JLL
Healthcare Capital Markets Perspective
June 2019
Technology, payers and convenience increase outpatient visits 25% in the last 10 years (Source: American Hospital Association Annual Survey Data, Trend Watch 2018)
Key points:
Trends in the acceleration of outpatient care support the thesis for investment in medical office and outpatient buildings as featured in JLL’s recently released 2019 Healthcare Real Estate Outlook.
Click on this link to download a copy of the 2019 Healthcare Real Estate Outlook
- Advances in medical technology are enabling the migration of healthcare services to the outpatient setting. Many surgeries and medical and diagnostic procedures that once required an inpatient stay can now be performed safely in an outpatient setting, thanks to improvements including minimally invasive surgical procedures – such as laparoscopy and robotic surgery – and new anesthesia techniques that reduce complications and allow patients to return home sooner.
- Payers (Medicare and private insurance) are fostering the transformation by designation of a shrinking list of inpatient-only procedures. The Centers for Medicare and Medicaid Services (CMS), for example, has been removing procedures from its approximately 1,700 inpatient list and adding procedures that may be performed on either an inpatient or outpatient basis, such as knee replacements and gastric-restrictive procedures. Notably, most major health systems now report outpatient revenues greater than inpatient revenues, a dramatic transformation from the past. The migration from inpatient to outpatient care has contributed to a decrease in national utilization rates for hospitals from 77 percent to 61 percent since 1980.
- Convenient care is driven by consumer preferences to seek medical services close to home or places of work. In the battle for patient acquisition and loyalty, hospitals have moved from their historical roots operating at a single campus location – first to a hub and spoke network tethered to the hospital, and now to a decentralized constellation of community-based services, designed to promote wellness and avoid hospital admissions. Healthcare consumers increasingly expect great availability and a better experience when seeking care. Outpatient centers with primary care, specialists, diagnostics and ancillaries under one roof offer convenience in a low cost system. Retail locations for urgent care, primary care visits, wellness and therapeutic treatments offer greater community access. Convenience, efficiency and value are better aligned in these new modes of outpatient care.
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