Real estate strategies must keep pace with provider business strategies
The following is a guest post from Peter Bulgarelli, executive managing director at JLL Healthcare Solutions.
While policymakers determine the future of healthcare, healthcare systems are moving forward with new healthcare delivery models designed to improve the quality of care and reduce costs. Central to these decisions is the issue of where care will be delivered.
As hospitals and health networks embrace a more patient-centric model of care, real estate strategies must follow suit. Healthcare providers are more carefully considering patient needs and preferences in determining the right location for different types of services. Today’s real estate decisions will directly impact future financial stability and success.
Designing a smart, fiscally sound real estate strategy that will withstand future market changes is based on these five tenets:
1. Put patients first
The future of care is all about convenience. Facing increased competition, hospitals must consider how they can physically position themselves to get closer to patients. In many communities, this means shifting more services off hospitals’ main campuses. Revista reports that 447 new off-campus medical office buildings were developed in the U.S. in 2016, while only 186 were built on campus. Meanwhile, retail clinic locations increased 38% in the last five years, according to Kalorama Information.
With a focus on increasing accessibility, healthcare systems are opening up highly visible urgent care centers and other outpatient facilities in high traffic retail centers, next to the local supermarkets that patients frequent. Keeping the brand top of mind for patients has taken on greater importance and factors heavily into location decisions. In Cincinnati, for example, a healthcare system built a new medical center with an emergency department next to the on-ramp of a major interstate, with the brand’s colors prominently displayed on the building’s exterior.
2. Let data be your guide
Where are most patients traveling from to reach your facilities? Why is a particular practice group underperforming after several years of success? How are the demographics of the region changing? Some hospitals and health networks are using advanced data and analytics to answer these questions, bringing together siloed information from clinical staff, the C-suite and real estate departments to develop a more complete picture of what’s happening now and predict possible future scenarios. Technology tools can layer in details about buying patterns, wait times, services, competitors and drive times to inform decisions about where to plant new facilities.
Predictive analytics in healthcare is still in its infancy, with Grand View Research estimating the market will reach $19.5 billion by 2025. While much of the focus to date has been on using predictive analytics for improving patient care, it can also offer tremendous value for real estate-related decisions by providing deeper insights into how to best serve the community. For example, analytics could predict an ideal location for a specialty practice with insights based on where target patients live, their habits and their likelihood of finding a competing provider.
3. Plan for rapid change
Chances are high that a healthcare facility designed today will serve a different function in another decade. Real estate isn’t the rigid, long-horizon decision it used to be. A healthcare provider might eventually need to transform an urgent care center into an outpatient clinic, for instance.
As healthcare systems take on greater responsibilities for improving the health of the communities they serve, many are questioning how and where they can make the most impact. Some leading systems are considering new ways to influence public health, creating partnerships that focus on economic development, healthy eating or community safety. Real estate decisions must carefully consider the system’s future vision, and build in room for inevitable changes.
4. Manage the small problems—before they grow
As healthcare providers expand into more locations, risks from ongoing operations multiply exponentially. Since a problem at one location can have a ripple effect on the reputation of the entire system, the health of a facility must be monitored as carefully as the patients.
Minor issues quickly grow into major problems when ignored, potentially putting patient safety at risk. A leaky water line may seem like another repair on the checklist, but what if it suddenly bursts hot water over a patient bed, as happened at one hospital? Luckily, the patient was temporarily out of their bed during the incident—but the consequences could have been very severe. As health systems add more services in more locations, centralizing the management of all facilities can help ensure consistency and make it easier to be proactive about routine maintenance and safety issues.
5. Assess weak spots
What efficiencies can be gained through a healthcare system’s facilities? The number of hospital beds in the United States is steadily shrinking in part because of providers making a concerted effort to quickly shift non-critical patients to offsite locations. Many healthcare organizations are redesigning their core campuses to maximize critical and specialty care. Some are moving non-clinical staff to other locations and building in more private rooms to help reduce the risk of infections.
As real estate portfolios have expanded in recent years, it’s critical for healthcare organizations to take stock of how their various assets are being used. It’s important to consider whether complementary services should be moved closer together, for example. Or, perhaps vacant land that may be part of a future expansion strategy could be temporarily used or leased for other purposes.
Regardless of what direction healthcare reform may take, certain facts will not change. Healthcare costs must decrease to provide more care to more people. Keeping patients out of expensive hospital settings can drive down the cost of care, while simultaneously improving population health. Amid all the uncertainty in the healthcare industry today, real estate remains an area where hospitals and health networks can make a measurable impact on the patient experience.