SAN RAMON, CA—The rise of one-on-one conferencing with doctors via phone, online or video on either may make data centers a significant sub-sector of healthcare real estate, John Pollock, COO of Meridian, a full service real estate developer and owner of medical real estate throughout California, tells GlobeSt.com. The healthcare industry continues to see rapid change with the influx of the newly insured through Affordable Care Act exchanges, increased consumer awareness, the role of technology, and the lines between providers and payers becoming blurred, Pollock says.
Meridian will be closing out the year with more than 1.3 million square feet in development and acquisition throughout both Northern and Southern California. The company will continue to seek well-located suburban medical and general office value-add opportunities throughout California in 2016, and is currently in escrow to purchase a large medical-office building in Los Angeles County. Below, Pollock gives us his list of the four top trends impacting healthcare real estate.
1. Influx of the newly insured: The increase in newly-insured patients is having a twofold impact on health care systems as they attempt to cope with the increasing “throughput” (i.e., more patients), while remaining profitable, says Pollock. The newly-insured population is putting pressure on systems to expand their outpatient clinics to better serve constituents. This demand is great news for medical-office-building owners and developers. “Here at Meridian, we are working with systems to look at ways to expand market share in their respective markets by offering convenient locations in addition to affordable rents,” Pollock says. “These are often difficult projects and can include outside-the-box thinking such as converting former office or retail space into new outpatient clinics. The other major issue to keep a close eye on here is the response of health-insurance companies, since they have to deal with the difficult issue of not enough young, healthy and middle-income clients to subsidize cost and demand from the older, sicker and under insured customers.” A couple of weeks ago, United Health Group–the largest health insurer in the US–dropped the biggest bomb on the ACA in recent times when the company’s CEO Stephen Hemsley announced a $425-million downgrade to its earnings forecast for 2015, largely due to losses on the ACA exchanges, Pollock explains. “Hemsley said the company ‘cannot sustain’ such losses. United has since reported that the company may pull out of the exchanges completely after 2016.”
2. Consumer awareness: As consumers continue to shoulder a larger burden of their overall healthcare costs, they continue to take a much more proactive approach to their healthcare, says Pollock. “Systems are now fully aware they need to provide a great overall patient experience in welllocated and carefully planned clinics. This has created a huge push by the systems to grab market share by establishing an outpatient presence in the communities they serve.” Several websites such as healthgrades.com and vitals.com also easily enable consumers to quickly research the patient experience of others, including convenience and the differences in cost for treatment at different facilities. This proactive consumer involvement and engagement is great for the industry, as it will allow patients to make well thought-out decisions that impact the cost of care for both themselves and the payers, says Pollock.
3. Technology: The next time you need to go to the doctor, instead of making an appointment, why not just fire up your smartphone? “The doctor will Skype you now,” says Pollock. “New programs by companies such as Teledoc offer one-on-one conferencing with doctors, either over the phone, online, or through video on your phone or computer–giving you all the medical advice you need without having to set foot in a doctor’s office.” Teledoc signed a 57,210-square-foot lease in Texas earlier in 2015, and Pollock says this type of telemedicine will continue to grow, so much so that in the future we may see medical-office buildings being constructed for the sole purpose of providing a call-center type of environment entirely dedicated to doctors interacting with patients either over the phone, online or through a smartphone app.
4. The provider/payer relationship: For decades, health systems (the providers) have provided healthcare services, and insurance companies (the payers) have financed that care. Over the past few years, however, the lines have become blurred, with providers launching managed-care plans and payers developing value-based care programs. “Some payers and providers are launching joint ventures that aim to take the strongest parts of both industries to both provide and pay for health services,” says Pollock. “Innovation Health, the Northern Virginia health plan owned 50-50 by Aetna Inc. and Inova HealthSystem, represents a great example of an ‘alignment’ structure, with the new health plan allowing the provider and carrier to tap into each other’s expertise to lower costs, grow market share and move to value-based payment. The three-year old collaboration is making a major expansion into new markets south and west of its base. This continued growth of market share and expansion, and reduction of overhead costs, will inevitably lead to the need for more medical-office space.” Meanwhile, seven prestigious California health systems, including Cedars-Sinai and UCLA, recently joined with Anthem Blue Cross of California to form Vivity, a unique arrangement that promises to improve quality and share cost savings among the participating entities, Pollock explains. “If successful, Anthem’s innovative new model could be adapted by insurance carriers and health systems nationwide, embraced by consumers and employers eager for strategies that reduce coverage costs and improve outcome and eventually take aim at HMO giant Kaiser.”