CREJ

Page 4 — Health Care & Senior Housing Quarterly — July 2021 www.crej.com HEALTH CARE — INSIGHTS S tepping into the post-crisis era, we see many moments of hope and opportunity as health systems re-imagine care delivery. What’s happening here in Colo- rado mirrors national trends: Health systems are competing for market and talent while adapting to chang- ing patient behaviors. And they are taking a hard look at their real estate portfolio as capital is diverted from building brick-and-mortar assets and reallocated to fund digital platforms for patient care. My role uses a data-driven method- ology to help health systems define their priorities and reevaluate oppor- tunities to boost their business per- formance and their position in their markets, through forecasting and modeling future state solutions. Here are the three big questions our health care clients have been asking lately: 1. Competition is fierce.What trends are we seeing that will help us posi- tion our system successfully in the market as we enter this post-crisis era? 2. How can we optimize our real estate portfolio to boost resilience and relevance? 3. How will telehealth impact real estate, and how should we plan for virtual care? n Competition and trends. Let’s talk about competition and trends first. Health systems no longer have the luxury to create a plan and spend a few years rolling it out. The industry is being inundated with nonindus- try disruptors such as CVS,Walmart Health and Amazon, which offer low- cost entry points. Consumer expecta- tions have shifted, with patients look- ing for the Ama- zon experience of convenient care and easy pricing. Shifting points of care – such as inpa- tient services to outpatient settings, higher acuity and complexity, and the demand to personalize care – are also fragmenting traditional delivery models. We advise our clients to focus on differentiating their brand by leverag- ing their strongest services and know- ing where they can make their biggest impact.We draw on consumer pro- files and try to understand what influ- ences their decisions. It may be time to drive outside the lanes or create alliances and service arrangements to fill a system’s services gap. Providing a seamless experience for patients may mean aligning with partner sys- tems, acquiring provider specialties or engaging an urgent care operator. More often we are seeing mixed-use health and wellness villages emerge to offer hospitality, retail and medi- cal services and more. For example, MetroHealth’s community district in Cleveland has emerged as a leader in health-related return on investment through innovative community and economic development; it even offers a farmers market and local library access. Successful planning starts with a deep dive into the spaces that our clients use. Real estate ranks among the top three expenses for most busi- nesses and especially for hospital systems, which often have aging and underperforming assets. n Maximizing the real estate port- folio. Health leaders can optimize their real estate portfolio by letting go of noncritical assets, negotiating favorable lease terms for higher flex- ibility, maximizing revenue-producing spaces and building income streams where possible. Here are some ways to start: • First, know what you have. Take the time to view your portfolio holisti- cally and build an analytics frame- work to track asset performance. Compare this data to your patient demographics and any shifts taking place in the services you offer, factor- ing in where those services are locat- ed. Benchmarking against your indus- try, specialties and other markets will help you contextualize where you are now and where you need to go next. • Decluttering is one easy way to cut costs; empty out old storage areas and turn them into revenue-generating spaces. Hospital real estate often is expensive, yet we still see storerooms filled with old, retired equipment and nonessentials that take up valuable space. • Recognize your power of negotia- tion when assessing liquidation, third- party developers or creative owner- ship scenarios. Investors have cash, and health assets still are strong. Pro- active planning is the approach; don’t let last-minute decision-making take you away from the driver’s seat. Leverage real estate portfolios to optimize position Becky Baron Senior health adviser, HKS Please see Baron, Page 12 HKS Baylor St. Luke’s new 12-story O’Quinn Medical Tower at the Houston McNair Campus reflects prioritizing patient experience and asset performance. Convenient, personalized and comprehensive services lead the way to expert positioning and care delivery.