Rx for Change: Healthcare Real Estate’s Next Generation
- Aug 03, 2017
So many trends in real estate are shaped by the oldest and youngest adult consumers: Baby Boomers and Millennials. Healthcare real estate is no exception.
One trend is the mushroom-like profusion of urgent care clinics and emergency rooms. In some areas, they seem to be on almost every corner. In addition to stand-alone buildings, these clinics are cropping up in less conventional locations, like retail centers.
Quick-care clinics proliferate for several reasons, both patient- and provider-driven. Baby Boomers and Millennials alike want convenience and accessibility, though for considerably different reasons. Many Baby Boomers are reaching the point where they don’t want to travel far for healthcare services or rely on others to take them.
Millennials, on the other hand, have been called the “drive-through generation” because they want healthcare delivery to be fast and affordable. To them, a primary care physician is not the first line of defense for a minor illness or injury. Instead, Millennials are more likely than older patients to use urgent care clinics and retail clinics.
These facilities are more efficient than experiential, so it’s interesting that their growth is happening while, in other categories of healthcare facilities, principles of good design are coming to the forefront.
There’s a new class of hospitals that are more hotel-like than institutional, with private rooms and pretty views, natural materials, acoustics that foster a peaceful and calming atmosphere, gardens, and art installations. Building on the knowledge that reduced stress has been shown to shorten patient stays, the guiding principle is that a pleasant environment can promote healing.
One design trend is a shift toward facilities that are bigger but contain fewer beds. Case in point: A new patient tower at an Ohio hospital added 260,000 square feet but only 16 beds. In a trend that holds true across that region and others, adding beds is secondary to giving patients and their families more space, privacy and comforts of home.
Investors are tracking healthcare as an area for growth over the next decade as the expanding 65-and-over cohort drives demand for services. This, in turn, will spark investment in healthcare real estate, including specialized assisted living and memory care facilities.
A variety of other factors, such as changes in delivery, accessibility and insurance costs, will also affect healthcare real estate. With the current uncertainty around this issue, there’s good reason to ponder what changes are in store. In this climate, healthcare providers have begun to use real estate strategically to reach more patients, improve comfort and quality of care, and keep costs in check. The needs and behaviors of Millennials and Baby Boomers factor significantly into those strategies.
The author is the CEO of BBG, the national CRE valuation, consulting and assessment firm.