The Transition to Outpatient Care

The healthcare sector has changed dramatically, with an increased emphasis on outpatient care. Outpatient facilities offer a variety of medical treatments, such as diagnostic procedures, consultations, and minor surgeries, allowing patients to get care without needing to visit large hospitals. The transition to outpatient care has transformed the commercial real estate industry, further emphasizing the need for accessible medical office space nationwide.

Understanding Outpatient Care

According to Definitive Healthcare, regular checkups with a primary care doctor used to be the main type of outpatient care; however, the scope of outpatient services has expanded to include:

• Diagnostic procedures such as X-rays and MRIs
• Blood and urine tests
• Physical therapy
• Colonoscopies
• Mammograms
• Chemotherapy and radiation treatments

These services are available in various outpatient settings, such as primary care clinics, community health centers, urgent care clinics, ambulatory surgery centers, and even select pharmacies.

The Rise of Outpatient Care

Several reasons have contributed to the rise of outpatient care. First, advances in medical technology and techniques have enabled a wide range of therapies to be performed in an outpatient setting. Many treatments that used to need hospitalization can now be performed safely and quickly as outpatient procedures, thanks to minimally invasive techniques and improved anesthetic methods.

Furthermore, there is a rising emphasis on prevention and early intervention, which is consistent with the goals of outpatient services. Outpatient care is critical in managing chronic diseases, preventing complications, and increasing general well-being since it is timely and accessible.

The majority of hospitals and health systems anticipate a rise in outpatient volumes for the remainder of 2023, with the largest budget increases allocated to digital care services.

Benefits of Outpatient Care Facilities

• Primary Care Services: Through primary care, individuals can establish a trusted relationship with a primary care doctor who can deliver comprehensive healthcare and annual physical examinations.
• After-Hours Care: Outpatient care centers also offer the benefit of after-hours care, ensuring that individuals can receive medical attention even when their primary care physician is unavailable.
• Convenience & Accessibility: Outpatient centers are strategically positioned in regions that are handy for patients and physicians. This convenience factor is particularly important for individuals with mobility limitations, those seeking routine checkups or minor treatments.
• Cost Savings: The elimination of overnight stays cuts the overall cost of care dramatically. Outpatient care facilities are also built to enhance efficiency, allowing healthcare personnel to see more patients in less time. These variables help to reduce healthcare costs for both patients and insurance providers.

Outpatient Care and the Impact on CRE

GlobeSt. reported that there is a national shortage of available space to meet the increasing demand in the healthcare real estate industry. The rate at which healthcare facilities are being occupied is surpassing the rate at which new properties are being constructed and delivered. This has resulted in occupancy rates skyrocketing to a historic high. Industry experts have recommended that these investors direct their attention toward outpatient services as their primary focus.

According to ConnectCRE, the increasing elderly population, longer life expectancies, and improved healthcare services contribute to the rising demand for outpatient healthcare services and facilities. This trend further solidifies medical office spaces as one of the most reliable and stable asset classes.

Furthermore, as stated in the Kaufman Hall National Hospital Flash Report, outpatient revenue experienced an increase of 8.0% in 2022, whereas inpatient revenue remained unchanged when compared to 2021. According to the report by GlobeSt., a significant portion of hospital revenue, estimated to be as much as one-third, is transitioning towards ambulatory surgery centers, office-based labs, and other ambulatory sites.

As stated by the Centers for Medicare and Medicaid Services, healthcare represented 19.7% of the U.S. GDP in 2020. It is anticipated that healthcare and healthcare expenditures will contribute to 30% of the GDP by 2030. Furthermore, there is a projected growth of 16.9% in the demand for outpatient services among individuals aged 55 and above by 2025. This growth rate is 4.3% higher than that of the general population.

Rich Steimel, the senior vice president and principal in charge of healthcare at Lendlease in New York, stated that there is a notable trend in the industry where an increasing number of medical procedures are being conducted outside of the main clinical facilities. This shift is attributed to the ongoing expansion of outpatient services in metropolitan areas and suburban regions. Steimel also highlighted that this transition provides hospital campuses with greater expansion opportunities and enables them to connect with a growing patient population. These patients require critical care but prefer the convenience of accessing healthcare services at off-campus facilities.

Takeaways

The growing impact of outpatient care in commercial real estate is transforming the healthcare industry and creating new opportunities for investors, developers, and healthcare providers. As the demand for outpatient services grows, capitalizing on this trend represents a promising route for growth and innovation in CRE.