Pro Tips From Medical Office Buildings To Avoid COVID-19

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Do you own or operate commercial real estate? Do you worry how to keep your properties safe during the crisis caused by the novel coronavirus? You can learn a lot from medical office buildings.

Long before doctors diagnosed the first COVID-19 infection, the owners of medical office buildings were thinking about how to stop the spread of disease. They have even identified a few key renovations that make a difference.

“They exercised a high standard for sanitizing their space, even pre-COVID-19, and are acutely aware of the transmission of infection,” says Joseph Fetterman, executive vice president of Colliers’ Healthcare and Life Science brokerage practice in the Philadelphia region.

Medical office owners and investors have a huge motive to prove that their buildings can operate safely, without spreading the novel coronavirus. As the crisis caused by COVID-19 drags on, businesses that can operate safely are more likely stay open—and keep paying rent.

“We have not seen closures of medical office buildings… We are operating fully in the facilities we manage,” says Kimberly Lamb, executive director of healthcare corporate solutions for JLL. “When most other buildings were shut down, our medical office buildings operated throughout, keeping open to serve the physicians and their patients, albeit with a trimmed back staff for the clinics but they operated the whole time.”

Fresh Air Matters

Because COVID-19 is a respiratory disease, owners of medical office buildings focus on how to keep viral particles out of the air in their buildings. Improving the heating ventilation and air conditioning systems can make a big difference, as can bringing more outside air into structures.

“It is common for the property manager to upgrade filters to MERV-13 and increase fresh air supply,” says Connie O’Murray, managing director of property management for JLL. “So far, however, most managers are not installing systems that use ultra-violet light to disinfect indoor air—they haven’t yet been proven to be effective and are not suitable for all buildings.”

Medical office buildings also ask their patients and staff to wear masks—to filter the air they breathe—and manage how their patients move through buildings. Many medical service providers now ask their patients to register online to bypass the risk posed by crowding into waiting rooms.

“Triage for COVID positive patients is being conducted through telemedicine, outside where possible or in isolated space removed from other patients,” says Fetterman. “Waiting rooms are either more distanced by removing chairs or restricting chairs that can be used.”

“It is all about getting them in to see their doctor and back out as quickly as possible,” says Bob Atkins, principal of the Atkins Cos. in a recent podcast for NREI.

“A lobby registration kiosk could also perform this function,” says Audrey Symes, research director for healthcare and life sciences for JLL.

For some medical offices, that means cutting back on staff who share the air in the limited space of an office. Hospital executives are evaluating which positions can effectively be done remotely on a permanent basis.

“We are hearing potential administrative footprint reduction targets of 50 to 75 percent,” says JLL’s Lamb. “Any vacancy administrative space may create would be absorbed by clinical needs as we move forward.”

Keeping MOBs Clean

All medical offices are disinfecting their spaces to at least the standard set by federal officials at the Centers for Disease Control (CDC).

“Some owners are going above CDC standards for operating the facility to be vigilant,” says Lamb.

Disinfection reaches an even higher level if a patient seems likely to carry the virus.

“When we have a patient who has been reported as presenting positive, we shut down the area and path in which the patient took to allow any spores to dissipate and then thoroughly sanitize the areas before opening back up to the public,” says Lamb.

Property managers are also finding ways to use ways copper metal to kill the virus. Coronavirus particles break apart within hours of landing on copper surfaces. In comparison, they can remain active and lethal for days on surfaces like steel or plastic, according to the Smithsonian Institute.

Owners and operators could replace doorknobs and touch plates with brass, which includes enough copper to kill the virus. But that’s often prohibitively expensive.

“What we have heard about and are seeing is copper foil tape wrap on door handles or placed on touchpoints such as elevator buttons,” says O’Murray.

Managers can also reduce the number of surfaces people have to touch by installing automatic doors or kickplates to open manual doors. In bathrooms, managers can slow down the flush times on toilet and install toilet seats with covers to limit the spread of aerosol droplets into the air, according to O’Murray.

Medical Offices Are Used To Controlling Infections

Long before the crisis caused by COVID-19, the professionals who operate medical office space tried to make sure visitors to their facilities did not make each other sick. Most of the techniques above were developed over the years to avoid “healthcare-associated infections.” The majority of medical office buildings are located on a hospital campus, often physically connected to a hospital.

“This alone creates a different mode of operation and management than any other type of real estate,” says Lamb. “There is a higher level of risk.”

