Real Estate Could Have A Role To Play In Alleviating Medical Staffing Squeeze

/in , /by

Battered by the lingering pandemic, a rise in inflation, supply chain slowdowns and recessionary fears becoming reality, the healthcare industry has faced crisis after crisis over the past several years.

But it could be commercial real estate to the rescue, at least partially, to help solve one of the industry’s most longstanding, yet persistent problems: healthcare’s chronic staffing issues.

Healthcare experts at Bisnow’s Chicago Healthcare & Life Sciences Real Estate event Aug. 11 at Illinois Science + Technology Park said that though challenges to the industry are overt, real estate is poised to be a partner in helping healthcare reconsider how it uses space for patient care in the current market, especially in light of staffing shortages exacerbated by years of a punishing pandemic.

“A lot of what we see in healthcare real estate decisions is using the real estate in a way to leverage staffing issues,” Ryan Cos. Vice President of Development-Healthcare Curt Pascoe said. “CRE can help fill gaps by optimizing space, either consolidating locations or reconstructing locations in a way that allows you to eliminate a front desk person or eliminate a nursing position.”

Even before the pandemic, the nation suffered from a lack of skilled nurses and other healthcare workers. Then some 1.5 million healthcare jobs were lost in the first two months of the pandemic alone as clinics closed and U.S. hospitals restricted services. Most jobs have since returned, though healthcare employment remains 1.1% below pre-pandemic levels, according to Colliers’ 2022 Mid-Year Healthcare Outlook — many of them lost permanently to burnout.

Shawn Janus, national director of U.S. Healthcare Services at Colliers, said that while he has seen persistent staffing shortages throughout his past 20 years in the industry, he is most concerned about the looming physician shortage, which the Association of American Medical Colleges predicts will cause the U.S. to need 37,800-124,000 more doctors in the next 12 years.

As healthcare facilities look to scale back and cut costs in the face of rising inflation, panelists said, they’re also making reductions in administrative spending to account for pandemic staff losses and increasing demands by millennials for flexible work options.

That’s where real estate can step in, helping healthcare consolidate or reconfigure space to minimize staffing holes.

“A lot of those hospitals have that administrative space in the hospital, which is already certified for joint commission and other regulatory bodies, so changing that into clinical space makes great sense,” said Allyson Hanson, CEO and executive director of the Illinois Medical District.

That switch is not always easy though, according to Janus, who said health system executives are being cautious about using space they have no way of filling given current staff shortages. He said internal goals by hospital executives aimed at decreasing at least 50% of administrative space is the biggest shift the healthcare industry is seeing.

To counter that, Hanson said, helping healthcare providers find new business models that reimagine methods of care and patient services in the face of staff cuts and downsizings is paramount.

Telemedicine is one way industry providers continue to optimize in the face of consumer needs. That means the tech CRE brings in must be on point.

Michael Becker, senior director of real estate services at Anne & Robert H. Lurie Children’s Hospital, told the panel that the percent of people communicating with clinicians virtually is up, even now as panic over the pandemic winds down, adding there is particular room for growth when it comes to behavioral health-based services.

“Basically we’re stable at pre-pandemic levels and we’re now stable at 7% of total visits so our use has doubled in a couple of years,” Becker said. “I see that continuing to grow, but not dramatically, at least not in the next five-10 years.”

Becker said that though telemedicine ramped up from 3% to 40% at the height of the pandemic, it was hugely challenging for the hospital’s technology team. While incorporating tech is important, he said, brick-and-mortar facilities will still carry the industry.

In fact, demand for medical office buildings continues to drive new construction activity and acquisitions across Chicagoland. And while cap rates have risen on average, they have continued to compress for on-campus medical office buildings which set record highs for asking rents and sales volume in 2021, despite pandemic stressors. A similar resiliency is expected to persist into the near future.

“Medical office as compared to office or retail or some of the other food groups is still considered a better investment and will weather this turn better,” Janus said.

 

Source: Bisnow

CVS Plans To Get Into Primary Care By The End of 2022

/in , , /by

CVS just said that it plans to acquire or take a stake in a primary-care company by the end of the year, as competition heats up with Amazon and Walgreens.

