Under the Radar Overachievers

Optimal Outcomes has quietly developed more than 100 healthcare facilities in the past 20 years.

Saying that Optimal Outcomes, a longtime, successful healthcare real estate development firm with a strong track record, flies under the radar when compared to HRE firms with national platforms isn’t just an observation from an outsider’s perspective. The firm’s principals and their eight employees readily agree.

“We acknowledge that we’re not great marketing people,” says Patrick Marston, founder and co-principal, along with Andrew “Andy” Boggini. “But I would add that we’re very fortunate that our work speaks for itself and that our clients are repeat clients and that new clients, seeing or hearing about the work we’ve done, reach out and call us,” he adds. “We’ve developed some really good and strong relationships here in Florida with a lot of repeat clientele. And that, I’ve got to say, has made this made this a very enjoyable and rewarding business for us.” While the St. Petersburg, Fla.-based firm has been flying under the radar for years – at least nationally – it has, as Mr. Marston notes, been focused on developing the best healthcare projects that it can, with a heavy focus on its home state and region. The result is that Optimal Outcomes has been going about its business quite prolifically, yet quietly, over the years.

Since its inception in the late 1990s, the firm has developed more than 100 projects and more than 2.5 million SF of medical office space, with most of its projects being Florida and many of them being on what could be considered a smaller scale. The firm has been especially busy in the past couple of years. “I would say that in the past 18 months or so, we’ve had 13 projects going,” Mr. Marston says. “Some of those are, you know, smaller types of projects in that 20,000 square foot range, but some of them are larger as well, perhaps 70,000 square feet. “What was interesting for us is that we didn’t skip a beat during the throes of COVID-19. In fact, it’s been kind of our busiest 18-month window that we’ve ever had.” Optimal Outcomes has done all of this, become one of the best-known HRE developers in the continually growing state of Florida, where the demographics look positive for the future of healthcare facilities and the growth of demand for medical services for years, perhaps decades, to come, without tooting its own horn all that much. As noted earlier, the firm’s leaders say marketing has not been a major focus. However, that is changing a bit, with Optimal Outcomes starting to be more proactive in terms of building relationships with new and potential clients, as well as taking more proactive steps to increase business, such as controlling parcels of land where it has a very good hunch – as a result of its many years of experience – where healthcare projects will be successful. Mr. Marston continues to downplay Optimal Outcomes’ supposed lack of marketing expertise, “but we are doing a few things looking to build more awareness of our accomplishments and expertise in the space,” he says. One of those steps included the hiring of Anthony Frogameni as VP of development in early 2020. Mr. Frogameni had spent the previous six years as a director based in the Orlando area with the Healthcare Capital Markets and Investment Advisory team of HFF Inc. “I wouldn’t call what Anthony is doing as being ‘straight-up marketing,’ per se, but he has great reach with providers in this state and he is increasing the general awareness of our firm with those groups,” Mr. Marston says. “But we honestly feel like our expertise and resumé speaks for itself in terms of areas where we have really specialized, and that’s in facilities for cancer care, orthopedics and multi-specialty buildings. These are areas that are likely to keep growing, both in terms of the market as well as for us, and we are confident that our business with our repeat clients is going to continue to grow as well. So, we’re kind of combining marketing in terms of reaching out to potential new clients while keeping our existing clients happy with what we do.” Mr. Frogameni says that while most of Optimal Outcomes’ work indeed comes through repeat clients and referrals from them, the company is, as noted, taking steps to put its name in front of prospective clients. “We’re very proud of the fact that we have built a good business through repeat client referrals from those clients,” he says. “But we are always interested in meeting new physician groups and sharing our expertise, which we are doing through attending conferences, getting involved with local organizations and non-profits, and other actions. “Since we have been doing business in Florida for more than 20 years and have had the fortune of working in almost every region in the state, we feel that most physician groups have probably heard of us or are at least familiar with a project we have done,” Mr. Frogameni continues. “On many projects, we are partnering with the physicians and key team members, which helps us build relationships and further gain trust within the physician community.”

Another key contributor to nurturing those relationships is Kim Dunlay, a director, who has been with the firm for more than 15 years. Ms. Dunlay managed a multiphysician specialty practice for many years before joining Optimal Outcomes. “Kim keeps the wheels on the train in more ways than one,” Optimal’s website says of her. “ She maintains a strong grasp of every phase of the business and becomes a friend and asset to our partners and clients as our relationships grow. Kim is the heartbeat of Optimal and a strong factor in its success.” Mr. Boggini has another explanation as to why the firm has not been too concerned with marketing its successes over the years. “I think a lot of it comes down to our personalities,” Mr. Boggini notes. “Both Patrick and I like to still get our hands dirty with all of these projects. You’ll find us on job sites and at every design meeting and in the meetings with the contractors. Both of us just really enjoy the whole development process, more so than the marketing process. “I also feel like the way we’ve gone about our business has worked for us, and our clients appreciate what we’ve done for them and actually been partners with them, either as they look to grow or as they strive to provide the best services they can in quality buildings and good locations for their patients.”