The coronavirus pandemic has heightened the danger. Often people who have tested positive for COVID-19 are in the same building as people who are especially vulnerable to the virus, because of age or a compromised immune system, for example.

“Professionally managed medical office buildings are operated as safely, if not more so, than a typical office building,” says Connie O’Murray. “As our knowledge of the virus evolves over time, so, too, do the approaches and innovations towards mitigation.”

 

Source: NREI

Medical Real Estate Still The Best Way To Keep Your Portfolio Healthy

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In 2018, the JSE’s SA listed property index dropped 25%. In 2019, the total return from the index was 1.92%, well below inflation. In the first five months of 2020, the index shed 39%.

Although dividends from listed property grew by 8-12% a year between 2014 and 2017, growth slowed to 3.5% in 2019, which again was below inflation. In response to the economic fall-out from Covid-19, many property companies have warned they will withhold dividends this year to strengthen their balance sheets and until they understand the full fallout from the pandemic.

The data is not looking encouraging.  Office tenants are cutting space wherever possible, having learned that their reduced workforce can work from home. Retail is under enormous pressure across the board, from the legendary brands like Edgars to the smaller independent brands, and restaurants that just don’t have the fire power to recapitalise and pay rents in a market where there are still restrictions and the consumer is unable to come to the rescue.

What’s more, if you are in the hotel and hospitality industry, then there is really no clear path to recovery at this stage and the losses will be devastating.

There’s no refuge in residential property, either. The Lightstone Residential Property Index shows national house price growth in SA peaked at 6.25% in 2014 and has slowed since then to a five-year low of 1.7% in 2019. Lightstone expects, despite the recent interest rate cuts, that growth in the residential housing market will slow again in 2020.

Two specialized sectors of the property market have continued to deliver solid returns throughout the Covid-19 crisis. Logistics is one of the winners due to online e-commerce stores which have enjoyed a surge in online shopping.

The other big winner globally is medical office buildings, whose tenants mostly offer essential services. Even those who had been required to close are already benefiting from a post-lockdown surge in patient visits as medical procedures can, in most cases, not be postponed indefinitely. Think for a moment about your dentist, who will still need to attend to those fillings even if he could not see you over the last three months.

For South Africans who invested in offshore logistics or medical buildings, the rand returns have been considerably enhanced by the latest depreciation of the rand against the dollar.

In the US, the Covid-19 crisis has hit particularly hard, with 134,000 deaths by early July, amid total confirmed cases exceeding three million. Hospitals under pressure to clear wards and scale up for the anticipated flood of Covid-19 patients have had to postpone all elective procedures and turn patients away who were not critical.

This dramatically affected the income of all medical professionals who are not directly involved in treating Covid-19 patients, and has also affected hospitals’ revenue. Even as the US emerges from lockdown, patients choose to avoid traditional hospitals in fear of being exposed to the virus. This has been a boost for medical practitioners working outside the hospital systems, as patients have sought treatment from doctors working from these independent facilities.

Orbvest, which has 19 medical office buildings under management in three US states (Texas, Georgia and New Jersey), noted rental collections declined slightly in April, during lockdown, as about 21 tenants across the entire portfolio of over 100,000 square meters requested deferment.

But by end-June, the net collection of rentals was back to 97.6%, as both Texas and Georgia re-opened their economies, and collections for the month of July already are close to normal. The nett result of the pandemic on our projected revenue will be negligible and we expect to have fully recovered before year end.

Medical property investment was not an unexpected beneficiary of the Covid-19 crisis. The argument for buying into a building tenanted by medical professionals, especially in the US, makes fundamental sense in the long term. In the US, the aging population is growing and requiring more medical care. An investment delivering a proven 8% p.a. in US dollar dividends paid quarterly, plus a capital gain share at the end of the investment period, is an essential part of a diversified portfolio for South African investors.

 

Source: Daily Maverick

Amazon’s New Prime Offer: Delivering Six Health Clinics For 20,000 Workers In Dallas-Fort Worth

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Amazon is getting into the health care delivery business, at least for its employees.

Last month, the e-commerce giant opened a primary care clinic in Irving and soon plans to open similar health centers in Coppell, Garland, Duncanville, North Fort Worth and near Haslet. The local launch is the first stage of a pilot project that will include four other U.S. metros by early next year, Amazon said.

