I recently attended the 2016 Philadelphia Healthcare Leadership Forum and was surprised by some of the takeaways I gathered from the panel’s discussion. The panelists’ conversation highlighted how the needs of patient care are now different—millennials are leading a new tendency to seek minute clinic and urgent care medical attention before scheduling an appointment with a primary care physician. This transition to a more convenient, expeditious model is leaving a surplus of hospitals as facilities don’t require as much of the largescale multi-floor buildings as they do a more compact location. With this switch, things are changing up for the larger healthcare construction/real estate picture. “As more millennials interact with the healthcare system, the industry will find itself facing a more sophisticated and demanding group that won’t stand for its inefficiencies with the same begrudging acceptance of previous generations,” said Kathy Hempstead, director of insurance coverage for the Robert Woods Johnson Foundation.
So what becomes of the traditional large-scale buildings no longer utilized when health systems are opening their own urgent care facilities to remain competitive with demand? The answer, once introduced, became a consistent theme of the following talks: Hospital Monetization. To generate some additional capital, health systems are monetizing whichever assets they consider non-essential (whether hospitals, medical offices, storage, etc.) This extra capital is being allocated to unlock value in existing facilities through upgrades in equipment, design, etc. As discussed in JH Greene’s previous healthcare construction blog, competition is fierce among healthcare players and any way to gain an advantage through having an impressive facility opens doors to more patients selecting the location for care and more employees inclined to work there. Once it’s known that one healthcare organization is innovating their facility, competitors react in a ripple effect. A facility with the best care and an outdated building may not seem credible any longer due to the refined, hotel-like appearance of many market-leaders.
The Chicago Tribune mentions that “Urgent care is a $16 billion a year industry and is expected to grow about 3.5 percent a year for the next decade, making it one of the fastest-growing segments of the health care system, according to IBIS World, a market research firm.” With this type of growth, it’s a hard to ignore area. Considering the future of healthcare innovation seemingly on the side of efficiency, the impact on Commercial Real Estate is an exciting notion considering the drastic shifts already seen. When you have the quality requirement characterized by the healthcare sector, there is no room to not engage an experienced healthcare construction expert.