A speech by the Advisory Board at the BOMA Healthcare Conference in Houston this month gave many insights into the future trends of real estate in the healthcare industry. The future of health systems is shifting away from hospital settings to more developments of ambulatory surgery centers (ASC), medical office buildings (MOB), urgent care centers (UCC), free-standing emergency departments (FED) and micro hospitals, while being incentivized by government programs. Statistics showed 58% of recent and planned medical-property construction projects are in the outpatient space.
Providers who are moving forward with ambulatory development have strategically defined these design priorities to meet their strategic goals: (1) convenient location; (2) consistent branding; (3) soothing environment and easy to find locations; (4) co-located services; and (5) extra space for primary or urgent care. Relevant projects are being planned by 92% of hospitals.
Investor demand for medical office properties is being driven by declining vacancy and market cap rates. Between 2012 and 2016, vacancy rates dropped from 11.6% to 7.4% and average capitalization rates dropped from 7.7% to 6.7%. During the same period, the price paid per square foot rose from $208 to $239.
NEW MEDICAL OFFICE BUILDINGS
MOBs are evolving to maximize accessibility, visibility, navigability and non-clinical atmosphere. Services often include imaging, lab and pharmacy while being located near complimentary services and retailers. Most MOBs are now larger, multispecialty properties that health systems use to enter a new market or protect market share and facilitate care coordination.
URGENT CARE CENTERS
Recent studies show that there are currently at least 7,080 urgent care centers in the U.S., and at least 37% are partially owned by hospitals. They average 50 patient visits per day and approximately 15% have begun to offer ongoing primary care services. UCCs are viewed as a low-cost investment to enter a new market, encourage primary care and discourage unnecessary use of emergency departments.
Micro hospitals with 8-12 beds will provide core services that include acute care, emergency care, pharmacy, diagnostic imaging, labs, primary care, outpatient rehab, outpatient surgery, specialty care, wellness care and women’s services. The average square footage for a micro hospital is 15,000 to50,000, compared to 15,000 for a FSED and 3,000 for a UCC. Micro hospitals will generally be located at city edges, exurbs, or 10-15 miles from parent facilities.
AMBULATORY SURGERY CENTERS
Between 2008 and 2016, the total number of Medicare-certified ASCs has grown from 4,955 to 5,507. General surgery is expected to grow from 18% to 52% in ASCs during the 10-year period of 2016 to2026. Gastroenterology is projected to grow during that period from 13% to 51%, and neurosciences should grow from 6% to 50%. Additional specialties that are expected to grow, but not as much, include urology, orthopedics and spine, ENT and cardiovascular procedures. Advancements in surgical technology will require ASCs to improve infrastructure or make design alterations to accommodate higher-acuity procedures.
The future of healthcare properties requires providers to maximize their existing facilities both on and off campus. Facilities must be built for flexibility (and possible growth) to adjust to the service mix as needs evolve. As always, efforts must be made to minimize service redundancies or gaps and limit fixed costs while focusing on the patient experience and care management.
Beth is Senior Vice President of Colliers International in Houston, Texas. She specializes in the marketing and sale of hospitals, surgical centers and healthcare properties including office, retail, industrial buildings and land.