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Healthcare Reform Drives New Building Model

Hammes Company's "Buildings for Life" Model Supports Access to Care, Collaboration, Cross-Functional Resource Sharing

By Chris Kay ACHE, IAIA

Executive Summary
Uncertainty abounds about the new political regime. Anticipated new reforms to the current healthcare system will keep the U.S. healthcare real estate markets in flux through 2017. While the impact of the Trump administration changes remains widely speculative, it is almost certain that significant tax reform is coming for the real estate industry, and the Republican administration continues to look at options to repeal or replace the Affordable Care Act.

Healthcare systems and physician practices are preparing to adapt their real-estate investment strategies in response to the new administration’s expected tax and healthcare reforms. Add to this the Federal Reserve's recent interest rate hike, with rates expected to continue creeping higher, and you have a dynamic, fast-changing real estate environment that will require new investment strategies and different models to support an evolving industry.

The Changing Legislative Landscape
Healthcare is a business and, in the United States, it is a multi-trillion dollar economy. While the Republican’s initial attempt to repeal and replace the Affordable Care Act was unsuccessful, there continues to be a great deal of uncertainty about which aspects of the ACA will remain in place and what is likely to change. For example, Republican legislators are considering repealing sections of the ACA that prevented new physician-owned hospitals from receiving Medicare payments and limited construction and expansion on physician-owned hospitals currently participating in Medicare. Healthcare providers must continue to treat patients now and prepare for upcoming changes in the marketplace, no matter how uncertain the future. We likely will see significant change, including an increase in both the demand for healthcare-related space and services as consumer choice preferences for medical coverage evolves. The need to accommodate any changes to the ACA will undoubtedly affect existing healthcare real estate requirements and force healthcare systems to reassess their strategic capital plans. In addition to any changes to the ACA, many other factors that will continue to play a role in the evolution of healthcare facilities and their future development. Planning, design and construction, tax reform, technology, advances in clinical research, an aging population, and the economy as a whole all keep the healthcare real estate industry guessing about what’s next.

Disruptive Technologies
Technology, coupled with advances in science and engineering, affect every single aspect of modern society. Technology innovations affect every industry, and healthcare is no exception. Each day, technological breakthroughs revolutionize healthcare delivery models. The digital revolution, combined with nanotechnology, robotics, advances in genome research, and other life science research megatrends are fueling the industry’s performance, driving its growth, and forcing a continuously changing landscape. Healthcare organizations around the globe are constantly reevaluating their capital facilities needs based on technology innovations.

Demographics are another factor driving significant change within the healthcare industry that directly affect real estate. The aging population in the U.S. have greater medical needs and an increasing demand for services. The U.S. Census Survey predicts there will be 86.7 million people 65 and older by 2050,--that’s more than one fifth of the country’s population.5 Added to this are the millions of previously uninsured and those who have aged out of their parents’ coverage who have signed up for coverage under Obamacare. Their coverage under the ACA likely will change again as the law changes based on future attempts to repeal and replace the law.  

 Other Trends:
- The global healthcare market continues to grow and is on track to exceed $4.2 trillion in 2025.

- Investment in sectors such as health information technologies (HIT), telehealth (virtual healthcare delivery), bio pharmaceuticals, and biosciences will drive market expansion.

- Consumers will continue to demand better access and more transparency. They will use their increased purchasing power and access to health information to drive their healthcare experiences and decisions.

The Result
All of these forces are changing models of market access to healthcare. Ultimately, these changing models will result in a revised integrated delivery systems and facilities that address collaboration and more efficient cross-functional resource sharing between the education, technology, research and healthcare sectors, creating wellness networks supported by more collaborative and efficient – an experience-based "Buildings for Life".™

Collaboration: Buildings for Life create an environment where different disciplines such as physicians, researchers, business partners and patients can collaborate. For example, Hammes is working with a client in the southeast United States to build a center where academic medicine, research and patient care will come together to collaborate on research, education, and patient care. The new building will support clinical and translational research opportunities to advance public health, and will streamline patient treatment. As care continues to shift from inpatient settings to outpatient settings, the need for combined patient care and research facilities like this is increasing.

Flexibility: Buildings for Life accommodate current services and have the built-in flexibility to adapt as needs change in the future.  Our client’s building will be a contemporary medical environment that meets today's standards and can rapidly adapt to changing medical best practices, research standards, and technological requirements. The new, cutting-edge building is expected to attract high-quality researchers and physicians and bring more biotechnology, biomedical and pharmaceutical firms to the region.

Experience: Buildings for Life are centered around user needs and wants in a retail-oriented environment. For example, our client’s building is a key anchor in an amenity-rich, highly accessible and pedestrian-friendly district. It also is close to an academic medical center and a short walking distance from one of the world’s most advanced research centers.

About the Author:
Chris Kay is president and chief operating officer of Hammes Company, the nation’s leading healthcare facilities real-estate developer, (according to Modern Healthcare Magazine’s 2017 survey). Chris has over 30 years of healthcare, real estate industry experience in the U.S and abroad.  Chris speaks regularly at various healthcare industry events and serves on the boards of several non-profit organizations.

"Buildings for Life" is a Hammes Company standard for the design of new collaborative healthcare research and education facility developments designed to meet the changing needs of the healthcare industry.