Healthcare Real Estate: The “Retailization” Of Healthcare

Abercrombie & Fitch, 5th Avenue

One of the clearest trends in the future delivery of healthcare — and therefore in the utilization and requirements for healthcare properties — is the drive toward outpatient care.  Technological advances and ever-greater specialization in healthcare services means that patients will be spending more health care time in facilities geared toward outpatient services and less time in overnight-stay facilities.

The trend takes care from its traditional delivery center – the hospital – and distributes it to localities.  Patient trips are shorter and integrated into other day jaunts, property signage opportunities are highly valued, and local traffic patterns speak volumes about the success or failure of the modern outpatient  healthcare facility.

If any of these factors and trends sound familiar, it’s because they resemble the retail property value proposition.

At the Real Estate Journal Healthcare Real Estate April conference in Chicago, the blue-ribbon panel discussing Strategies In Medical Office Space acknowledged the retailization of the medical care delivery model  in a variety of ways.  It was agreed that efficiency and competition — as odd as it may be to hear about these time-honored determiners of commerce in the context of healthcare —  would shape the delivery of health services going forward.

Co-Branding: A Routine And An Extreme Case

Much about the outpatient-facility trend makes intuitive sense. 30 million new insured are coming to the market, a wave of consolidations will leave the country with possibly fewer than 100 healthcare networks, and the aging of the population will create radically different balances in property requirements.  Part of that rebalancing will include co-branding and shared space opportunities never before seen on a national scale.

One question from the audience asked about co-brandin trends in the midwest.  Reference was made to a plan in Menominee Falls, WI where a healthcare facility development project was said to be co-branding an as of yet unnamed health club.  I found coverage of this development in Milwaukee media coverage.  A synergy between a healthcare facility and a health club, while not common at all, makes a great degree of sense on its face; health is a concept shared deeply by the two.

But not all property co-branding in medical care has been so intuitive.  Perhaps giving a glimpse into a brave and odd new world in co-branding, was panelist Michael Noto, SVP Management Services group for Healthcare REIT:

“Urgent care operators co-branding with health systems will continue…one [co-branding] that is really kind of crazy is [clothier] Abercrombie & Fitch co-branding with Columbus, OH Nationwide Children’s Hospital. There will continue to be a trend toward co-branding, going back to providing greater visibility, getting whatever leg up ad hospital can get on its competition.  If it means they can pull in a clothing company to do that, they will.”

I wasn’t sure if I heard Mr. Noto clearly — but incredibly, I had.  After checking up, I found a New York Times piece confirming the hospital had renamed its emergency and trauma center after the vendor of preppy duds in 2008 in exchange for a $10M donation.

Long story short: get ready for more bewildering combinations as the inevitable and oh-so-American mixing of health care and commerce proceeds apace.

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