Shaping consumer experiences in healthcare

The upending of many real estate fundamentals and shifting demographics during the COVID-19 pandemic pushed even more attention toward the growing healthcare real estate market. But valid questions are being asked about the short- and long-term outlooks on the industry as a recession looms and the industry struggles with financial performance given significant increases in labor, supply chain and capital expenditures. Despite those concerns, investors and strategists are right to prioritize healthcare assets as industry shifts continue to push decentralized consumption of in-person medical services. Today we begin a series that examines these industry shifts, starting with a deep dive on consumerism.

Consumer comforts: still waiting

While technology improvements have allowed for greater individual conveniences in almost every part of our lives, we have not yet witnessed sweeping improvements in both the access to and delivery of healthcare. According to AMN/Merritt Hawkins’ 2022 Physician Wait Time Survey, wait times to see a Family Practice physician in America have dropped 30% from 29.3 days in 2017 to 20.6 days. However, this improvement is really a return to where wait times were 10 years prior, and this improvement is not seen in specialty areas. The same AMN/Merritt Hawkins’ survey found that Cardiology (+26%), Dermatology (+7%), and Orthopedic Surgery (+48%) wait times have increased in the same 5-year period. Crucially, these specialties do not have the same level of omnichannel competition (urgent care, retail care, virtual care) as primary care and in many cases still require a referral before being seen.

Zooming in on telehealth

One of the offerings considered by many to be a “solution” to longer wait times – Telehealth – took off during the COVID-19 pandemic, leading many to believe it would be a significant disrupter within the industry. Telepsychiatry has continued to be an overwhelming success story, helping to spread what is known industry-wide to be one of the scarcest resources: providers able to treat mental health challenges. In fact, Mental & Behavioral Health services account for nearly 60% of telehealth usage according to FAIR Health’s Monthly Telehealth Tracker. The success of telepsychiatry aside, overall telehealth usage has stabilized to represent about 5% of all U.S. healthcare claims. Telehealth will continue to be an important offering for large providers to better engage, manage and direct their patients to the more profitable services – almost always in-person – within their networks, which also means the disruption from telehealth we thought we were seeing early in the pandemic will not be realized until there are much more significant technology developments for at-home diagnostics and at-home therapeutics.

A more personal approach to diagnosis

Despite modest improvements in the speed of delivery, technological innovations have spurred significant advances in other areas of healthcare, namely in precision health. Sometimes referred to as personalized health, precision health is defined by the CDC as the unique disease risks and treatments for individuals including approaches that occur outside the setting of a doctor’s office or hospital, such as disease prevention and health promotion activities. Genetic testing and counseling, mobile health applications and wearable medical trackers, biomarker testing and pharmacogenomics are all examples of precision health. These methods of diagnosing and treating individuals have great promise and will no doubt grow dramatically, and in the long-term they should be highly effective ways of helping people avoid the highest acuity and most emergent medical situations. But until the at-home therapeutics market has developed dramatically, the treatments that will be required for diagnoses from precision health sources will need to be delivered in person, and most likely in ambulatory settings.

Real estate at the center of experiences

The clear desire from patients for more convenient and more accessible care, slower adoption of virtual-first care and tempered technology advancement to allow for at-home self-treatment will continue to boost the need for more ambulatory medical space – physician offices, urgent care centers, surgery centers, and more. As a result of increased decentralization, providers have a greater need for the right type of data inform their location and portfolio management strategies. Healthcare real estate strategies require strong, data-driven analysis in order to succeed. Luckily, there are readily accessible tools that leverage demand and competition while simultaneously tracking and optimizing footprints for stronger, more transparent decision-making.