Healthcare real estate business leaders speaking at a Bisnow event discussed how technology, a changing population and regulation are all triggering innovation in patient care and healthcare facility use. Tunrola Odelowo, a partner in Arnall Golden Gregory’s Real Estate Practice, led the discussion.
The panelists were Lee Asher, EVP of CBRE Healthcare Capital Markets, Christine Gorham, CEO of Eastwood Real Estate Services, David Park, SVP Construction at Novant Health, Joshua Richmond, VP of Physicians Realty Trust, Robert Simmons, VP Real Estate at Piedmont Healthcare, and John Willig, Founder of Ackerman Medical.
Ms. Odelowo asked the panelists how innovation is defined by health systems, real estate investors and physician groups; what the main drivers of healthcare real estate innovation are; how health systems currently view their real estate assets compared to several years ago; and whether the future of healthcare is moving, in some respects, towards community-based care. The answers from the panelists varied and are as follows:
“Ten years ago, real estate was the second largest item on a health system’s balance sheet, but probably got the least amount of attention,” David Park said. Today, real estate is no longer viewed as “a necessary evil” but a useful commodity that can be monetized to help a system or group achieve its goals, he said.
“Healthcare systems are beginning to look at real estate as a fluid asset that can be used on the balance sheet differently than it has been in the past,” Mr. Park said.
Christine Gorham pointed out that physician groups that are independent are focused on facility design that improves the patient experience because they want to retain those patients and grow their practices organically.
Lee Asher mentioned that advanced technology not only makes treatment easier for the patient, but attracts the best physicians. “From an investment standpoint, we want to know what is the equipment in the building and how expensive was it, and what patient volume and procedure volume do they have in those locations, because that drives the value of real estate,” he said.
Many physician tenants also are area healthcare real estate investors, and they are demanding the most up-to-date technologies to improve their ROI, John Willig said. He added that real estate investment has become more important to physicians because of declining government reimbursements for patient care.
Robert Simmons said different communities have different needs and that influences Piedmont’s real estate decisions. Whether to monetize a building to free up capital for deployment elsewhere is determined on a case-by-case basis, he said.
Josh Richmond said some healthcare systems are seeking to convert multi-tenant buildings to single tenant, and that’s requiring innovations to building design.
Mr. Richmond also noted that more systems now are hub and spoke, with a single hospital and smaller satellites in various locations offering limited services dictated by community needs.
Telemedicine and health apps also are influencing square footage decisions as more doctors and patients interact remotely. Some physicians are even choosing to share space in a timeshare setup.
Ms. Gorham said there are instances where leading doctors leave hospital campuses and relocate nearby to reduce real estate costs.
Mr. Park pointed out that Atlantans frequently move, and providers are establishing facilities in response to population changes. No one wants to drive a long distance for healthcare.
However, healthcare providers are competing against residential and retail developers for desirable locations, so creating affordable space is driving innovation, Mr. Willig said.
Mr. Park said that while improved patient care is the primary impetus for innovation, “the tail wagging the dog is all the regulatory stuff that hospitals have to deal with.”
Looking ahead, the aging population, or “silver tsunami,” is going to fuel continued innovation, which in some cases will require providers to cash out their real estate, Mr. Asher said. He also said CBRE Healthcare Capital Markets expects increased foreign investment in U.S. healthcare real estate.
Ms. Odelowo is a member of Arnall Golden Gregory’s Healthcare Real Estate Team, comprising attorneys from various practices who work together to serve the owners and operators of all types of healthcare real estate.
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