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Amazon’s One Medical Ramps Up Its Expansion In Primary Care

Amazon’s One Medical membership-based primary care unit that provides on-demand 24/7 access to telehealth services and offers in-person care continues to report steady growth.

Having recently added two new health system partners and leveraged the Amazon Prime membership model, One Medical is connecting with employers and the roughly one-third of consumers who do not have a primary care doctor.

Below are three ways One Medical is extending its reach.

1. Forging More Employer Relationships

So far, more than 8,500 employers have engaged with One Medical’s services throughout the 20 regions the company now serves nationally. And just last week, news came that One Medical will serve as the primary care provider for the Health Transformation Alliance, a cooperative of nearly 60 employers including Coca-Cola, American Express, Marriott, Boeing and J.P. Morgan.

Takeaway

Amazon hopes to build momentum for lower-priced, primary care services that offer convenient access and give employers more choices to help manage health care benefits for their employees.

2. Building Health System Partnerships

New Jersey-based Hackensack Meridian Health and CommonSpirit’s Virginia Mason Franciscan Health recently became the latest health systems to partner with One Medical, bringing the company’s number of health system partners to 12. Virginia Mason will become One Medical’s specialty referral partner for its eight primary care clinics in the Seattle area. Meanwhile, One Medical plans to enter New Jersey this year, building new clinics in partnership with Hackensack Meridian Health. One Medical will manage and staff the clinics, which will become part of Hackensack’s clinically integrated network. The first clinic is slated to open by the end of 2024 at a location to be determined.

Takeaway

Some health care executives believe One Medical is taking a wise approach by partnering with health systems on specialty referrals and working with a company that has a digital-first, consumer-centric mindset.

“This new offering from Amazon is smart and certainly supports the way we all need to think about delivering better services,” Jeffrey Sturman, senior vice president and chief digital officer at Memorial Healthcare System in Hollywood, Florida, recently told Becker’s Health IT.

3. Extending the Prime Membership Model to Medical Care

Earlier this month, Amazon stated that it would begin offering a One Medical Prime membership for $9 per month or $99 per year — $100 less than the standard One Medical membership fee. Prime members also can add up to five additional memberships, each for $6 per month or $66 per year. In-office visits to One Medical Clinics are not included in the membership fee. Amazon also is leveraging its pharmacy business to provide greater convenience to members. Amazon’s RxPass will deliver prescriptions to customers’ homes for $5 per month. In addition, Amazon has developed a new feature to make it easier for consumers to use manufacturer discounts on branded medications by integrating coupons into the checkout process.

Takeaway

The long-anticipated move by Amazon to come up with a Prime membership model for health care services appears to be taking shape. With an estimated 167 million Amazon Prime members in the U.S., this could be a significant source of new patients for One Medical and its partners. How effectively One Medical manages these patient relationships and consumer expectations will go a long way toward determining the long-term scope and reach of its operations.

 

Source: American Hospital Association

MOB’s Low Vacancies, Longer Leases Boost Investor Appeal

Vacancies? What vacancies? As medical offices go, the idea of unleased space is practically a foreign concept.

Thanks to an aging population that requires more care and the need for medical office visits when a patient is ill or has a chronic disease, medical offices remain in demand. As a result, in the first quarter of 2023, the national medical office vacancy rate was only 9.2% — just under half the 17.5% vacancy rate for traditional offices.

“From 2019 through the first quarter of 2023, vacancy in medical office properties has only risen 50 basis points nationally,” Marcus & Millichap reported in June.

The future outlook also seems healthy as the number of senior citizens increases and the amount of new medical office space being built remains limited. As of June, less than 12 million SF – or 1% of current inventory — was slated for 2023 delivery.

The report acknowledges, however, that availability depends on location-specific factors, such as resident demographics, existing local stock and metro-level construction pipelines.

Vacancy rates are especially low in warm weather markets which are experiencing an influx of retirees escaping cold-weather climates like Chicago or New York. The report cites a 190 basis-point drop in medical vacancy in the Dallas-Fort Worth area from 2019 to March 2023 “coinciding with a 17% surge in the metro’s age 65-plus cohort.” There was a similar pattern in other areas where the senior population grew more than 15%, such as West Palm Beach, San Antonio and Phoenix. Each saw vacancy falling by more than 200 basis points in the same period.

