On October 8, Colliers hosted its annual National Healthcare Conference in Boston. It was well attended by a number of brokers, health system executives, developers and investors. Hall Render shareholder Andrew Dick attended the conference this year and presented on “Emerging Trends in Health Care Real Estate.” Andrew’s slides can be found here. In addition to Andrew’s content, there were two other presentations that caught our attention.

The first was a provider panel titled “Optimizing Healthcare Portfolios and the Evolution of Healthcare Real Estate Strategy.” The discussion was led by Kristin Blount from Colliers, along with Mike Becker from Lurie Children’s Hospital of Chicago, Ron Brown from Ascension, Jason Palda from UC Irvine, Maya Plotkin from Beth Israel Lahey Health and Kristen Thompson from UC Health (Ohio).

The second was a presentation about the economy titled “What a Bifurcated Economy Means for Healthcare Real Estate.” The discussion was led by Collier’s National Director of Research, Steig Seaward.

Below are five takeaways from those presentations:

- Access to Care – Providers are hyper-focused on finding the right location for outpatient services. The mission of a health care organization is to meet patients where they live. Ideal locations are in a retail setting where patients can receive care and grab lunch in the same trip. Providers are very interested in abandoned pharmacy locations and retail end caps that can be repurposed for medical use.

Key Takeaway – Patients continue to rank location and convenience as their top reasons for visiting an outpatient facility. Quality of care is important, but is often cited as a lower priority when choosing a provider.

- Own vs. Lease – Providers prefer owning core real estate assets in proven markets. When testing new markets, providers are more willing to lease assets until the business case is made for staying in the market long-term. Once the business case has been made, providers will want to purchase or build to secure their future. For non-profit providers, ownership creates a path to secure a property tax exemption that can significantly reduce operating costs.

Key Takeaway – Providers like to control their own destiny by owning core assets. Lower operating costs and challenging landlords were cited as the primary reasons they prefer ownership.

- Financial Performance Matters – Providers cited financial performance per location as a metric they are tracking and doing more with less space. If a particular location isn’t performing, they are more inclined to close the location or to look for ways to consolidate the services with a more profitable service line.

Key Takeaway – Every location is being monitored in terms of financial performance and overhead. Providers must look for ways to drive efficiency with real estate assets.

- Workforce Challenges – Our workforce demographics are changing. Due to declining birthrates, an aging population and a stricter immigration policy, there are fewer available workers.

Key Takeaway – Providers can identify new markets and clinical opportunities for growth, but staffing those opportunities will be a challenge in the near term.

- Real Estate and Recruiting Clinical Providers – Clinical providers cited workplace location as an important factor when deciding whether to accept a job offer. Providers also want to work at a facility that has amenities or that is close to amenities like restaurants, retail and fitness centers. The space itself is important as well. The space must offer modern design and workflow.

Key Takeaway – Clinical providers want a workplace that is convenient and that offers nearby amenities. But these factors won’t make up for poor workplace culture or low compensation.

For additional information on this topic, please contact:

- Andrew Dick at adick@hallrender.com or (317) 977-1491;

- Joel Swider at jswider@hallrender.com or (317) 429-3638; or

- Your primary Hall Render or Hall Render Advisory Services contact.

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.