With just two principals, Optimal Outcomes, which has less than 10 employees and which self-funds the projects it develops and owns, does not have “third-party investors to perform for, and we don’t have outside money to answer to,” Mr. Marston adds. “All of our deals are driven by economic prudence. So, for us, if the economics of a deal will not work, we won’t do it.”

How they got started

Like many firms involved in the HRE sector, Optimal got its start kind of by accident, or at least not as part of a plan to start an HRE development firm. Back in the late 1990s, Mr. Marston, who was working the banking industry in Boston, approached his friend, prolific HRE developer Don Simmonds of Simmonds Healthcare, about doing a project with him. “Simmonds Healthcare was a designbuild firm that was very successful, it had eight offices and was in competition with Marshall Erdman (now known as Madison, Wis.-based Erdman) on a national basis,” Mr. Marston recalls. “Don was a dear friend of mine and was very successful at his business, but he did his projects on a design-build basis as a feefor- service developer.” Mr. Marston, on the other hand, because of his background in banking in Boston, where he had graduated from Boston University, was interested in owning the project he proposed developing with Mr. Simmonds. “Not only was I doing banking, but I was a workout specialist, as I chased down what could be considered bad credit and I was doing it exclusively in real estate,” Mr. Marston says. “So, I had received great exposure to real estate from a very, very conservative credit-driven perspective, which I think has been very helpful to us in our business, as we’re probably more conservative than many other companies in the industry.” Mr. Marston says his initial plan to do a project with Mr. Simmonds about doing as a one time investment as opposed to starting a long-term business. “I really wanted to be involved in brick and mortar,” he recalls, “as I’m more of a blue-jeans type guy and have always been enthralled with construction. I was also interested in the equity side of business. “So, I approached Don and said, ‘Hey, listen, why can’t we take what you do and do it as an ownership model?’” he recalls. “Don told me, ‘I’ve tried it, and it’s a lot of work and it’s really hard to make it work, but if you can do it, I’ll help you.’ At the time, I had like just a few dollars in my pocket.” Mr. Marston’s first project just happened to be in Florida, as he “tripped over” a deal with a cardiology group affiliated with a hospital in Spring Hill, about 60 miles north of St. Petersburg, that was part of what was then Health Management Associates (HMA), a for-profit system that operated hospitals and other healthcare facilities in the southern part of the country and which, in 2014, merged with Franklin, Tenn.-based Community Health Systems Inc. (NYSE: CYH). “I really did not know this was going to be a business at the time, as I was still living up in Boston,” Mr. Marston says. “I thought the project was going to be an investment, maybe providing me with some passive income.” But after the development of that project, Mr. Marston started getting asked to do others. “I was very, very fortunate and lucky that some people started reaching out and asking to assist them with their medical office projects as well,” Mr. Marston recalls. Upon realizing that being an HRE developer could indeed be a business, Mr. Marston called upon his good friend from their days back at Boston University, Mr. Boggini, who was also working in commercial banking in Boston at the time, to join him in what looked like it could become a growing business. “So, I convinced Andy and his family to move down to Florida, which was not the easiest thing to do at the time, but they’ve fallen in love with this environment, particularly the weather,” Mr. Marston says. Mr. Marston had moved his family down to Florida as well, living in the St. Petersburg-Clearwater area and responding to requests from providers, both hospitals and physician groups, to undertake development projects. “Patrick and I got together for a project that he was doing in Florida, and it was one project that quickly blossomed into six or seven different development projects within two years,” Mr. Boggini recalls. “And, I had to admit, being in Florida was kind of nice.”

Early on, as noted, the firm developed projects for health systems, or groups affiliated with them, including Nashville, Tenn.-based HCA Inc. (NYSE: HCA), and a pair of St. Petersburg-based organization, the 15-hospital BayCare Health and the six-hospital Bayfront Health. Mr. Marston adds that in the early days of the firm, even though Optimal Outcomes preferred to develop projects for its own ownership, it did indeed do plenty of feefor-service projects in which it was not involved in the ownership. In recent years, however, that has changed, with the company owning a majority of its developments, often with physician-tenants as investors in the real estate. “When we started the business, we were still going some fee-for-service work, and we did projects as far away as the West Coast, in Washington state,” Mr. Marston recalls. “But things happen, and because we were married and had families, we started to say, ‘Hey, if we can do these projects closer to home it’s a lot better for everyone, even our clients because we will have a hands-on approach and be there when they need us.’ “So, now the vast majority of our work is still in Florida,” he adds. “These days, that not only helps be closer to home, but it also comes down to our desire to be very close to our projects, in large part because we are such hands-on developers. Our goal, we admit, is not to be the biggest development firm, but, even though it sounds like a cliché, but to be the best developer on each of our projects and for our clients as we can, and we think that entails being very involved in them from start to finish.”