 “The company wants to team up with a provider that has a strong management team and tech background and the ability to grow quickly,” said CEO Karen Lynch on the company’s second-quarter earnings call

CVS, best known for its many drugstores, has touchpoints across the health-care industry. It has acquired insurer Aetna and pharmacy benefits manager Caremark. Customers can get vaccines or urgent care at MinuteClinic outposts inside of its stores. And the company keeps adding more health services to those locations, too — it recently introduced therapy for mental health at some stores.

CVS doesn’t yet have doctor offices where patients can go for an annual checkup or appointments with a physician or nurse practitioner, though.

“CVS wants to change that by buying or partnering with a company.” said Lynch at an investor day last year.

At the time, Dr. Alan Lotvin, executive vice president of CVS Health and president of CVS Caremark, said he envisioned CVS standing out in primary care. The company wants to offer longer hours at its doctor offices so people can visit as early as 6 a.m., as late as 9 p.m., or on the weekends. It also wants to utilize simple, streamlined tech, so customers don’t have to fill out piles of paperwork.

Other health-care players have already made moves in the space. Rival Walgreens Boots Alliance is opening hundreds of doctor offices in partnership with VillageMD and became the majority owner of the company. Walmart has a small, but growing number of clinics where people can visit a doctor, dentist or therapist for a low price.

Amazon ratcheted up pressure by announcing last month that it would acquire primary-care provider One Medical for about $3.9 billion. The boutique health-care company has 188 medical offices across 25 markets, according to its latest quarterly results.

“CVS has a competitive edge with the size of its business,” Lynch said. “Nearly 4.8 million customers interact with the company each day at CVS locations. MinuteClinic visits increased 12% in the second quarter. CVS can build from the strong foundation that we already have.”

 

Source: CNBC

Geographic Trends Emerge For Private Equity Firms Acquiring Physician Offices

/in , /by

The Northeast, Florida and Arizona are the nation’s hotspots for private equity (PE) firms to acquire physician practices across six specialties.

A new study examined geographic trends of private equity acquisitions of physician offices specializing in dermatology, gastroenterology, ophthalmology, obstetrics/gynecology (OB/GYN), orthopedics, and urology. Among those, less than 10% of physicians worked in PE-acquired practices, as of 2019, based on figures from the IQVIA OneKey database, compiled with the American Medical Association Physician Masterfile and other data.

Health care industry analysts have been examining effects, good and bad, of PE investments in physician practices. The study did not attach financial values to PE transactions and did not examine consequences for patient care, but it did refer to potential price hikes if market competition dries up.

“Because some PE acquisitions consolidate physician practices into larger organizations, geographic concentration of PE penetration may be associated with reduced physician competition, which could lead to increased prices,” the study said. “If PE acquisitions induce practice consolidation among remaining independent practices with financial pressures, this spillover effect may further hinder competition, underscoring the importance of monitoring practice consolidation and the ownership and regulatory environment of acquisitions.”

The research letter, “Geographic Variation in Private Equity Penetration Across Select Office-Based Physician Specialties in the U.S.,” was published earlier this year in JAMA Health Forum.

How Many And Where

The study found in 2019, there were 97,094 physicians in the six specialties and 4,738, or 4.9%, worked in PE-acquired practices, the study said. PE penetration was:

• 7.5% for dermatology, or 851 of 11,324 physicians
• 7.4% for gastroenterology, or 845 of 11,484 physicians
• 6.5% for urology, or 492 of 7,609 physicians
• 5.1% for ophthalmology, or 741 of 14,493 physicians
• 4.7% for OB/GYN, or 1,325 of 28,493 physicians
• 1.9% for orthopedics, or 460 of 23,891 physicians

Based on state and hospital referral region data, PE penetration was greatest in the Northeast at 6.8%, or 1,270 of 18,708 physicians, and lowest in the Midwest at 3.8%, or 638 of 16,613 physicians. PE penetration was highest in:

• Washington D.C., 18.2 %, or 188 of 1,031 physicians
• Arizona, 17.5%, or 326 of 1,866 physicians
• New Jersey, 13.6%, or 464 of 3,49 physicians
• Maryland, 13.1%, or 195 of 1,488 physicians
• Connecticut, 12.6%, or 212 of 1,688 physicians
• Florida, 10.8%, or 741 of 6,852 physicians

 

Source: Medical Economics