Thought Leaders: Cushman & Wakefield Report Suggests New Rules and Significant Changes for Healthcare Real Estate

WASHINGTON, D.C. – March. 6, 2014 – The healthcare industry will see significant changes in 2014 in how consumers seek health services, according to a white paper by Cushman & Wakefield’s Healthcare Practice Group. Recently enacted reforms, including health exchanges and a more at-risk consumer, are causing many changes in the industry, including where healthcare groups will offer services in the future.

“Healthcare has traditionally been about where people live and work,” said Scott Mason, leader of C&W’s Healthcare Practice Group. “What you’re going to see (in the industry) is healthcare groups placing ambulatory services in larger facilities that are branded and distributed throughout the market not only where people live and work, but also where they shop. And that’s new.

“In the recent past, much of what was the healthcare industry centered on hospitals. Hospitals will remain important, but ambulatory facilities that offer lower cost services are developing quickly as access points for convenient care. This is part of the new normal in healthcare real estate.”

As the rules for the healthcare industry change, the model for this reform will be retail. The white paper reinforces the need for better focus on the total healthcare experience that includes not only efficiency but also convenience and one-stop care. Significant changes within the industry will include the following:

· Campus-based systems will grow into more of a distributed model
· Data sharing and the need for clinical handoffs will lead individual practice sites to evolve into group practice sites
· Leasing motivated by opportunity will now ensure a proper mix of medical services
· Fragmented distribution of services will unite for one-stop care
· Requests will shift from small multi-tenant to larger, single tenant space for “team” coverage

“The status quo is going to change,” Mason said. “We think there are some clear solutions to preparing for a future where services are delivered very differently than they have been in the past and people think differently about where and how to access health services.”

Evolution of traditional medical space, as the white paper examines, to more of a full service ambulatory care model will cause hospitals to distribute resources differently and re-examine their traditional capital expenditure priorities. There will be a new set of rules that apply to this “new normal” in healthcare real estate. Some of these new rules reflect disruptive innovations that are occurring in the healthcare industry.

“You’re not going to have just a personal physician anymore,” Mason said. “You’re going to have a whole healthcare team, and that team will take responsibility (possibly even accountability) for overall health — not just illness — with a focus on chronic care management and other specialties that can influence a more healthy lifestyle (e.g. nutrition). It is less about office visits and more about active interventions and changing poor health habits.”

These changes will offer healthcare systems an opportunity to not only look to the future but to evolve to a more strategic way of handling their space and services. This will mean adapting to how the retail industry does it.

“It’s important for our healthcare clients and our health facility owners to get their arms around the new normal,” Mason said. “The shift is toward a different experience that will take place in well located and designed buildings that are welcoming and healing. This is what is being demanded by a more sophisticated, mobile consumer in a fast-paced world in which healthcare must change if it expects to be selected by future patients who will be spending more of their out of pocket money and have choices.”

* * *

About Cushman & Wakefield

Cushman & Wakefield is the world’s largest privately‐held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world’s major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and nearly 16,000 employees. It offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $3.7 billion in assets under management globally. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at

The full content of this article is only available to paid subscribers. If you are an active subscriber, please log in. To subscribe, please click here: SUBSCRIBE

Existing Users Log In

Comments are closed, but trackbacks and pingbacks are open.