On most of its projects, Optimal Outcomes uses its own capital, Messrs. Marston and Boggini explain. “We’re on the project site at least once a week,” Mr. Boggini adds. “And being that kind of a business, one whose principals are involved and who have capital invested, makes it difficult to do that on a national basis and still be as involved as we’d like to be.”

A very strong history

As noted, Optimal Outcomes has been a rather prolific developer over the years, perhaps being as busy as any HRE firm in the state of Florida during the past couple of decades. Also as noted, the company got its start working with health systems, and has done projects in recent years for the likes of the previously mentioned Bayfront Health and BayCare as well as but also for Englewood, Fla.-based St. Anthony’s Health Care. Even so, many of its projects during the past decade have been for physician groups, of which Florida is home to numerous thriving practices. A number of these practices continue to grow, including some that are receiving investments from private equity firms and consolidating with other groups. Among its physician-group clients are St. Petersburg-based Cardiac Surgical Associates, Baton Rouge, La.-based Hematology Oncology Clinic and Fort Myers, Fla.-based Florida Cancer Specialists & Research Institute (FCS). Undoubtedly, that last group listed above, FCS, which has more than 100 locations throughout the state, with many of them being somewhat smaller, local cancer treatment centers, has been one of Optimal Outcomes’ largest clients over the years. “We started working with the predecessor group to Florida Cancer Specialists, Gulf Coast Oncology, which later became part of FCS and which provided us with our entree into cancer care facilities, about 13 or 14 years ago,” Mr. Marston says. “As a result of our success with them, and providing them with quality projects and service, developing cancer care projects has become a strong specialty of ours and has led to more cancer-care provider clients along the way.” Optimal Outcomes has been at FCS’ side for much of its growth, often assisting the group in its ability to provide a better patient experience. In all, Optimal has worked on about 14 to 15 projects for FCS, developing facilities both on a fee-for-service basis as well as on a third-party-owned basis, with physician investors. “We’ve worked with them on their growth strategy in that when they go into a new market, they’ll buy these physician practices, many of which are located in smaller, dated offices – third-generation properties,” Mr. Marston says.

“We’ve been there with them, kind of educating them on the real estate piece and saying if they are going to consolidate with these physicians and consolidated their offices, they should build new, modern facilities in more convenient locations that provide a better experience for patients. Newer facilities also provide a better experience and working environment for the staff and the physician teams. “On top of that, building new, efficient facilities will result in better economies of scale,” he adds. “And they have enthusiastically taken us up on this concept, which they were a little nervous about early on but as a result of doing so have gotten such strong patient feedback, as well as staff feedback. It’s proven to be a good, smart and wise business decision on their part.”

Earlier this year, Optimal Outcomes completed its newest facility for FCS, the 23,000 square foot Tallahassee Cancer Center in Florida’s capital city. The project, which consolidated two cancer centers in the area, is on a 3.3-acre, highly trafficked site at Blairstone and Miccosukee roads. Included are 16 exam rooms, each with its own windows to provide natural, healing light, more than 50 infusion chairs, some of which are private to accommodate hospital beds, as well as a fixed PET/CT suite.

Other projects

With more than 100 projects developed over the years, Optimal Outcomes certainly has many that stand out. Just in the past year or so, the firm has started and completed a number of new projects. It started construction on a 20,000 square foot, $9 million cancer care facility for Florida Cancer Specialists in North Port, part of Sarasota County on the Gulf Coast, and completed a 16,000 square foot cancer center in Estero, near Fort Myers, for FCS. It also finished construction of a 17,000 square foot cancer center in Baton Rouge, La.-based for locally based Hematology-Oncology Clinic, which is affiliated with a Florida organization, Fort Myers-based American Oncology Network LLC (AON). There were also others, including the FCS cancer care facility cited above in Tallahassee. As for the project in Baton Rouge, Optimal landed the opportunity through its relationship with AON, a national oncology group based in Fort Myers. The firm completed the project in six months. “We are so pleased with the outcome of our new facility,” said Missy Brown, the clinical practice manager for HOC, in a written case study of the development. “Optimal Outcomes strived to meet the needs of our patients and physicians from start to finish. Their diligence and attention to detail turned our ideas into a beautiful, functional facility enjoyed by all who enter our doors.”

