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April 16, 2019

IN THE KNOW: ULI Healthcare and Life Sciences Council Spring Meeting

Meridian’s CEO, John Pollock, Provides Highlights From This Year’s Event

“This was another great meeting put on by ULI. The panelists covered a wide variety of topics regarding health care in the United States. Below, I summarize the three I found most compelling.

Health Systems; alike or not quite?
The consensus among panelists was that they are more similar than not. Nearly all systems would prefer to own their real state and seem to be open to anything that is remotely strategic – not the best news for the investors in the room. Each system places an immense focus on driving waste out of the system through greater utilization of their existing real estate. Kaiser as an example is going through an exercise that will save $71 million per year through greater utilization of their administrative space. This drive for efficiency also extends to the physician practices. Physicians are implementing more and more lean practices to increase the volume of patients, while maintaining quality and ensuring the patient has a great experience.

Regulatory Update – We discussed three healthcare regulations that, in my opinion, illustrate the complexities that come with healthcare real estate. Stark Law, which prohibits physician self-referral; Anti-Kickback, which makes it illegal for providers to knowingly and willfully accept bribes or other forms of remuneration in return for generating federal healthcare program business; and, the False Claim Act, which prohibits systems from submitting a claim that was derived from a financial relationship with the referral source, even if it was for a legitimate service. The healthcare real estate industry is not for the inexperienced and requires a level of sophistication that is beyond what is necessary for many other real estate sectors.

The Broken Healthcare System – The healthcare system in the United States if facing a data crisis. The mismanagement of data is unfortunately causing upwards of 400,000 unnecessary deaths per year. Ed Cantwell, President and CEO of Center for Medical Interoperability provided a picture of a patient’s room, who sadly had passed away. There were a dozen devices in the room, each with its own interface, screen and purpose – and each device was also proprietary. Had the devices been able to share data it would have given the providers critical information that, taken together, would have prevented the death. Ed discussed the fact that the financial services industry had to create a platform to share financial information back in the 1990’s in order to ensure the security of data. It is the same evolution that will have to happen with healthcare if we are wanting to have meaningful change.

There is plenty of work to be done in our industry and I look forward to continuing to play a major role as the real estate side continues to evolve and develop.” – John Pollock, CEO