“We are definitely moving away from the hospital model,” said Fritz, who specializes in healthcare spaces. “Clinical quality and safety are necessary for payment. We need satisfaction in environment of care—how is it helping or hindering the quality of care? For example, staff used to be housed in cubes. Now they want more of a huddle environment.”

Steiner said many hospitals have monetized. “We're seeing a hesitancy to buy real estate. Local nonprofit hospitals are not able to get the capital and big systems are struggling against allocating capital.”

“They're working through cash flow and liquidity,” said Caulum.

Fritz asked: “How do we achieve reduced cost with reduced reimbursement and still renovate?”

“There are some who see all this dysfunction in the system as an opportunity—private ambulatory centers, for example. I've heard cardiologists say this is the best time to be independent. This is a trend,” said Steiner.

With a reduced length of hospital stay, the question arises: What will hospitals do with the extra space?

Fritz said, “Some of this space will make for more private rooms, some will be changed to observation units, quick triage, a zone for certain emergencies, or a partnership with hospice.”

Will a traditional medical building be no more?

“The need for certain buildings to be near hospitals will always be there, but expansion is happening—in telemedicine and radiology especially,” said Steiner.

“It's 'people, process, technology, place,'” said Caulum. “We can take care of people remotely. Your MOB might be your laptop. Your prescription is just a click away. You don't have to go to a place where everyone is sick. Where your healthcare is delivered doesn't matter. Scripps has 200 hospice patients on any given day and only two of them need to be in the hospital. The rest can be handled remotely. We got money when you were sick. As a society, we have to change.

“You can't drive a car with the rear view mirror and that's how hospitals have been doing it. But the opportunities are huge,” continued Caulum. “If you don't have physician alignment, people will stop going to the hospital and the hospital will close.”

Steiner said it's a matter of wringing out inefficiencies. “The new model is putting a lot of pressure on hospitals,” he said.