Healthcare Real Estate Shifts Toward Flexible, Community-Focused Models

Healthcare organizations are rethinking their real estate strategies to support more flexible, cost-efficient and patient-centered care, according to an analysis by Shawn Janus, Colliers’ U.S. National Director of Healthcare.

Provider earnings as a share of total healthcare spending have steadily declined, dropping approximately 200 basis points between 2019 and 2024, with an additional 100-basis-point decline projected by 2027. This sustained margin pressure is driving healthcare systems to scrutinize every part of their operations, including the size, mix and purpose of their real estate portfolios.

“Many systems are exploring smaller, more efficient footprints, flexible formats and the adaptive reuse of existing buildings rather than capital-intensive ground-up developments,” Janus said. “As financial pressures increase, interest in real estate strategies that limit long-term commitments continues to grow.”

Healthcare expenditures are expected to rise faster than GDP by about 1.2% annually over the next five years, further pushing providers to prioritize operational efficiency and technology-enabled care. From a real estate perspective, this shift emphasizes facilities designed to support streamlined workflows, efficient patient movement and reduced square footage.

Workforce challenges are also influencing real estate decisions. High workloads and burnout may lead more than half of healthcare workers to consider leaving their jobs within the next year. Facilities that support flexible staffing models, efficient workflows and improved day-to-day experiences are becoming increasingly important for recruitment and retention.

Outpatient care continues to expand, with ambulatory procedure volumes projected to increase roughly 9% between 2023 and 2028. This trend reflects a broader move toward care delivered closer to patients’ homes, prompting providers to favor smaller, service-specific locations that offer greater convenience, lower operating costs and a better overall patient experience.

“While traditional hospital campuses remain critical, the center of gravity is shifting toward community-based locations that offer convenience and more predictable operating environments,” Janus said.

Digital access is another key driver reshaping healthcare real estate. As digital-native Gen Z patients increasingly rely on telehealth, wearables and online prescription tools, providers are adopting care models that blend virtual and in-person services. Clinics designed with flexible layouts, team-based workflows and seamless transitions between digital and physical care settings are better positioned to meet evolving patient expectations and foster long-term loyalty.

Source: GlobeSt