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Doctors' Embrace Of Telemedicine Could Shape The Future Of Medical Offices

For more than a year, public and private health insurance providers have been reimbursing doctors for telemedicine visits, a pandemic-fueled tectonic shift in the U.S. healthcare system that has doctors reimagining how they will practice medicine in the future.

If those reimbursement policies — brought on by the federal national emergency, which President Joe Biden extended indefinitely last month — are extended or adopted long-term, they could drastically reduce doctors’ need for a physical office and have significant ramifications for the owners of medical office properties.


“Reimbursement has been a huge issue [for telemedicine], and that got resolved because of Covid,” said Dr. Payel Gupta, a New York City allergist who founded the telemedicine company Cleared. “That's going to be what's making the biggest difference and what is allowing for change.”

Gupta launched her new digital health platform in November, and as it grows it has led her to evaluate how much time she will spend in her Manhattan office going forward if the reimbursement trends brought on by the coronavirus pandemic remain beyond the health crisis.

On March 6, 2020, the U.S. Department of Health and Human Services issued a declaration that Medicare and Medicaid will cover televisits amid the health emergency to allow Americans to visit their doctors without leaving their homes. The measure, which has set a precedent for many private insurers as well, has opened the floodgates for a technological revolution in the healthcare field as virtual care caught on en masse.

For New York City, this means that many of the 33,910 doctors licensed throughout the five boroughs have begun to care for their patients, at least in part, virtually.

“From a societal standpoint, the new, updated billing they’ve incorporated for video and telephone visits has really helped drive the adoption,” said Dr. Shanna Levine, a primary care doctor in Manhattan. 

In-person doctor's visits have dropped dramatically — the country’s largest healthcare provider, the Mayo Clinic, saw a decline of 78% in the first month of the pandemic, Science Magazine reported in November. Meanwhile, telemedicine visits increased 154% year-over-year during the final week of March 2020, according to a report from the Centers for Disease Control and Prevention.

Telemedicine insurance claims went through the roof — increasing 2,980% between September 2019 and September 2020, according to the American Journal of Managed Care. By the end of the year, 46% of the population had a virtual appointment, compared to 11% before the pandemic hit. 

“Telemedicine has proven to be significantly helpful to assist doctors and patients communicate and helped a lot of medical practices continue to survive when people didn’t want to go anywhere,” Paul Wexler, head of Wexler Healthcare Properties and one of the top healthcare real estate brokers in New York, told Bisnow. “The insurance reimbursement seems to be improving significantly.” 

The trend is not likely to go away unless restrictions are put back into place, and some lawmakers are pushing to make the changes permanent. In Congress, a bill that will permanently ensure telemedicine visits are covered under Medicare is picking up traction in the House of Representatives while in Albany, Gov. Andrew Cuomo proposed a bill that would require coverage of telemedicine throughout the state.

Wexler said he has not yet seen telemedicine take a bite out of medical office demand, which is recovering, though not yet on pace with its pre-pandemic rates, he said. He doesn't expect it to in the future either, with the exception of psychiatry offices. 

But investors and brokerage firms are considering the implications that a permanent reimbursement policy and the continued prevalence of telemedicine will have on real estate. 


“We anticipate that medical office space needs could lessen as facilities such as waiting areas are reduced due to a lower volume of patients visiting a physical location,” Colliers Healthcare Services said in a report last fall

Colliers researchers predicted that healthcare providers would downsize administrative space and consultation space in their offices as more staff members work from home and more appointments happen virtually.

“Providers who are new to telehealth will need to designate and fit-out spaces for telehealth services. This should go together with investment in technology and 5G connectivity,” the report states. “We expect developers to respond to these needs by providing telehealth-compatible space that meets these changing space and usage patterns.” 

The specialties most likely to dump space, based on telemedicine adoption data, would be behavioral health, rheumatology and endocrinology, according to a Nuveen Real Estate report predicting the impact of telemedicine.

Rheumatology and endocrinology used telemedicine around 15% of the time over the past year, according to New York-based health nonprofit Commonwealth Fund, compared with more hands-on specialties — such as surgery, ophthalmology, dermatology and orthopedics — which used telemedicine around 5% or less of the time. Behavioral health used telemedicine for 40% of all visits, according to the Commonwealth Fund. 

While certain specialties are more likely to use telemedicine, the amount of space a doctor takes up varies from doctor to doctor, medical experts say.

Levine said she probably won’t take up any less office space in the future. This year, she was able to diagnose a patient with an inflammatory heart condition called pericarditis, but only because she caught it when she was able to see the patient face-to-face and notice the physical symptoms her patient was having, she said.

“These things will, in theory, never go away,” she said. “I myself find, despite being able to, I don’t prefer taking care of patients virtually."

No matter how many types of technology get adopted, there will always be a need for testing — such as a cervical cancer screening — that requires the patient to come into the office, Levine added. 

"I don’t foresee [telehealth] decreasing my need for office space," she said.


But some doctors will prefer a hybrid model. Gupta, who uses a waiting room and one exam room in a large space that she shares with a pediatrician, is considering two half days in the office with the rest of her time spent treating her patients virtually, she said.

Jersey City-based telehealth company HealCo., which started in January 2019, allows doctors to market their space when they are not using it to share it with others. 

Since its inception, the company has grown the real estate it lists in the New York-New Jersey-Philadelphia area to 300K SF, CEO and founder Kirat Kharode told Bisnow. Including HealCo.'s other markets in eastern Texas, Southern California and South Florida, it markets 1M SF, he said. 

Kharode, who worked as a hospital systems executive for 20 years before founding the company, said that there is often unused space in medical buildings. He believes the future of healthcare space will rely heavily on space sharing, especially in the age of telemedicine, as doctors look to monetize excess space and cut costs where possible. 

As with many professions that utilize office space, the rise in technological adoption in healthcare amid a global health pandemic has propelled a conversation around the future of space that will likely linger beyond the pandemic itself. 

“It's not that easy to make complete change within an industry, and medicine is just so ingrained in practices that we have a hard time getting away from,” Gupta said. “Covid allowed people to dip their toe into something new … something that has been around but that doctors have been resistant to for a number of reasons.”