When It Comes To Healthcare, CRE Is Driven By Data

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Understanding and analyzing data is especially important in the healthcare industry, where reimbursements are often tied to the percentage of square feet dedicated to patient care.

For commercial real estate, that means healthcare providers can now be more judicious when it comes to design and space allocation.

GB Architects principal Lois Broadway says clients are now looking at local demographics to determine the average customer age, and also using data to determine the most likely type of care that its patient base will require.

“We are working with a client that started a full assessment on their local demographics to determine ages, admissions into local hospitals and what they need while there,” said Broadway, whose colleague Melissa Kelii will moderate a panel at Bisnow’s National Health Series: Pacific Northwest.

This data drives decisions, like whether a hospital should include more maternity units or make more space for geriatric specialties like cardiology and knee replacement specialists, she said. Hospitals should also consider how much time they allow patients to recover. For example, some hospitals let patients remain in the hospital for three days, while others end the visit after 24 hours.

“Adding to the issue is that fact that Medicare and Medicaid reimbursement is based on the percentage of the facility that provides direct patient care,” Broadway said. “They look at the whole picture and then give you a facility charge,”

So if 60% of the facility is dedicated to patient care and 30% is dedicated to secondary patient support space, such as storage areas, the provider will be reimbursed at different rates for the different uses. Areas like parking garages, which are necessary but not related to patient care, are not reimbursed at all, she said.

All this makes maximizing space a smart financial decision. It is particularly important to find ways to minimize the amount of square footage dedicated to data storage. Often, data is now being stored off-site through cloud providers. The healthcare-focused cloud computing industry is set to hit $40B by 2026, according to a report by Acumen Research and Consulting.

“The cloud can reduce IT costs, provide quick access to business applications and forms and provide medical teams with on-demand patient data from anywhere,” Qentelli VP and Head of Innovation Vishnu Nallani told Bisnow. “However, as data storage moves to the cloud, healthcare companies must be careful to secure it and ensure the privacy of their patients. Data breaches cost healthcare organizations millions of dollars each year, because patient data is seen as extremely valuable on the black market. Having security features in their cloud like perimeter and internal firewalls, intrusion detection systems and data encryption is extremely important.”

“Meanwhile, storing all this data off-site can increase the percent of square feet dedicated to patient care and increase revenue,” Broadway said. “Healthcare provider companies are looking at ways to increase revenue without adding space. Sometimes remodels work. Maybe they can add another patient per hour to a general practitioner’s schedule. Internal remodels that add rooms but not square footage can pay off. Turning space previously used for data storage into patient care areas increases the reimbursable space. It’s not just about how and where to store data. It’s also about collecting the information you have and analyzing it to determine if you are managing your human, resource and capital assets efficiently.”

When designing and selecting healthcare facility sites in Seattle, Broadway hears a lot of concern from clients about transportation to and from the facilities.

“All of our clients express concern about transportation,” Broadway said. “That includes the location of bus stops, access for staff and patients and even other forms of transportation such as shuttles, ride-share and valet.”

Broadway said her clients in Seattle, as well as in other suburban cities, are looking for more bicycle storage and electric charging station stalls.

 

Source: Bisnow

Broe Real Estate Group Adds Site To Growing MOB Portfolio

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Broe Real Estate Group, a private real estate investment firm and affiliate of The Broe Group, headquartered in Denver, Colorado, confirmed the acquisition of a 41,030 square foot office building located on 4.66 acres at 1501 W. Mineral, Littleton, Colorado.

Constructed in 1999, the two-story multi-specialty building located in Douglas County is the ideal candidate for conversion, given its highly visible location and proximity within the sub-market. BREG will undertake significant capital investments to convert the previously zoned office building into a medical office facility equipped to serve the area’s growing need for medical services. Douglas County‘s 19.4% growth since 2010 has outpaced all metro Denver area counties, creating increased consumer medical need.

“The Mineral acquisition offers the opportunity to repurpose a high quality asset into an institutional quality medical space that addresses the area’s continuing need for non-hospital medical services,” says BREG CEO Doug Wells. “Our team is actively pursuing medical tenants to serve the community’s growing needs.”

The Mineral project is BREG‘s fifth transaction supporting MOB repositioning project in the past twelve months totaling nearly 600,000 square feet.

Jeff Wood and Monica Wiley from CBRE listed the property for sale on behalf of WorldVenture, which operated its headquarters at the site for nearly 20 years.

“1501 West Mineral is a highly visible building with excellent access to nearby retail amenities and medical services. Demand for high quality, well-located healthcare options in Douglas County continues to outpace supply, which has been limited in part by rising construction costs,” noted Wood.

 

Source: PR Newswire

What’s Behind Medical Office Buildings’ Strong Trajectory

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One of the US’ fastest growing industries, healthcare spending reached almost $3.5 trillion annually in 2017.

The US Centers for Medicare & Medicaid Services anticipates national healthcare expenditures to grow to $5.7 trillion by 2026. With this growth, healthcare real estate, specifically medical office buildings, are poised for further success.

Medical Office Buildings

Medical office buildings comprise approximately 10% percent of the US office sector. These buildings are typically about 40,000 square feet and range from small physician offices to large healthcare systems. Investors are attracted to this asset class due to its stability and positive forecasts for a strong performance. On the rise for the last four years, medical office sales totaled $10.4 billion in 2018.

“Medical office buildings are so popular and are in demand as a renovation or as new construction,” says Jason Signor, CEO and partner of Caddis Healthcare Real Estate. “The market is phenomenal and occupancy levels and rental rates are healthy.”

It is well-known that the the aging US population is directly correlated with the rising demand for healthcare as doctor visits dramatically increase with age. Individuals 65 years and older spend five times more on healthcare than those who are younger. Yet, even with the favorable demographic and economic backdrop, new healthcare construction has not kept up with demand.

“With the continued shift from inpatient to outpatient care, new real estate strategies are being implemented which includes moving to urgent care centers, MOBs, micro-hospitals and health-system sponsored wellness centers,” says Signor. “ Outpatient care is booming and will continue to flourish in the future. The challenge, of course, is for our sector to keep up with the growing demand.”

Ambulatory Surgery Centers

Ambulatory surgery centers—healthcare facilities which offer patients the option of having procedures and surgeries performed outside of the hospital setting—have drastically reduced healthcare costs. According to the American Hospital Association, the number of ASCs and hospitals are almost equal with 5,534 hospitals and 5,532 surgery centers. While hospitals have declined by 5%, surgery centers have grown as much as 82% since 2000.

“ASCs will continue to dominate the healthcare real estate landscape,” says Signor. “We won’t see these large hospital campuses being built as much. As the campuses get older however, you will see more renovations as hospitals keep up with medical technological advances and stay abreast with ASCs.”

 

Source: GlobeSt.