ing the need to restructure or sell many smaller physician-owned medical office buildings. These trends are creating more
opportunities for commercial real estate professionals.”
BUILDING, BUYING, VACATING
The experts point out, however, that even without ACOs and
PPAC, the move is on to deliver healthcare more efficiently—
and less expensively—to the masses. This, in turn, is leading
not only to community healthcare centers, but also to reconfiguration of current healthcare space.
That reconfiguration is coming at an interesting time:
another aspect of healthcare real estate is that many hospital
buildings and medical office buildings in existence are functionally obsolescent. Simone’s Deglomini points out, for
example, that many of today’s acute-care hospitals were built
decades ago. The problem is, that with “new technology,
those building are antiquated,” he comments.
Furthermore, on the acute hospital end, “the shift is from
doing everything in the hospital to moving those activities to
the outside, as much as possible,” Beam
says. “Hospitals are morphing into
ambulatory care spaces.”
As such, while some acute care hospi-
tals could be abandoned due to func-
tional obsolescence, Duke Realty’s
Dunbar says the greater likelihood is that
those hospital buildings could become
specialized facilities. “Not all hospitals
can be everything to everyone, nor should
they be,” he points out. “Rural hospitals,
for example, might not be involved with
catheterization. If they don’t do at least
three to five of those a day, they don’t
need to be in that business.”
And those spaces need to be a lot
more flexible than they were in the past.
Mugford says healthcare real estate construction numbers are picking up a bit,
but “there aren’t as many small doctor practices you can fill
buildings with, so you need to have heath systems commitments for those buildings to fill them,” he points out.
Furthermore, with healthcare systems buying up private
practices, there will be the attempt to eliminate conflict
between the physician groups versus the hospital MOBs.
“They’re encouraging their practice groups to dispose of real
estate to relieve conflict that might be created
with ownership,” says Transou of MedSouth.
“That’s a potential opportunity—as they’re try-
ing to dispose of real estate, there’ll be buyers
out there looking for it.”
Acute-care hospitals could be making their
way toward not just technologically advanced
facilities, but health villages, consisting of on-
campus fitness centers, retail, healthy food prod-
ucts—and even an onsite spa. As such, we could
see a future of bedless acute-care hospitals and
medical practices offering everything from
ambulatory surgery to sophisticated MRI and
other diagnoses activities.
“It’s a whole new way of treating the patient,”
Deglomini says. “It’s a way of trying to make it con-
venient for the patient, rather than dealing with it
the way that was done before.”
Rendina agrees, noting that the newer facilities
blur the lines between inpatient and outpatient
treatment, with efforts directed toward
prevention and wellness along with treat-
ing the chronically ill. “I believe hospital
occupancy of most new facilities will
increase relative to historical percentages
given the trend of increased physician
employment,” he says. “But since it’s
incredibly expensive to operate a hospital
bed, the future will also be about keeping
people healthy and reserving the beds for
the sickest of the sick.”
Even with changes impacting the sec-
tor, the basic function of healthcare real
estate isn’t going away anytime soon.
Bivins notes that healthcare will con-
tinue to be driven, in part, by real estate.
“You can’t outsource healthcare,” he
observes. “At some point, you still need
to go and shake hands with your doctor
at some sort of location.” The future issue will be, however,
where that location will be, and from what type of real estate
that doctor will be operating. ◆
Reprint orders: www.remreprints.com
Wilmington Health medical office building in Wilmington, NC,
recently acquired by MedSouth Healthcare LLC.
Bessemer Medical Office Building in
Bessemer, AL is part of Griffin-American Healthcare REIT II’s portfolio.
The Walstead Place Care Home, in Sussex, England is part
of the UK senior portfolio acquired by Griffin-American
Healthcare REIT II this past summer.