Healthcare Systems Must Shift Real Estate Portfolios to Realize Value

Four trajectories define how systems can move ahead; each has ramifications for patients and capital projects, say DPR Healthcare leaders

REDWOOD CITY, Calif., April 17, 2024 /PRNewswire/ -- Healthcare systems investing in and operating their real estate portfolios as they did just five years ago are unlikely to realize their expected returns and must shift their approach to align with their patient care and financial goals, according to the latest Healthcare Insights report from DPR Construction.

"Cascading changes in the healthcare industry, ranging from lower reimbursement rates to the costs of staffing and low margins are forcing healthcare leaders to rethink their real estate strategies," said Supina Mapon, a DPR healthcare strategist. "The need to both manage cash and keep pace with evolving patient preferences calls for disruptions to traditional facility management. Those who embrace these challenges and look to rebalance risk and return when it comes to capital assets will position themselves for better financial success."

Mapon sees four emerging healthcare real estate trajectories for systems to consider, varying in appeal based on system size, community needs and competitor sets in given markets. Leaders should evaluate which best aligns with their approaches to patient care and work with their capital project partners to plan for the future.

• The Rationalized Portfolio, where existing real estate assets become highly streamlined, right-sized to changing strategic and operational objectives of the health system, and continuously monitored for their performance and returns to the system.
• The Redistributed Portfolio, where systems begin to source partners and incorporate community nodes of care into their real estate portfolios, potentially moving to models of care hosted in environments that may be managed by others, such as retailers, workplaces, schools and more.
• The Re-envisioned Portfolio, where providers may supplement a multi-channel technology platform that guides patients toward wellness and resources with an extensive physical network of community care nodes.
• The Refocused Portfolio, which would shift the paradigm of the hospital from the anchor of the health system to the final and highest-acuity specialty center. In this case, hospitals operate as specialist hubs, portfolios evolve to include an ecosystem of digital and community nodes, a reduced number of ambulatory centers, and access to a number of post-acute sites.

"Not taking action risks having underutilized spaces that are a drag on the bottom line and will have ramifications for patient care, clinician and staff morale and more," Mapon said. "Given that each approach will have significant effects for patients and their communities, providers should carefully consider what makes long-term sense for the portfolios and capital projects. Including construction and design partners in discussions will help ensure a sustainable path forward."

DPR's Healthcare Insights series covers how emerging trends affect capital projects and planning and how contracting partners can help healthcare systems make sense of the rapidly evolving market.

About DPR Construction
DPR Construction is a forward-thinking, self-performing general contractor and construction manager specializing in technically complex and sustainable projects for the advanced technology, life sciences, healthcare, higher education and commercial markets. DPR's portfolio of work ranges from large-scale new construction to small tenant improvements and special projects. Founded in 1990, DPR is a great story of entrepreneurial success as a private, employee-owned company that has grown to a multi-billion-dollar organization with offices around the world. Strategically focused on delivering more predictable outcomes through applications of virtual design & construction, prefabrication, its team of self-perform craft, and leveraging data to learn and improve from DPR consistently ranks among the top building contractors and employs approximately 11,000 professionals across its family of companies. For more information, visit http://www.dpr.com.

For more information, please contact:

Jay Weisberger
DPR Construction
Tel: 206-550-8883
Email: [email protected]

SOURCE DPR Construction