Asset Consolidation and Optimization Will Surge

Healthcare Real Estate 2018 Outlook, Part 3

The Dynamic Competitive Landscape Will Force Providers to Think Differently About How to Manage Their Asset Portfolios 

The business of healthcare has been disrupted by the confluence of decreased demand resulting from payer transformation from fee to value, emphasis on wellness and prevention, higher out-of-pocket obligations, reduced collections, and the increasing sophistication and demands of the consumer. Concierge medicine, virtual care, and retail health are now common terms within the industry’s lexicon. 

Providers are responding to disruption by consolidating, restructuring, and optimizing their asset portfolios. For 2018, we see the following market dynamics continuing:

  • Acquisition of physician practices will continue despite the “losses per employed physician” that have resulted thus far for some providers who have made this type of acquisition.
  • The unfortunate and unintended consequences of healthcare systemwide M&A activity already experienced by some providers, will continue:
    • Excessive and/or unfavorable strategic commitments due to lack of appropriate upfront due diligence
    • Negative effects on balance sheet/cash flow from capital commitments made during the initial transaction
    • Excess capacity due to overlapping service offerings and lower demand
    • Service gaps, omissions, or redundancies
    • Lack of brand integration and services coordination across sites, leading to patient dissatisfaction and provider loyalty
    • Lack of standardized and efficient property management, thus increasing costs
  • Consumer demand for greater convenience and faster, better services, coupled with a great experience, will continue its upward trajectory, placing increased importance on ambulatory networks that deliver the right programs, sizing, and distribution of facilities.
Download our Full Viewpoint

Patients, payers, physicians’ preferences for outpatient care, and increasing competition will require providers to think differently about where, what, how, and with whom they locate their physical assets.

Fred Campobasso
Managing Director, Healthcare Real Estate Group

What Providers Need to Do:

Have a question for Fred or Mike?

About the Experts

Back to top