Photo by National Cancer Institute on Unsplash
ExecutiveChronicles | The Role of Pharmacy Real Estate in the Business of Healthcare | The coronavirus pandemic is responsible for several changes in the healthcare industry. It had a significant impact on the delivery of services that continues to be felt today. One positive outcome is the shift from the traditional, large hospital campus concept to a smaller, more convenient service model.
The pandemic, combined with new technology, opened doors to innovation in reaching patients who need healthcare services the most. This shift to a more value-based population health model has brought healthcare services into neighborhoods where they did not previously exist.
The Shift from Hospital Care to Outpatient Clinic Care
Why did the delivery of healthcare services shift away from hospitals to smaller clinics? The simple answer is that during the pandemic, many patients did not feel comfortable visiting large, urban hospitals filled with people. The potential for COVID-19 exposure made many people seek other options. One alternative was to visit outpatient clinics in ambulatory care settings. These smaller, suburban clinics provided the same care but were located closer to patients’ homes, provided easy access, and were much more convenient.
How Outpatient Clinic Care Will Impact Healthcare Real Estate
The demand for outpatient medical office buildings and ambulatory care facilities will increase as patients continue to seek healthcare close to home. Building these types of facilities to meet this demand by erecting new construction may move slowly. However, there is an alternative. Investors can turn to the affordable option of repurposing existing vacant structures, such as office buildings, warehouses, and big-box retail outlets. This concept makes investing in healthcare real estate a viable option and a wise decision.
Why This Is a Good Time to Invest in Healthcare Real Estate
With America’s aging population combined with rising life expectancies, not only will people need more medical care, but they will need it for a longer period of time. As reported by Pharma Property Group, the ongoing need for medical care continues to create opportunities for investors seeking to expand their portfolios to include medical office buildings and other pharmacy real estate properties. This potential growth in the healthcare industry makes it an attractive investment.
How the Aging Population Will Influence Healthcare Needs
Population trends indicate that approximately 10 thousand Americans turn 65 years old each day. With the number of Baby Boomers in their 60s and 70s, the need for healthcare increases along with the demand for facilities to house healthcare services. In recent years, there has been a focus on encouraging seniors to age at home, taking a certain pressure off of the need for long-term care facilities. However, for seniors with limited mobility, housing designed to meet this need will be an affordable alternative. This, too, increases the need for healthcare services.
The Future According to the Numbers
The healthcare economy is growing. The healthcare industry employed 14 percent of the US workforce in 2023, making it the largest employer in the country. Healthcare real estate continues to grow in value, topping $1.2 trillion. By 2017, healthcare spending had jumped to nearly $3.5 trillion per year. With an estimated annual growth rate of 5.5 percent, healthcare spending will continue to surge to $5.7 trillion by the year 2060.
How Technology Is Pushing Healthcare Away from Hospitals
Innovative technology has been a key component in shifting healthcare delivery from traditional hospital campuses to outpatient facilities. With this shift, patients now expect more availability and better outcomes when seeking healthcare. Technology has made it easier for patients to communicate with healthcare professionals. Equally, it allows for easier collection of data related to health conditions, creating opportunities to better diagnose medical issues. Wearable tech can also be used at home, reducing the need for hospital stays.
Expect Medical Office Buildings (MOBs) to Shape the Future
Over the past decade, outpatient visitation has increased by 25 percent, and there is no sign that it will soon be slowing down. This has contributed to the increase in investment in healthcare-related real estate. Medical office buildings are becoming the most popular of the choices within this niche. It makes sense when you consider that MOBs and pharmacy real estate properties are cycle-resistant compared to other types of commercial property, as they offer stability to an investor.
Telemedicine Impacts on Medical Office Buildings (MOBs)
Telemedicine was new in early 2020, with less than 1 percent of all medical visits being conducted online. However, within six weeks of the onset of the coronavirus, the number of virtual healthcare visits escalated to 15 percent. Concurrently, telemedicine was seen as a safe alternative to risking exposure to COVID-19. Telehealth continues to be used, mainly to supplement traditional inpatient visits. For this reason, telemedicine is not viewed as a potential threat to the need for more medical office buildings and pharmacy real estate in the future.
Final Thoughts
Pharmacy real estate has a strong future in today’s healthcare industry. The pandemic is partly responsible for this, as the delivery of healthcare services changed dramatically during its peak. Patients opted for alternatives to traveling miles and risking exposure to the coronavirus when seeking medical care in large, urban hospitals. The shift to outpatient centers located closer to home has become a more attractive option for a large number of people in need of medical attention. This means that pharmacy real estate has value and will continue to grow in order to meet the demands of an aging population that is living longer. The long-term benefits of adding medical real estate to investment portfolios are apparent, as there is more stability and future growth with this type of investment over other types of commercial properties.
Photo by National Cancer Institute on Unsplash
