to those who can’t pay for it, said Patrick Gerveler, Blessing Health System’s chief financial officer. The new mall facility could take away that business.

“Part of the patients who have commercial insurance or Medicare, they might help pay for those cases when we have folks without the ability to pay,” Gerveler said. “If we have less of those patients and they’re going to QMG … that money doesn’t stay in the tax-exempt system.”

A drop in lucrative outpatient surgeries also could affect the hospital’s ability to provide behavioral health and emergency care, he said. Quincy Medical Group officials have said they don’t expect the new facility to affect the hospital’s patient load.

But the competition among the two providers could be a positive change for patients, said Maureen Kahn, Blessing Health System CEO.

“Competition will make us even better,” she said. “It brings prices down in some cases. It also will maybe improve the quality; it may improve the service.”

For example, Gerveler said the hospital has hired 45 new physicians since October.

A retail home run

The new mall facility could boost the mall’s business, too, said Jenkins, the property manager, who calls the new construction a “home run in the 21st-century realm of retail leasing.”

Once it opens, he said, “it’s going to bring 200 people a day to the vicinity of our mall that otherwise wouldn’t be here, not to mention 50-plus white-collar employees who are going to need to take breaks and eat lunch and dinner.”

Jenkins is hoping for the shopping mall holy grail — a new Starbucks coffee shop. He's already heard from prospective tenants.

“People, businesses, companies are reaching out now because of the announcement of QMG coming to the mall,” he said.

He can also envision flower shops, cafes and restaurants opening to accommodate the new influx of workers and patients. And he expects the Hallmark store, just steps from the clinic’s entrance, will make a killing selling get-well cards.

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