Article

Real estate strategies yield opportunities for healthcare providers

Dec. 19, 2022 · Authored by Todd Carpenter, Brent W. Maier, Mark J. Ross, Nate Voss

During the pandemic, the healthcare industry experienced a convergence of issues that has changed the way it has traditionally operated, particularly in how it uses its facilities. It’s not just one sector affected, either: the continued shift of inpatient care to outpatient centers, patients seeking certain amenities where they receive healthcare, baby boomers boosting demand for senior housing and services, etc. Healthcare providers are having to rethink and strategize their real estate needs and, in doing so, are finding areas of opportunities.

Declining inpatient care

A recent Healthcare Financial Management Association (HFMA) survey of financial executives projected the median percentage of revenue from inpatient care to fall to 25% by 2030 from 40% in 2019. Not that it was a secret that in acute care, the hospital’s role in providing healthcare is shrinking as services are pushed to outpatient facilities, but the pandemic accelerated the move.

To be fair, inpatient revenue may be declining, but it doesn’t mean the healthcare systems themselves are; often, patients are just being sent to facilities that are still operated by the system. Regardless, with more patients going to nonhospital settings, healthcare providers are having to step it up by adding amenities to enhance the experience for the patients as well as their families or caregivers.

They are finding ways to improve and elevate their level of patient engagement since they want to engage with their patients and they want their patients to engage with them. The more investment they make, the more attractive their buildings are, the more amenities they have, the more likely patients will seek care rather than put it off.

Also, when they are taken outside the hospital setting, patients tend to have better outcomes either because of the way in which they receive certain services or that they have access to advancements in some types of technology.

Evaluating facility needs

To stay competitive, health systems should be evaluating their facility needs, particularly in light of fluctuating interest rates and rising construction costs. In the past, real estate strategy hasn’t always been top of mind for healthcare providers, but it should be when it’s such a significant investment for them.

So what can they do to leverage their real estate to help them grow and invest in other segments of their business? Healthcare providers have to create a strategy that takes into account the industry, their area, their patient population and their needs over the next five to 10 years. Once they have established who they are, what they want to be and what their surrounding area is missing, they can start finding pockets of opportunities.