Due to the recent demands for improved technological coordination, abrupt payment alterations from insurers and increasing pressures from societal and political authorities as to how medical should be delivered, for lack of a better phrase, the sector has witnessed a ‘perfect storm’. Add in an economy that battled the worst recession since the Great Depression during which covert raids of hospitals, pharmacies and clinics were seemingly a regular occurrence, to say the very least, the medical sector has faced significant threats and challenges over the last few years.
So, what now? The hospitals, the staples of healthcare, are growing once again and highly entrepreneurial ventures have regained traction to provide greater competition for healthcare services. As for our recommendation, addressing expenses that prohibit growth of the balance sheet should be first and foremost.
While the greatest monthly expense most successful medical organizations have is employment, the second is real estate. Both go hand in hand and should be addressed simultaneously to eliminate redundancy. This can be viewed as consolidating, prior to pushing forward again with growth. Whether paring an office or creating collaborative partnership ventures, one thing is for certain, expansion is critical in a highly leveraged, volatile economy where bigger has more availability to people, patients, capital and exit strategies.
An aggressive diagnosis of real estate usage is necessary to adjust for the the myriad of forced changes that have created the overwhelming uncertainty within the sector. From a real estate perspective, these changes are physical, geographical, economic or regulatory. This article will address the physical components of real estate, with others provided upon request from our medical real estate advisory.
Beyond simple bricks and mortar, attention should be paid to the layout of the space. A strategically designed space plan will provide administration with ability to manage operations efficiently, allow patients to move through with confidence and give health providers optimal time to coordinate with both administration and patients effectively.
While adding or relocating to existing medical space may seem ideal, finding a perfect fit is hard to find. A space that was designed prior to the early 2000′s will almost certainly provide challenges to efficiency. Real estate flow, like the internal workings of the body when altered, the emphasis is placed on other organs which are forced to overcompensate. This creates larger, more costly complications down the road.
A select few items that should be addressed for greater efficiency include:
- People Flow
- Dead /Wasted Space
- Interior Location (if within multi-use building)
- Floor Load Capacity
- Roof Leaks
- ADA / Code Requirements
- Ingress / Egress / Parking
The physical demands of medical real estate exceed those of a standard business use. For this reason, it is critical that real estate decisions include a complete analysis of the physical condition of both the space and building under consideration.