Real estate: an increasingly critical factor in deploying healthcare

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May 26, 2017


Health systems have made great strides in keeping patients healthier by providing more care outside of the main hospital facility walls. Decisions about where to deliver care can reduce costs for hospitals and patients alike, while also creating new sources of revenue to hospital systems.

Location is an increasingly critical factor in determining future success.

Healthcare decentralizes

Hospitals are more focused than ever on keeping patients healthy and minimizing the need for acute care.

Treating patients at the right place with the right care not only offers conveniences and better outcomes, it keeps costs down for everyone.

Many communities today have more ambulatory facilities, urgent care centers, retail clinics, micro-hospitals and freestanding emergency departments.

We expect the future of healthcare to become even more distributed and regionalized.

As a result, smaller, off-campus medical office buildings (MOBs) have become a hot commodity. Demand for large parcels of land for new hospital developments will continue, but at a much slower pace.

Optimize what you have

Real estate is typically one of the largest capital investments for a healthcare system. Therefore, it is critical hospitals optimize their real estate assets to support a growth strategy and reduce costs.

Some health systems are finding efficiencies by consolidating finance, human resources, information technology and other non-clinical staff in an office building outside the main hospital campus.

Other healthcare systems are getting more from their real estate by leasing underutilized space to a third party, making the space profitable and generating much needed income that can be put to use immediately.

Whatever the scale or scope of your real estate footprint, data-driven analysis can help identify opportunities to create efficiencies and drive more value from each existing facility.

Convenience is king

Convenience increasingly drives where patients go for care. Hospitals are learning from retailers, making it easier for patients to stop in.

For some providers, this has meant partnering with retailers to open clinics within supermarkets and drug stores. While others choose prominent shopping centers where their brand receives exposure.

Retail clinic locations have increased 38 percent in the last five years, according to Kalorama Information, and are positioned for significant growth in the future.

But the matter of convenience becomes complex when you consider different types of care and the broad spectrum of healthcare needs. Picking the right location is crucial.

Demographics matter more than ever

Like traditional retailers, data and analytics can help healthcare executives understand from where patients are coming, what they want and what their future needs may be.

Smart site selection requires predictive and deep analytics, considering age and income levels, competitors, traffic patterns, visibility and hundreds of other factors.

The good news: The data is there.

The challenge for healthcare executives is aggregating data across departments to create a holistic understanding of a health system’s potential. Tools like geographic information system (GIS) technology can visually integrate every data point to support rapid and thoughtful decision-making.

More locations can mean more risk – but there are ways to reduce it

There are significant benefits to having numerous decentralized locations. But more locations comes with inherently more risk.

At a fundamental level, health systems in growth mode face the risk of over-locating, resulting in resource-wasting redundancies. Healthcare systems are particularly susceptible to this in the case of mergers and acquisitions.

Ongoing, data-driven portfolio analysis should be employed to identify locations best suited to serve the patient population and shine a light on less-productive locations that may need to be eliminated.

More facilities also mean more opportunities for things to go awry on a day-to-day basis. Advanced management can mitigate this risk, but capital must also be prioritized to maintain facilities across a system. Centralizing facilities management and applying common standards and processes for all facility managers in a health system provides consistency and ensures quality service across the board.

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