Medical Real Estate in 2020: You Need to Make Better Use of Your Space

No doubt about it: the health care industry is experiencing a seismic shift right now, with foundational changes coming faster in this sector than any other in the country.

The biggest change, as we’ve discussed before is size: patients are done with dealing with huge, sprawling medical complexes and prefer the convenience of smaller outlets that are easier and more convenient to access. This has particularly been seen in the area of outpatient medical office buildings (MOBs), which have sprouted up all over the country as people seek out smaller, more affordable health care options. In fact, in recent years, MOBs have experienced growth at DOUBLE the rate of total office inventory in the US (40 percent versus 20 percent growth in inventory in the 54 largest markets in the US.)

Within the medical industry, the rates of growth are even more stark. According to R.J. Sommerdyke of Meridian up to 70% of new construction for medical facilities has been for these off-campus MOBs versus traditional medical facilities.

This is a change driven both by consumer choice and circumstance, with many health care consumers moving to plans with high deductibles or HSA’s and, in turn, seeking out more affordable options for their medical care. This is a trend that likely won’t reverse itself anytime soon, so the smart medical practitioner or investor in 2020 should have an eye on branching out or moving entirely to a smaller, more efficient space that better serves their patients.

 While they’re moving to that smaller, more convenient location, the smart medical provider should also be looking for ways to more efficiently use that space. This is a huge advantage of an MOB over a larger hospital facility, as they offer more freedom of use and less need for support space. This becomes important when looking at Medicare and Medicaid reimbursements:

So if 60% of the facility is dedicated to patient care and 30% is dedicated to secondary patient support space, such as storage areas, the provider will be reimbursed at different rates for the different uses. Areas like parking garages, which are necessary but not related to patient care, are not reimbursed at all

A smaller office building, or shared office space outside of a huge medical facility, offers a great opportunity to reduce this support space and allow practitioners to maximize their reimbursements by utilizing more space per square inch for patient care. This can be maximized even further with the use of cloud storage services to limit the amount of physical space needed for extensive filing and archiving.

As we embark on a new year and a new decade it’s best to keep this in mind: the winners in medical real estate in 2020 and beyond are going to be those who are adaptive, those who are nimble and ready to go where the patients are while making a smaller footprint. If you need help navigating this new terrain, don’t worry – we’re here to help.