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Healthcare Real Estate In 'Once-In-A-Lifetime Metamorphosis'

Perhaps more than ever, healthcare is an industry in constant flux. An industry still adjusting to the Affordable Care Act is bracing for its possible replacement, patients are acting — and being treated — more like consumers, but perhaps the most persistent change agent is technology.

Array Advisors principal Fady Barmada and Penn Medicine Executive Vice President and Chief Administrative Officer Kevin Mahoney

For other real estate sectors, technology is an amenity; smarter apartment buildings, offices or retail locations that appeal to certain demographics. But keeping up with technological advancements is a requirement in healthcare, so its real estate needs to both incorporate the latest tech and make room for its obsolescence.

“In every new project, we’re looking at what’s off the shelf right now, and of course IT is such a huge portion of the capital budgets of hospitals,” Anchor Health Properties Vice President of Development Katie Jacoby said.

Every prevailing wind today demands that healthcare become more adaptable. While changing consumer habits and political realities have sparked the well-covered trends of consolidation between providers and smaller, nimbler outpatient and urgent care facilities, hospitals are still a requirement — and a much longer-term investment, making adaptability a tougher question.

Speaking of the need to “future-proof” inpatient facilities, Penn Medicine Executive Vice President and Chief Administrative Officer Kevin Mahoney stressed the importance of “creating the built environment first, rather than last.” That means not just building with high ceilings to make room for new machinery and lining floors with enough wiring for future connectivity, but also preparing for a hospital to be used before all the construction money has been spent.

Penn has a program where it builds a sample hospital floor off-site, complete with mock patients, and lets doctors and nurses work and test its layout. The professionals comment on what they do and do not like about the design, and architects use the information to build a better hospital without wasting money on redoing what was already constructed.

Not every system can afford to do such a thing, and even Penn is looking for ways to make such a valuable tool more efficient, such as virtual reality. It is a cheaper way to simulate an environment, and it allows for adjustment and retesting without rebuilding the sample floor.

Penn Medicine Executive Vice President and Chief Administrative Officer Kevin Mahoney and Thomas Jefferson University President and CEO Stephen Klasko

“Because of the delivery time frame of hospitals, no matter how much you simulate at the beginning, the dynamics of the system change prior to delivery,” Array Advisors principal Fady Barmada said, stressing the importance of continual testing throughout development. “Once it’s finished and once it’s built, everyone’s on the same page and there’s really no ramp-up.”

Adjusting how healthcare real estate responds to technology also requires examining how healthcare uses real estate in the first place. The transition from inpatient to outpatient care is part of a larger drive to prevent patients from spending too much time or money on health, and the emergence of telehealth is removing a chunk of doctor’s visits from the equation altogether.

“We’ve made a major investment in telehealth. Twenty years ago, 95% of banking was done in banks and 5% at home, and now that’s reversed,” Thomas Jefferson University President and CEO Stephen Klasko said. “The same thing is going to happen with healthcare.”

Getting diagnosed with a phone call is viewed with suspicion by patients across generations, but the improvement of video chat programs allows for better remote interactions — a patient and a nurse can convene with a doctor who is not in the hospital at the time, or a family member can call in to a hospital so they can hear what a doctor says without coming to visit.

“We could have done this three years ago with Facetime or five years ago with Skype, and we didn’t,” Klasko said. “And the change is coming from patient demands, to which we need to respond.”

Responding to patient — and as they are increasingly being viewed, consumer — demands is both a result and cause of technological advancement. Online search tools and review apps like ZocDoc allow people to find what hospital is cheapest, cleanest and most reliable, and as a result, providers have a stronger sense of competition.

“I believe we’re in a once-in-a-lifetime metamorphosis from hospital systems to consumer health providers,” Klasko said.

Anchor Health Properties Vice President of Development Katie Jacoby and Virtua Health Real Estate Director Julie Herb

Retail has been competing for consumers since its inception, so it is no surprise that providers are increasingly taking cues from the sector, not to mention its real estate. Retailers must predict the needs of their customers, and they have done that with increasingly detailed data collection and analysis.

Barmada envisions a future where, much like data collection on social media, the healthcare industry has a window into nearly every moment of a person’s life, thanks to biometric data collection programs found in Fitbits and Apple Watches and the constant improvement of artificial intelligence in interpreting data.

“Once you start allowing AI to integrate into systems like biometric data collection, [you could have a] future where you’ve got a Siri that actively accesses data given by your biometric scanner, coordinates with your holistic health plan, and changes your schedule to help you make better health and lifestyle decisions,” Barmada said.

To some, that may seem like a chilling overreach of technology into our lives, but Klasko is secure in his belief that the increasing use of tech will improve doctors, rather than rendering the system impersonal.

“We admit doctors based on how they can be a better robot, when there is technology far better at memorizing things,” Klasko said. “We need to admit doctors based on how they can be better humans.”