In the fall of 2019, Mayo Clinic and Google announced an interesting new partnership. With the help of Google, Mayo Clinic will use cloud computing, machine learning, data analytics, and artificial intelligence (AI) to alter healthcare delivery as we know it. By using such advanced technology, they plan to improve healthcare for both providers and patients. This announcement of the new partnership, and several other recent medical innovations, presents a good opportunity to take the pulse of healthcare real estate.
Technological Innovations in Healthcare
The new partnership between Mayo Clinic and Google isn’t the only medical-technological collaboration taking shape. In 2018, the online retail giant Amazon bought PillPack, an online pharmacy. Then, in December of 2019, Cerner, a health IT company, announced its plan to collaborate with Amazon as well. It seems that the themes of technology and healthcare are on everyone’s agenda.
Technological advancements like these are just a few of the platforms growing in popularity. Mobile health (otherwise known as mHealth) has become more prevalent in recent years. From FitBits to smartphone apps, many health professionals are integrating mHealth into their patient treatment plans. Technology is bridging the gap between the patient and the healthcare provider.
So how are all of these medical innovations impacting healthcare real estate? In 2018, national spending on healthcare rose to $3,649.4 billion. The cost per person averages to about $11,172. Healthcare is an important industry, and technology is improving health options. With online medicine subscriptions, improved IT, and mHealth, health systems are enhancing patient experience. In order to meet the patients’ expectations and physical locations, health systems have branched out from the traditional hospital setting.
New micro-hospitals and outpatient clinics are a significant benefit for both parties. They help offer the personalized, local care that patients have been looking for. The more customized the patient treatment options, the more patient loyalty a practice can incur. These facilities present themselves in many forms. They can be anything from a small clinic with a team of physicians to a large adaptive reuse space filled with a range of specialists. These healthcare innovations are helping medical real estate expand into multiple facilities in new markets.
Important Aspects for Healthcare Real Estate Tenants
In addition to mHealth and IT advancements, medical procedures and treatments continue to improve. Healthcare facility needs are changing. Some hospitals and surgery centers will need more space for innovative equipment. Others will need facilities with less square footage, but will need additional campuses. And while healthcare professionals sift through the ever-changing medical processes, they are not always able to stay up-to-date on their healthcare real estate needs.
Many medical practices, both on and off the main hospital campus, lease their space while working under a larger health system. As years pass and innovations unfold, the medical practice (tenant) has the responsibility to handle the upkeep of their facility. Due to the demands of the job, very few have the time or training to review their lease and negotiate the details. Unfortunately, many medical practices wind up paying for major facility updates that could otherwise be a part of their lease agreement.
This is where a healthcare real estate advisor comes in. They are the liaisons between the health system, landlord, and tenant. While new technologies, procedures, and policies develop, it’s in the best interest of all parties to update their facilities. Oftentimes, advisors can appropriately negotiate those leases so that the tenant can receive the necessary tenant improvements (TI), without paying out-of-pocket.
Medical treatment plans and healthcare technologies will continue to change. And with those advancements come the opportunities for new healthcare real estate strategies. As long as healthcare experiences innovation, healthcare real estate will adapt accordingly.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
