Healthy Real Estate Choices: How smart strategy is reshaping healthcare portfolios

By Jonathan Marks, Clinical: Medical Real Estate Solutions

Years of steady growth in the healthcare sector have had a profound effect on real estate nationwide. Because the sector is consumer based and reflects a diverse range of services and specialties, there has been a proliferation of different types of assets accommodating inpatient hospital facilities, outpatient physician offices, urgent care, surgical centers, imaging and beyond. Whether the real estate comprises de novo development or adaptive reuse for larger portfolios or simply leasing existing MOB space, i.e., medical outpatient buildings for physician practices, careful planning is crucial.

As a medical real estate advisor for well over a decade, I have watched the healthcare space become increasingly sophisticated. Today’s process goes far beyond s/f and convenient parking. Rather, most practices require strategies that address both operations and real estate for better alignment to enhance patient throughput and speak to the needs of physicians, medical groups, PPM / MSO organizations, and investors.

Case in point, Rothman Orthopeadics, one of the country’s largest orthopedic practices, and particularly well known for its work with professional athletes, was interested in pivoting into a new and more efficient business model. The objective was to streamline the overall portfolio, reduce costs, and mitigate risks in its 45-plus locations. A plan was developed that could accomplish this goal over a few years through expanding its core market and disposing of non-core businesses. Most recently, a group of medical real estate associates, comprising myself, along with Cresa’s Michael Doetsch in New York and Dennis Gralla in New Jersey, negotiated six dispositions totaling 97,224 s/f. Due to our specialization, knowledge of the market and relationships within the physician practices and hospital systems we were able to quickly negotiate deals with Valley Health, Hackensack Meridian Health and NYU Langone to reduce real estate obligations by approximately $50,000,000, while producing successful expansion strategies in other states.

For Regional Cancer Care Associates (RCCA), the goal was to expand its Sparta practice, which was constrained by limited space opportunities at the hospital and in the market. We were able to help the practice more than double its space by relocating them with a built-to-suit that increased their clinical capacity and Infusion operation while enhancing patient satisfaction. Over the years, our team has worked on many new locations, renewals and Chapter 800 upgrades at RCCA’s clinics across the Northeast.

The combination of innovative healthcare data and medical market expertise are the special sauce that can help identify opportunities to enhance clients’ real estate portfolios, while contributing to their operational efficiency. But the key to success for any growth strategy is a process that addresses the various types of challenges impacting long-term and ambulatory care practices.

At our newly launched firm, the overriding objective is to simplify the process by providing important insights that can enhance performance metrics, as well as manage implementation from start to finish. The assignments we are working on encompass portfolio optimization, strategic site selection, competition analysis, clinical space programming, medical office leasing, acquisitions, dispositions, build-to-suits, and medical buildouts.

To effectively navigate the complexities of the current healthcare industry, most practices require the expertise of advisors who collectively understand healthcare, market opportunities by specialty, and throughput drivers that affect decision making. Other aspects of clinical space that should also be addressed include licensure, accreditation, code and compliance, market providers, and other viable space options suitable for long-term success.

It is an exciting time to be working with such a broad range of medical service practices whose overriding goal, ostensibly, is to improve lives and make people healthier.

Jonathan Marks is founder & CEO of Clinical: Medical Real Estate Solutions.