Evans: Health care real estate is evolving

May 19, 2010

If Clarian Health CEO Dan Evans were investing in health care real estate, he’d make bets in three new things: smaller, denser clinics with lots of computer equipment to do telemedicine; medical office buildings populated by physician assistants; and nursing homes with a strong relationship with a hospital.

“If I were an actuary from Mars, and I had $1 million to spend, where would I invest?” Evans mused before a roomful of health care professionals last week at an event titled, “The future of health care real estate.” Hosted by the Urban Land Institute, the event took place in the former L.S. Ayres store on South Meridian Street.

Evans said the biggest change from the new health care reform law will be the 32 million additional people who have health insurance to help pay their medical bills. Add to that the 70 million aging baby boomers, who are already frequent consumers of health care services.

“Demand won’t be a problem,” Evans said. But having the facilities to serve those new patients in light of declining reimbursement rates from public health plans will be a challenge.

Technology will have to be part of the solution, but health care providers will need buildings specifically designed to accommodate current technology and anticipate  innovations.

“What other industry relies on an unreliable IT backbone to do their business?” Evans said, noting that health care providers make patients repeatedly fill out basic information on forms because they don’t trust the information already put in their medical record systems.

One answer would be medical clinics and hospitals set up so receptionists don’t have to turn their backs on patients to enter their information. That’s when mistakes occur, Evans said.

Also, technology for video consultations between doctors and patients will be a key way to cut down on costs and make medical professionals able to see more patients.

As part of that trend, Evans foresees physician assistants getting more autonomy, leading them to set up their own offices apart from physicians so they can handle the influx of new patients.

But whereas local developers of medical offices like to finance and manage those buildings by signing up physicians as investors, that won’t be an option when the tenants are physician assistants.

“They don’t make enough money to invest in office buildings,” Evans said. Even primary-care physicians make an average of about $170,000 in Indiana. Physician assistants, on the other hand, make an average of $77,000.

Lastly, because of the aging population—as well as the health reform law’s creation of a new federally administered long-term-care insurance program—Evans would bet on nursing homes. But the ones that prosper most will have a close relationship with a hospital or group of physicians to help coordinate care of their patients.

“I would not want to do business with someone trying to replicate what we were doing five years ago,” Evans said.


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