PHOENIX—As healthcare reform continues to be a major focus, there are many challenges on the horizon. Some see steady growth ahead in the medical office field, recognizing that we are just at the beginning of the aging of the baby boomers. Both private equity firms and more institutional players are seeing the need for more suburban medical office development and even large-scale medical campuses as the health care industry consolidates, according to ULI Emerging Trends 2016.
The provision of insurance to millions of additional Americans under the Affordable Care Act actually appears to be accelerating healthcare consolidation, for reasons of economies of scale, while simultaneously creating small-space demand for medical offices specializing in urgent care. Such trends create options for real estate development and investment, for those nimble enough to take advantage. There are gaps to be found—not only in pricing, but also in the matching of supply to demand.
Key questions remain about how reform is driving development decisions, and how developers and healthcare systems are responding. There are notable relationships between the healthcare systems, medical office buildings and the developers which will impact what is coming in the future.
In preparation for the RealShare HEALTHCARE REAL ESTATE conference next month, a development decision driver session moderator, Neil J. Carolan, senior vice president, business development and leasing for Rendina Healthcare Real Estate, offers this insight to GlobeSt.com: "As healthcare continues to change in the clinical delivery of care, so does the development of healthcare facilities. Healthcare executives are constantly modifying their methods of care to best meet the patients' needs and to meet the needs of the community – so must the development of healthcare facilities modify the way that facilities are both designed and constructed and utilized."
Carolan provides some specifics:
• As in-patient lengths of stay shorten, developers must be ready to develop facilities that can handle a higher level of patient delivery services. Many of the services formerly offered in a hospital setting are now being placed in a medical office building/ambulatory center that is not hospital centric.
• Developers must become flexible in in terms of placement and location of new facilities. Again, much of the non-urgent care delivery can be more community based rather than on the hospital campus.
• Developers must be prepared to develop facilities within the financial restrictions of both physicians and healthcare facilities. Reimbursement for patient care continues to decrease. As a result, physicians and hospitals have less monies available and therefore, developers must be able to develop facilities that are both cost and patient efficient.
RealShare speakers will be discussing the level of activity in the market, what's in the pipeline and where we might be headed.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
