In recent years, an increasing number of health systems have looked to optimize their valuable real estate portfolios to reduce costs and drive revenue. The COVID-19 pandemic has prompted a shift in how brick-and-mortar facilities are utilized and its impact is reinforcing the need for alternative revenue sources, such as real estate. Healthcare organizations are increasingly taking on new roles as landlords, real estate developers and urban planners, as they seek to lift up their surrounding communities in ways that often also result in new revenue.
In a discussion with Modern Healthcare Custom Media, two industry leaders in this space discussed how health systems can most effectively leverage real estate assets to ensure success in this new normal.
Panelists:
Tabitha Ponte is founder and CEO of Ponte Health, a Fla.-based company specializing in the development and holdings of health facilities and infrastructure that are sustainable, technology integrated, and patient- and data-driven.
William Schlein is the healthcare practice leader at LS3P. In this role, Willy brings visionary healthcare experience to clients across the Southeast. He focuses on adding value in planning and design through an effective mix of healthcare delivery models.
TP: Real estate has always been, and will always be, a steady and ever-growing source of income for any healthcare organization that may be seeking to gain an additional revenue stream. Dependent upon scale, location and general market conditions, the additional revenue can remain steady and conservative, or it can be a high-performing rent source if the healthcare organization effectively leverages its own position within the healthcare sector.
WS: We are advising our clients to manage all building resources across campuses to restart revenue generation at the end (of this wave) of the pandemic. This equation includes real estate in concert with improved outpatient service lines, upgraded infrastructure and updated campus master plans. We collaborate with clients, developers, engineers and contractors to appropriately balance building assets, patient outcomes and revenue streams.
TP: Healthcare organizations should begin by understanding the current state of their assets, and allocating a capital budget to bring those assets up to standard, to ultimately target rents that will produce the desired additional revenue stream—a reversed engineering condition. The quality of an asset will dictate the rent that it can produce, and will also dictate the intensity of maintenance and capital required for the life of the lease.
WS: We are triaging real estate immediately and master planning prospectively. Underutilized properties have been rapidly renovated for outpatient pharmacies or converted to PPE storage. Medical office buildings that were closed to patients were quickly upgraded for telemedicine. Our long-range visioning anticipates pandemics, natural events, demographic shifts and infrastructure capabilities in relation to existing and future built assets.
TP: Some leaders may assume that the value of real estate assets has diminished as a result of the shift to telehealth and other technology-driven trends. That assumption is largely unfounded, because the patient will continue to need inpatient, emergency and interventional care. Technology is a tool that should be considered a single component of a gamut of tools healthcare organizations have, including real estate.
WS: Work from home is a benefit of prosperity that varies with the demographics of the healthcare organization. Location, patient access to care and technology, and the organization’s outpatient services—the fuel that feeds the engine or the lack of fuel that starves it—have been the primary “value” focuses. The stalled economy in low-income communities has led to dire health inequities, making ambulatory care real estate a “frontline” asset.
TP: Healthcare organizations should strive for their facilities strategy to become a more open and more public-driven strategy. The healthcare campus itself may now be obsolete being replaced by vibrant, more rich, multi-care and multiperspective environments where the patients feel more empowered to take a proactive approach to their care. The next successful health organizations will not manage illness—rather, they will promote wellness.
WS: The shift will be met with outpatient facilities located closer to patients and providers – but not necessarily hospitals. Post pandemic pent-up demand for healthcare, combined with increasing nurse and doctor shortages and newly embraced telemedicine, will redefine these satellite facilities. Healthcare will be on the town square—from brain health counseling in storefronts to multi-OR ambulatory surgical centers near the neighborhood.
TP: There is a lot of attention being paid to direct-to consumer solutions due to the convenience and accessibility it brings to many. Even though this seems patient-centric forthe people that can afford it, we’re moving away from the tenets of value-based care, because there is no coordination across these apps—none of them are talking to each other, so they’re fragmenting care. You need an experience layer—governance that says all of these apps need to talk to each other and all of these apps must have standards for seamlessly exchanging data. Over the next five years, I hope we double down on interoperability efforts and unlock a truly connected health ecosystem, including secure and seamless data sharing.
WS: Our health system clients demand medical office buildings with rapidly churnable, flexible tenant layouts. We are designing core and shell floor plates that push elevators, stairs, lobbies and bathrooms to building edges; incorporating natural light for wayfinding and views; adding stairs and elevators for social distancing and one-way traffic; and confirming sustainable interior construction to create a resilient and high-performing building.
TP: Patient convenience should be the key driver for healthcare organizations. The reality, however, is that convenience may not be well-defined. What is convenient for a single mother is not the same as what is convenient for a teenager, nor is it the same as what is convenient for the aging patient population. Thus, a more specialized, more market selective organization will become better experts of that convenience, better honed into experience.
WS: Competitive consumerism and web-informed patients are driving facility design and location choices. The perception of high-tech care and communication, delivered in clean, safe environments near patients’ homes, work, and school, is key. Ease of access, parking, site and building wayfinding, quick throughput, and the architectural responses to creating a calming environment, are guiding the shift towards buildings that heal.
TP: As real estate moves forward into the next decade, I will be most specifically watching two key trends: first, the merging of healthcare uses with other unexpected uses, some mundane and others much more creative, and second, the merging of the assets with advanced technologies, specifically deep learning systems and neural networks, as I believe technology will expand far beyond devices, and even far beyond today’s talk of augmented or virtual reality.
WS: Healthcare system mergers and their impact on facilities design and construction, equitable access to care, and building responsiveness to environmental pressures. The forces of pandemic(s), societal deep dives, costs of healthcare, juxtaposed economies, and an evolving climate are all swirling together. The trend to watch will be how our industry creates elastic solutions that address multiple challenges in one building, campus, or system.
