Determination of the ideal, long-term real estate location in the current healthcare environment is challenging because the foundation, where healthcare business and real estate decisions once accumulated, is now shifting. With numerous economic uncertainties on the horizon and questions regarding Medicare and Medicaid coverage and its model of distribution, physician real estate demand is suffering at what is perceived to be a fiscal and legislative bottleneck with a limited few finding fresh strategies for improved long term growth.
With quality, rather than quantity, slowly championing the minds of providers and their patients, increase to a wider range of access and patient referral options are being explored. MREA is at the forefront of these discussions.
For instance, one area that is of key importance to review is the enterprise’s existing referral base. Our brokerage unit tends to visually distribute these referral sources via location map with tiered monetary importance to highlight relocation opportunities that are optimal for existing, as well as future growth. MREA has identified multiple other methods to best suit a referral-based expansion.
Another alternative for consideration is that of weighing leasing and purchasing. If purchasing real estate to locate multiple businesses, MREA provides an income-to-cost analysis, as well as upfront cash commitments, which are transferred into our firm’ proprietary investment proforma model. We work with several models to forecast future years of income, costs and return on investment which compliments a cost and comparable market analysis for each property.
Leasing may be a better option than purchasing, though. The competition for healthcare tenants from owners/landlords translates into better incentives to lease. It is often that a build-out allowance, deferred rent and aggressive long-term package will exist. The management responsibility and liability concerns are also reduced or eliminated in any tenancy.
Besides these two ideas, the third would pertain to the competition of the organization. Establishing goodwill is no longer merely important; it’s vital. The industry is now plugged in and race for market share is fierce. Whether the competition is from a hospital system, a well-established brand, or independent, understanding what they are (or are not) doing in this environment will help to determine where your organization needs to be focused. Our firm maintains a unique database that highlights the top 5-20 competitors within each specialty in a geographical area and performs routine evaluations on their business and real estate modalities.
These select few location reminders highlight the need for quality healthcare real estate representation. Please contact MREA at 713-701-7900 for all of your medical real estate needs.
