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Profitable Wellness Facility

A Medical-Mall Concept,a Two-Income Family Market and a Careful
Matching of Space and Programs Make Fort Sanders a Winner

By Donald DeMars
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You wouldn’t have believed it: a projection for a handsome first-
year profit by a 55,000-square-foot, medically related fitness
facility. Our experience in this industry might have made us
skeptical of this projection, too, but there it was: the carefully
analyzed data from our market and financial feasibility study
pointing to early profitability for the Fort Sanders Health and
Fitness Center, to be constructed as part of a medical mall
complex in Knoxville, Tenn.  

Natural light, throughout the Fort Sanders Health and Fitness
Center, gives an upbeat, uplifting feeling to the facility’s spaces.
The entrance area, above, exemplifies a point-of-sale
approach that invites participation in a wide variety of activities.

The complex, a child of Fort Sanders Regional Medical Center,
was to place the fitness center in a full-service environment,
including:

Retail shops

Nanny’s full-service child care center

Physician's plaza of medical offices

Diagnostic center with outpatient surgery

Patricia Neal Service Center for Outpatient Rehabilitation

Fort Sanders Health and Fitness Center

A future medium-sized acute-care hospital

The fitness center was built, but only after a second opinion was
obtained from a big-six accounting firm. While they basically
agreed with our market-capture numbers, they concluded that a
facility of this size, scope and quality should expect to
experience losses of nearly $200,000 into its second year.
Having differed with a large, nationally known firm, and having
estimated member attrition at a low 15 percent, we looked
forward with anticipation to the first year’s results.

The call that came from Dan Bonk, then acting director of health
promotion at Fort Sanders, near the end of the first operating
year (1989) had me sitting on the edge of my chair, biting my
lip. He said, "It looks to be about a $300,000 profit, with 5,000
members… and 15 percent attrition. Not bad, DeMars!" I’d be
lying to say that I didn’t feel absolutely puffed up with pride after
that call but, more importantly, it confirmed some lessons that
have profit consequences to other developers contemplating
the creation of new facilities for the more sophisticated, but still
fun, fitness styles of the ‘90’s.

Market-Driven Design
Hospitals tend to be more sophisticated in the marketing
issues of project and product development than most
entrepreneurs or other developers in the health and fitness
industry. But many hospitals have most of their experience with
essential health-care services; people with a particular physical
need present themselves, or are referred, to the hospital. What
differentiates a leader like Fort Sanders from the rest is their
awareness that to be a leader, you must offer to the consumer
not only what he needs, but what he wants!

Fort Sanders began thinking about a fitness facility some six
years ago, and brought Donald DeMars International on board
to take a hard look almost four years ago. The first step after
meeting with managers of key departments, was a market and
financial feasibility study. We used additional focus groups to
help position the program, which ultimately was targeted to the
family market - especially those with two careers.

With constant program input from Fort Sanders’ personnel, we
analyzed the study results and expressed them in schematic
and design development architectural drawings, and an interior
design of the facility. Final construction documents were
handled by the local architect, Barber McMurry, using selective
details and specifications that we provided.

It is the quality of a developer’s data gathering and research
analysis, strategy development and product-line development
that guides the quality of the physical facility, product line,
program management, promotion and advertising. Constant
results evaluation are key to the operating success of facility
program delivery.

Point-Of-Sale Visibility
The positioning of the program components within the overall
facility design at Fort Sanders followed a distinct rationale that
we have evolved over a number of years. As one looks at the
floor plans, the first level is organized under both a public and
private format. Anyone walking through the front door at the
center, either guest, drop-in, visitor, member or non-member,
they are not discouraged from participating in the self-evident
profit centers.

This "point of sale" or retail entrance approach has been found
to synergistically produce substantially more profit from such
components operating together and serving both public and
private, than operating independently and serving only a public
or private clientele. The retail "mall type" corridor entrance
encourages participation for those formerly uninitiated in the
fitness business, as well as going a long way toward reducing
the expense of sales and marketing. This "front-end corridor"
normally includes access to second-floor medical, and
oftentimes hair care, skin care, tanning solon, etc. Within this
corridor, there is also a sales center and general administrative
offices. This overall approach is quite similar to hotel "front of
house" design.


