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New Report Signals Growth In Behavioral Health Sector

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A new report from Colliers International signals there is a rising demand for behavioral health services in the US.

Construction for behavioral health hospitals has increased dramatically since 2017, according to the report. In 2018, the supply level was 3.8 million square feet. By 2019, that figure more than doubled to 8.1 million square feet. In 2020, in light of the COVID-19 pandemic, the sector is still growing with 6.4 million square feet set to deliver this year.

While construction costs are declining due to the pandemic, the costs for behavioral health hospitals are expected to hold steady in 2020 at $403.60 per square foot, which is up from $346.80 per square foot just in 2018.

The report states that while in any given year one in four Americans is impacted by behavioral health conditions there is a shortage of behavioral health physicians. Kaiser Foundation research found the US was only fulfilling around 44% of its need for mental healthcare professionals. One of the biggest factors affecting the shortage is the cost of care.

Colliers found the average cost per bed in a behavioral health asset averages $330,000. The Advisory Board said that treating patients with behavioral health diagnoses costs $900 more per month than for patients with no behavioral health diagnosis. As a result, less than half of patients receive treatment, according to Colliers.

And now, COVID-19 is placing an unprecedented impact on behavioral health services. In late March, a McKinsey survey found 63% of respondents were feeling anxious, depressed or both.

“The anxiety, stress, financial strife, grief, and general uncertainty of this time will undoubtedly lead to behavioral health crises,” McKinsey said in their survey.

The pandemic has signaled the greater need to integrate both physical and behavioral health. The company stated that integration between the two services could help lessen the shortage of people getting help.

Colliers echoed that sentiment by stating “the majority of patients with a behavioral health diagnosis also have a medical comorbidity.”

One of the suggestions from Colliers is screening in both physical and behavioral health settings. Moving forward, Colliers said the success of behavioral health services is dependent on a system where physical and behavioral conditions are treated together and where private/public partnerships occur more often. The 10 largest behavioral health hospitals in the U.S. are all either government-run or owned by nonprofits.

They note that the success of Orange County, CA initiative BeWell OC is just one example of what the healthcare system could look like in the future. The “wellness hub” was a public/private development.

 

Source: GlobeSt.

The CARES Act Is Positioning Healthcare Real Estate For A Bright Future

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The Coronavirus Aid, Relief, and Economic Security Act, known as The CARES Act, was passed with great fanfare and a lot of promise.

In a lot of ways, it hasn’t lived up to that hype as small businesses struggled to get the help that they needed. But Kyle O’Connor, President and Founder of MLL Capital, which owns medical and life sciences facilities, thinks one sector was well-positioned to benefit from The CARES Act.

“One of the things that has been a big help for the medical industry has been The CARES Act, whether it be the payroll protection program [PPP] or the other funding that went to the health systems,” O’Connor says. “That has, I believe, helped quite a bit.”

O’Connor thinks the medical sector has received many benefits from the act that haven’t been there for other sectors.

“If you look throughout the economy, not every type of business was as well suited as the health care industry was to take advantage of the payroll protection program,” O’Connor says.

The employee size limitation for PPP grants is 500 employees. Since most medical offices won’t clear that threshold, they are great candidates for that funding.

“Most medical practices plan to rehire all of their laid off or furloughed employees given they expect demand to resume,” O’Connor says. “It’s also important to note that the health systems received/will receive funding from other elements of The CARES Act. In the medical field, The CARES Act has allowed doctor’s offices to keep critical medical workers employed. The doctors can only see so many people. So the nurse practitioners, the administrative staff, all the nurses that support each individual practice are a pretty important part of the system.”

Doctors are also adopting things like telehealth to offset a decline in office visits.

“The occupiers in our buildings were organizing themselves for dealing with the issues that have been caused by the stay-at-home orders,” O’Connor says.

Once the COVID crisis eases up or clears, O’Connor does not doubt that patients will return to medical offices. And demand could be even more significant as there is pent-up demand for medical services.

“They’re going to be much more comfortable going back to the doctor, and there will be a flood of requests for appointments,” O’Connor says. “There will likely be greater levels of health care that is being provided as the impact of the stay-at-home orders dissipates.”

The support from The CARES Act, in addition to the resilience of the sector, has made O’Connor optimistic about its future.

“Medical offices and life science property types have a defensive element to them,” O’Connor says. “We are going to hold their value better than some of the other property types.”

 

Source: GlobeSt.

Survey: Patients Strongly Prefer Off-Campus Healthcare Experiences

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In an effort to uncover critical insights into patient behavior and serve as thought leaders within the healthcare real estate industry, Physicians Realty Trust (the “Company”) commissioned an independent survey in five of the Company’s largest markets to better understand consumer perceptions of healthcare facility safety within the context of the COVID-19 pandemic.

CVR and Carmichael & Company, healthcare consultants based in Indianapolis, conducted the panel-based survey for the Company, surveying the Atlanta, Dallas, Louisville, Minneapolis, and Phoenix markets. A total of 2,018 respondents were surveyed, resulting in an average margin of error of 2.19% across the five markets.

Strong Consumer Preference for Off-Campus Medical Facilities

The research revealed that when seeking medical treatment, the overwhelming majority of respondents prefer to receive care in an off-campus medical facility located a mile or more from a hospital campus. Based on survey results, this trend is likely to continue for the foreseeable future due to COVID-19, especially given concerns regarding a possible resurgence of the virus later this year.

“The findings affirm our long-term observations in consumer attitudes and validate the Company’s continued investment strategy targeting off-campus medical office buildings,” said John T. Thomas, President and CEO of Physicians Realty Trust. “As thought leaders in the healthcare industry, we commissioned this research to advance our understanding of COVID-19’s impact on our business, as well as provide insight and guidance to our healthcare partners.”

In the report, respondents also provided insights on enhanced safety and hygiene protocols, spokesperson preferences for COVID-19 communication, and other shifting perceptions of healthcare highlighted by the pandemic.

“For many years, consumers and physicians have been seeking services at locations convenient to them and their homes, often away from hospital campuses,” Thomas added. “This study verifies that especially in light of COVID-19 safety and cleanliness concerns, consumers strongly prefer medical office facilities located away from the hospital campus.”

The Company is sharing these findings with its healthcare partners and stakeholders to increase awareness and better understand healthcare consumers’ decisions.

To access the report, go to www.docreit.com/research.

 

Source: PRNewswire