Posts Tagged ‘patient centered medical home’

D-Day For Obamacare Means Big Changes For Healthcare

Tuesday, May 27th, 2014

MOBs are getting ready to take center stage as healthcare moves into more of a localized, outpatient setting.

By John Driscoll, President, Alter+Care

The first of this year was to be Obamacare’s D-Day. Though some changes kicked in earlier — the right to keep kids on your health plan until they turn 26, for example — the big provisions like the individual mandate became law this year. The ramifications from a medical and economic standpoint have been written about amply. In regards to the healthcare real estate industry, there are two very large trends: the consolidation of providers and the move to outpatient as the new center of healthcare delivery.

THE CONSOLIDATION WAVE
Part of the Obamacare plan to improve outcomes is the concept of the Accountable Care Organization. ACOs are essentially consortiums promoted as bigger, better models that manage health at the population level across a broader swathe of the healthcare specialties.  An ACO might include a hospital, various specialty groups, a  surgery center, imaging, emergency department and even nursing homes, with all payments made to the head of the ACO – usually the hospital – and then distributed to the rest of the group.

It’s now all about the team. As a result, the ACO has caused the biggest wave of consolidation I’ve ever seen in the sector. Consider that a quarter of specialty physicians and 40 percent of primary care physicians are already employed by hospitals. This number is up from 5 percent and 20 percent, respectively, in 2000. Some larger specialty practices are combatting this trend by merging with other practices to avoid being purchased by healthcare systems or hospitals.

Some independent practices are moving out of condominium office buildings and joining together to acquire office buildings. The costs of maintaining small independent space can become burdensome, especially as the technological pressures on integration and connectivity are imposed. Chances are, information technology financing will become an ever-increasing part of medical office loan commitments. Some IT expenditures are in the $30,000 to $50,000 range, while multi-specialty groups have larger expenditures to fund.

THE NEW CENTER OF HEALTHCARE
In order to lower costs and operate more efficiently, hospitals have migrated services from expensive acute-care environments to technologically enabled outpatient facilities. The hospital-centric model of the past has already given way to a hub-and-spoke network in most markets, where outpatient centers provide convenient and accessible care to patients and refer volumes to affiliated inpatient facilities. So what’s next? As it develops, hub and spoke will become a distributed model of care. It will result in providers who are physically dispersed, yet highly integrated through technology. Electronic medical records and advances in medical information technology will allow discrete providers to operate as a team. Primary care doctors will act as gatekeepers, coordinating and overseeing care regimens across this broad network.

The presence of this “patient-centered medical home” model means large MOBs (rather than hospitals) will become the hubs, while smaller specialty sites have become the spokes.  Think of the last time you visited a hospital for a procedure as opposed to a medical office building located in your community. Some systems are even leasing space in retail malls. As a result, the MOB is the definitive center not only of care, but also of healthcare real estate.

Last year was a banner year for outpatient services, and the investment community jockeyed to scoop up prized MOBs. There was a total of $4.98 billion-worth of MOB sales through the third quarter of 2013. This is compared to MOB sales of $5.21 billion for all of 2012. This has resulted in an average sales price of $231 per square foot, which is very strong with cap rates in the 6 percent range. If you extend the numbers out to sales of all buildings leased by healthcare providers, including doctors’ offices, urgent care clinics, diagnostic labs, imaging centers, the total reached $6.67 billion last year.  This was the second-highest number we’ve experienced in 13 years with a sales price of $270 per square foot. When you consider that 90 percent of the $1 trillion of healthcare property overall is still owned by hospitals, it is certain we are only at the beginning of this shift toward third-party real estate ownership.

To meet the challenges of distributed care and cost reduction, developers and operators of healthcare assets will need to think about the particular mix of services and programming in every building. This will result in the consolidation of redundant and inefficient facilities, while in other cases it will mean extending into preventive health and wellness to achieve population health management goals.

This article first appeared in Western Real Estate Business.

Marcus Welby, M.D., May Be Healthcare Reform Solution

Tuesday, July 7th, 2009

Marcus Welby may be making a comeback – not to your television screen – but to your doctor’s office.  Partisans on both sides of the healthcare reform issue in Congress agree that general practitioners should play a starring role in unifying America’s disorganized delivery system.1

“Patient-centered medical home” – meaning a primary-care physician’s office that people visit for most of their medical needs – is the name being give to this vision.  This GP would monitor everything from flu shots to chronic disease management to weight loss and organize care with other practitioners.  According to a 2004 study, if every patient had a healthcare home, the resulting efficiencies could cut costs by 5.6 percent, or $67 billion per year.

This surprisingly simple solution streamlines a wasteful system that consumes 18 percent of the American GDP and a responsibility that falls primarily on private industry, which covers 60 percent of people with healthcare insurance.  IBM, which last year spent $1.3 billion on its employees’ healthcare – the equivalent of one month of the company’s income – has already bought into the concept.

Critics caution that the medical home is overly reminiscent of the “gatekeeper” model of 1990s managed care programs.  Supporters counter that this concept is intended to benefit patients versus insurers.  It’s more akin to practicing medicine 1950s-style, but with digital technology such as electronic medical records to assure a 21st century twist.