Designing the Back
The balance of the facility (or "back of house" beyond the
member check-in at the front desk) was organized with the
following points in mind:

The placement of the components follow a hard rule to
convenience the consumer. The least steps taken, from check-
in to dressing to program and return to the front entrance, the
better.

Program components are placed in consideration of flexibility
and versatile family programming. Providing programs for pre-
schoolers, school-age children, teens, adults, seniors and
specialized groups, such as pregnant mothers, the obese, etc.,
requires immediate adaptability of the spaces and both visual
and acoustical masking between program areas.

Viewing angles between compatible program spaces on both
first and second floors were emphasized for interest and
excitement.

Natural light is essential, and natural light infusion, penetration
and expansion between spaces was planned. Bringing the
outdoors indoors was the target, all within a concern for energy
conservation.

The overall facility is 62,000 square feet, and includes the
following elements:

Child care

Pro-shop

Restaurant

Racquetball/squash courts

Outdoor tennis

Educational classrooms

Full gymnasium

Indoor pool (25-yard)

Aerobics studios

Conferencing center

Indoor running track

Lockers, whirlpools, steam, sauna, massage

Sports medicine clinic

Strength and conditioning

Kidfit club
Hospitals’ medical
posture is bending
toward
recreational
aspects in fitness
profit centers

The hospital
industry has
traditionally
approached
preventive
medicine from a
health-promotion
standpoint, offering
health fairs, health
education and the
like, as a way of
communicating to
the consumer that
the hospital
acknowledges the
importance of
prevention.

Although most
hospitals have tried
to develop health
promotion as a
profit center, or as a
marketing method
to increase bed
occupancy,
fitness/wellness
centers have not
proliferated within
the hospital
industry at large.
The industry is so
medically postured,
and hospital
mission
statements are so
targeted toward the
sick, that it seems
difficult to justify
investment in the
recreational
aspects of full-
service fitness
programs.
Nevertheless,
those hospitals that
have sought
expertise from the
private-sector
fitness industry
have shown
success, and these
successes are
increasing the
hospital industry’s
financial
commitment to the
new fitness-
services profit
center.
The Kidfit Room is a big attraction at Fort
Sanders.
The Kidfit membership exceeds 350.
Recreation room
The sports medicine clinic, as the only principal medical
component, comprised approximately 3,400 square feet, and
the fitness center has collected approximately $70,000 per year
in rent from it. Nevertheless, Jay Kelly, current general manager,
recently related to me, "Fort Sanders has decided to move a
portion of the sports medicine department out of the health and
fitness center due to the rapid growth in membership and the
dollars the member group can generate."

Quality Leadership
The quality level of the Fort Sanders facility is also one of the key
determinants of its success in the local marketplace. As we
completed a competitive survey of all the other facilities in the
marketplace as part of the market analysis (and there are plenty
of other facilities), it was quite apparent that there was no real
quality leader in the area. The great developers all know that
quality is "the name of the game" for a long-term success. Yes,
excellent quality does cost more than marginal quality, but the
extra cost can be financed and amortized over many years so
that you don’t feel the impact of the difference as readily. On the
other hand, you feel the benefits of the quality from the very first
day the facility operates. Quality facilities do not deteriorate as
quickly as marginal facilities and they also produce smaller
maintenance and expense burdens.

The Fort Sanders Health and Fitness Center project exhibits the
multiple-use facility approach that is applicable in any number of
component mixes. This general placement of retail, child care,
control, administrative and sales, locker-spa-swimming pool,
upstairs medical, fitness and sports components are the most
efficient approach toward adaptability and flexibility in basic
program components.
For more information about
Donald DeMars International, Inc.,
email us at
donald@donalddemars.com
All contents contained herein,
Copyright ©2003 by Donald DeMars International, Inc.