The strength of the medical office market is being bolstered by the entry of large retail chains such as Walmart Health. Walgreens has expanded into primary, specialty and urgent care following its $8.9 billion acquisition of Summit Health, while Amazon snapped up One Medical’s virtual, in-office and lab services. Other retailers entering the market could also boost demand for medical office space.

Post-Covid, medical office space has maintained an average sale price of just under $300 per SF. However, the report notes, dealmaking has slowed since the Fed began to raise interest rates. Uncertainty in the banking sector, which supplied over 75% of medical office financing in 2022, could also tighten lending.

On the other hand, medical office leases are generally signed for longer periods, reducing erratic swings, and healthcare is often non-discretionary. These factors, as well as telehealth and fewer labor challenges “could boost investor confidence in the long-term growth potential of the sector,” the report states.

 

Source: GlobeSt.

Medical Office Real Estate Demand Is Outpacing Supply In Dallas-Fort Worth

Medical office space vacancy rates in Dallas-Fort Worth are more than a percentage point below the five-year average as demand remains strong in the region, according to a report from Transwestern.

The report says that the DFW market is undersupplied, but as rents rise, new construction may become more feasible in the future. Interest rates and material costs are rising, which has slowed down all new construction, and the medical office building space is no different. While rent is growing, it hasn’t kept up with other costs, so underwriting for new construction has been more difficult. But if the limited medical office space remains with increasing population in the region, rent prices will rise until new construction can be justified, the report says.

Prior to the pandemic, Dallas was the country’s second-most active medical office building construction market, behind only New York.

“There’s a definite need for increased health care services, more hospital campuses, and more doctors’ offices, but also the real estate that can house them,” says Andrew Matheny, research manager for Transwestern. “When you set that against the construction levels that have been declining over the last couple of years, that’s going to be a significant driver of rents and new development here in the next few years.”

While square footage under construction and 12-month deliveries are down compared to a year ago in the medical office space, those figures could soon be trending in the opposite direction. Vacancy rates in DFW are at 10.2 percent and were 11.6 percent one year ago. Gross rents are also up nearly 3 percent compared to a year ago.

The healthcare market overall continues to grow. Employment for the hospital space is up 4 percent compared to a year ago and 10 percent for other ambulatory service markets. Total available space is at 13.8 percent, which is below the five-year average for the region.

“In the last three to six months, we’re starting to see transactions come through that are bringing revenue in line with these higher costs,” Matheny says. “That may need to happen here for another couple of quarters before we start seeing more groundbreaking projects.”

South Dallas, in-town Dallas, and along the Dallas North Tollway have some of the lowest vacancy rates in Dallas, though there are zero projects under construction in-town and South Dallas, with just 21,000 square feet under construction near the tollway. In the Frisco/Legacy region, there are more than 150,00 sf under construction, but it has one of the highest vacancy rates in the region, at 13. 9 percent. The East Dallas suburbs (17.3 percent) and Grapevine/Southlake (23.1 percent) have higher vacancy rates than Plano/Legacy.

If the market responds as Transwestern is predicting, the new hybrid work environment will probably play a factor.

“If people are spending more time at home, they’re probably going to prefer to see physicians and providers that are close to where they live, so we may see a geographic rebalancing of health care services close to where people live,” Matheny says.

This trend is already making waves with the growing presence of urgent care centers, retail clinics, and free-standing emergency rooms popping up closer to where people live. Hospitals, too, are moving more services away from central hubs and into ambulatory care facilities. It isn’t just more convenient; caring for people outside the hospital is also cheaper.

Telehealth has surged during and after the pandemic, but Matheny doesn’t see it significantly impacting the medical office market.

“While it may allow a physician to reach more people without coming in, physicians still need physical spaces where they can see their patients face to face,” Matheny says. “From a leasing perspective, it’s been a very busy medical office space. There is a demand for it, and I think people want to see their doctor in person.”

 

Source: D CEO Magazine