Another project that should be exemplified is Optimal Outcomes’ sale in mid-2021 of its 125,000 square foot MOB complex, known as Tradition HealthPark, in Port St. Lucie, Fla., along the Atlantic Coast and about 110 miles north of Miami. Optimal sold the complex to Cleveland based Cleveland Clinic, which operates the adjacent 177-bed Tradition Medical Center, for $52.5 million, or about $420 per square foot (PSF), according to information from healthcare real estate (HRE) data firm Revista. Although Optimal typically has a long-term ownership philosophy, Mr. Marston says that “due to significant and continual interest in these particular properties by multiple institutional buyers, coupled with very favorable market conditions for sellers like Optimal, we felt approaching Cleveland Clinic was appropriate. I think the terms and timing of the deal worked for both parties and the resultant transaction was what we would consider a ‘win-win.’ We never build to flip but we will also always consider the merits of any investment time horizon given a multitude of factors.” Optimal was involved in the outpatient complex since the first MOB, the 60,000 square foot Tradition HealthPark One, was developed by Valencia, Calif.-based Mann Medical Research in 2012. Mann originally planned to build a drug manufacturing facility on the site, which at the time was not part of the hospital campus. However, when the research firm contracted with another firm to do that, it decided to develop a MOB next to what would become the new Tradition Medical Center. In 2015, Optimal acquired the facility from Mann as well as 12 adjacent acres where, in 2017, it developed the second MOB on the site, the 65,000 square foot Tradition HealthPark Two, which includes a surgery center. “We developed the second building for multiple tenants, including the hospital,” Mr. Marston says. ”Inclusive of joint ownership in an ASC (ambulatory surgery center) located within the second building, the hospital system ultimately occupied approximately 70 percent of the building.” When asked if Optimal typically holds its projects for long periods of time, Mr. Marston says, “I know this might sound like a sales pitch, but if you’re building a project and your intent is to hold it for the next 10 or 20 years, you will build it differently, and you will spend money in areas that you would not if you had an intention of selling it in 12 months. “Sure, we have sold some properties, but our goal is to always be long-term holders. We like the cash flow and the only reason that we ever sell is if the price offered makes it unrealistic not to.” When asked to give an example of a project that perhaps best exemplifies Optimal’s capabilities, Messrs. Marston, Boggini, and Frogameni all agreed that a new project it recently completed in Vero Beach, Fla., about 30 miles north of Port St. Lucie, does just that.

According to Optimal officials, the firm was approached by Vero Orthopaedics to, at first, assist it in developing a new “flagship” orthopedic facility with an ASC. When it came time to determine the ownership structure, the orthopedics group decided to form a joint venture (JV) partnership with Optimal Outcomes. The two entities used a structure that allowed the group’s physicians and executives to invest in real estate without having to guarantee any of the project debt. As it typically does for all of its projects, Optimal performed the site selection, due diligence, site acquisition, debt financing, planning and design, permitting, and construction of the project, which was completed in July 2021 as a multi-tenant MOB. “We’re really proud of this one,” Mr. Frogameni says. “Not only did it turn out great, but it’s a good example of a project done in partnership with the physicians, which we have done many times. In our structure, we allow the physicians to invest in the real estate without having to guaranty any of the debt, which many find to be an attractive ownership structure.”

What does the future hold?

As Optimal Outcomes looks to the future, it plans to continue building on the success it has garnered and earned over the past two decades or more. And that means working with health systems when opportunities arise, but still placing a heavy focus on developing new facilities for growing physician practices. “We like working with physician groups,
as they align well with us and are very entrepreneurial and in many instances can make decisions rather quickly – in fact, from our first meeting with a group until physicians and others are treating patients in a building is often just 18 to 24 months,” Mr. Marston says. “And the strong, healthy physician groups today are, as all of us in the sector are aware, going through big consolidations by a lot of the institutional money guys who are very interested in talking to
third-party developers because they’re very finance-oriented and understand that doctors and providers are good at what they do and growing their businesses, but that they’re not as good at real estate. “It’s why we’ve been approached by some folks, some equity firms, from up in the Northeast that are investing in physician groups down here in Florida and other areas and are looking to pursue growth strategies. As part of that, they’re looking for a development arm to lead that part of the growth, the network expansion, and we feel that is really providing us with a nice opportunity to potentially grow as well.” Other than that, the key leaders at Optimal do not foresee any big changes in continuing to do what they do best, even if it means flying under the radar just a bit.