Just by looking around, anyone in attendance at BOMA International’s 2018 Medical Office Buildings + Healthcare Real Estate Conference in Houston could see this is an exciting and quickly evolving time for healthcare real estate. The conference center at the Marriott Marquis Houston was bustling with people, including both veterans of the healthcare real estate sector and newcomers. In all, a record-setting 1,315 professionals attended the conference this past May.
They came for the content, the networking, the deal-making, the professional development and the panel discussions, which evolve each year based on feedback from attendees, explained MaryBeth Kuzmanovich, national director of Healthcare Services with Colliers International and co-chair of the event, along with Julie Wilson, senior vice president of Leasing and Management with Healthcare Realty Trust. "The growth of this conference is an example of how the sector has grown and how much interest there is in this product type, from long-time firms and investors to those who are looking to enter the space because of its strength and how it holds up during downturns," Kuzmanovich said just minutes after the event concluded.
If there was a theme to this year’s panel sessions, it was how third-party real estate firms can assist healthcare providers in new ways as the healthcare delivery model undergoes big changes. Those changes are coming by way of advancements in technology, such as patient telemedicine visits with physicians and the growing use of health-monitoring wearable devices. They also are coming by way of healthcare policy changes, the continuation of consolidations, the rise of the patient as a discerning consumer and more.
Flexibility is key as the industry adapts to these changes. During a session titled, "How New Technology Is Impacting Design, Now and Tomorrow," panelists noted that, as technology transforms the way care is delivered, healthcare facilities need to be designed with future changes in mind. Spaces within medical office buildings (MOBs) might need to be converted into medical call centers; physician offices might need to be repurposed into exam rooms; and other modifications may need to be made to accommodate unforeseen technologies, including robotic devices in procedure rooms. "These are all discussions and decisions that need to be made up front, from the very start of planning for a healthcare facility," noted Jason Shroer, an architect with Houston-based HKS.
"We’re certainly on the leading edge of some dramatic changes over the next 20 years in terms of how we deliver healthcare. The good news is that demographics are on our side and will be for the next 30 to 40 years. The demand will keep going up because of the aging population."
During his keynote speech, Ethan Brosowsky, a senior director with healthcare consulting firm The Advisory Board Company, said that, as health systems face dwindling revenues and increased competition, they must establish efficient, interconnected ambulatory "constellations" to survive. These "constellations" are networks of outpatient locations to allow systems to improve patient access, enter new markets, protect existing market share and care for patients in lower-cost settings. "Providers tend to view physical plants as more fixed than they really are, and [third-party real estate firms] need to help them make their facilities and portfolios evolve to meet the needs of their patients," he explained.
One conference panel focused on the increasingly important relationship between third-party capital providers and hospital systems, most of which are trying to conserve every dollar, while still investing in services that produce better returns than their real estate. "There are only so many dollars [a health system has to] spend," stated Courtney Hanfland, system director of Real Estate Transactions with Catholic Health Initiatives (CHI). "Do you put those dollars into patient care, technology, development? Third-party partnerships are important so that you can stretch those dollars, deal with compliance issues and stay competitive."
As companies, such as Amazon and Walmart, continue to disrupt the delivery care model, there is fear that the role of healthcare facilities, especially hospitals, could diminish, cautioned professionals on a panel titled, "Direct from the REIT C-Suite." But, big, dramatic changes are still a number of years off, the panelists concurred. "We’re certainly on the leading edge of some dramatic changes over the next 20 years in terms of how we deliver healthcare," said Danny Prosky, founding principal with American Healthcare Investors. "The good news is that demographics are on our side and will be for the next 30 to 40 years. The demand will keep going up because of the aging population." Whatever the future holds, there are plenty of opportunities for healthcare real estate professionals to innovate and add value for their clients.
Co-chairs Kuzmanovich and Wilson capped off the event by awarding the Medical Office Buildings & Healthcare Real Estate Committee Co-Chairs Award to Todd Lillibridge, senior advisor to the chairman & CEO of Lillibridge’s parent company, Ventas. Lillibridge was recognized for advancing the healthcare real estate sector and his strong commitment to serving providers and their patients.
The 2019 Medical Office Buildings + Healthcare Real Estate Conference will be held May 1-3 in Minneapolis. Co-chairs for the event will be Chris Bodnar, vice chairman of CBRE’s U.S. Healthcare Capital Markets team, and Courtney Hanfland of CHI.
ABOUT THE AUTHOR: John B. Mugford is the editor of Healthcare Real Estate Insights magazine at Wolf Marketing & Media LLC (www.wolfmediausa.com).
This article was originally published in the July/August 2018 issue of BOMA Magazine.