Registered nurse Jodyne Schlachter explains the technology in one of the clinical rooms at the new Amazon health center in Irving. Amazon plans to open five additional clinics in North Texas this year.(PHOTO CREDIT: Ben Torres / Special Contributor)

Depending on results in Dallas-Fort Worth, Phoenix, Louisville, Detroit and San Bernardino, Calif., Amazon could eventually expand the clinics to additional employee hubs.

The project was conceived over a year ago, before COVID-19 emerged. Officials said the coronavirus has had little effect on their plans, except to put even more emphasis on virtual health visits.

Amazon’s centers will be staffed by Crossover Health, a California company that operates onsite and near-site facilities for some large self-insured employers, including Microsoft, Facebook and LinkedIn. The clinics will include doctors, nurses, chiropractors, physical therapists and behavioral health experts.

Amazon has about 20,000 employees in North Texas and has been growing rapidly here. About 11,000 work in operations and fulfillment centers, and the rest are corporate staff, management and tech workers.

Amazon is hardly a pioneer in this space. Walmart unveiled its own health clinics in 2014, charging $4 for a doctor’s visit for employees and $40 for store customers.

Amazon clinics will be limited to employees and their dependents. To accommodate so-called Amazonians on late shifts, the centers will have extended hours, including weekends.

“Hopefully, we’re within 10 miles of almost everybody who works for Amazon in the D-FW area,” said Derek Rubino, senior program manager for workplace health and safety. “Amazon was proud to offer health insurance to all full-time employees on their first day, including hourly workers. But many in D-FW don’t use the benefit. A lot of it really comes down to convenience. Having benefits only gets you part-way there.”

Amazon wants to remove barriers that keep workers away and persuade them to embrace primary care. That includes a range of services, from check-ups and immunizations to managing chronic conditions. Studies show primary care helps avoid more complicated, costly problems later.

“I honestly believe this is going to be life-changing for some folks,” Rubino said.

Onsite clinics are usually embraced by large employers and often were started to address workplace injuries. More recently, companies have adopted them for general medical care, putting clinics near the workplace, not inside it.

In 2017, one-third of companies with at least 5,000 employees had a general medical clinic at or near their worksite, according to a survey by Mercer, a human resources consultant. That share was twice as high as a decade earlier.

“The vast majority of these clinics have done very well, both in meeting their financial objectives as well as improving health and wellness,” said Larry Boress, executive director of the National Association of Worksite Health Centers.

Companies cite many reasons for investing in clinics, from lowering health spending to boosting worker productivity.

“Over 40% of employees who use the clinics don’t have a personal doctor,” Boress said, “and in the Mercer survey, more than 1 in 3 said the clinics served as their medical home. These clinics often become their only source of medical care.”

Health advocates, employers and insurers are emphasizing primary care as a way to bend the curve in health spending. In Plano, to encourage city employees to go to certain doctors, the health plan charges a copay of just $5 for a visit. In Fort Worth, it’s free for city employees to use certain clinics or virtual health providers — but there’s a stiff penalty for going to the ER if it’s not an emergency.

The Amazon health centers are in-network providers so employees will pay the standard rate, which depends on the health plan they’ve chosen. Amazon officials would not provide a number or range. On Amazon’s benefits website, the price of an in-network office visit is $30.

“We wouldn’t drive anyone away because of price,” Rubino said.

Crossover Health, which started in 2010, said employers save 30% on health spending through its program. One reason is that it claims to cut urgent care visits and imaging services by half.

During the pandemic, Crossover said it has shifted 90% of interactions to virtual care, and secure messaging — emails and texts between patients and providers — is up 40%.

“We can identify things that may be important to a specific population and really tailor the program,” said Dr. Stephen Ezeji-Okoye, Crossover’s chief medical officer. “The extended hours, the range of services, the coverage of young dependents — all that was designed for Amazon employees.”

Crossover also emphasizes short waits, usually fewer than five minutes, to see a doctor. Visits last 30 minutes or more, in part because doctors aren’t reimbursed on a fee-for-service basis.

“Crossover gets a monthly payment, based on a per-member fee or a cost-plus arrangement,” Ezeji-Okoye said, “and that keeps the focus on keeping patients healthy. The long encounters lead to fewer tests and imaging and fewer referrals because we have the time to establish a relationship.”

“While many companies and providers are rethinking their approaches to health care, Amazon’s move could have an outsize influence,” said Boress of the worksite trade group. “Employers like to benchmark themselves against the leading edge companies. They look to the leaders, and in many cases, they follow ’em.”

 

Source: The Dallas Morning News