How Technological Advancements May Affect the Future of Healthcare Institutions

Given an increasing population and greater demand for enhanced healthcare services, technological development is anticipated to contribute to efficiency of both patient and healthcare processes. Considering the spread of telehealth, there have been an increasing prevalence of micro-hospitals tailoring medical services to specific needs of their communities. Healthcare facilities will continue to be developed at lower-cost sites focusing on outpatient services, urgent care and telemedicine.

According to experts, “technology-enabled care will change how we design spaces of care.” As technology contributes to healthcare efficiency, the need for large hospitals will decline as smaller institutions become better equipped, leveraging smarter software, and improving patient outcomes. Surgical procedures are being completed faster and more efficiently, often shifting to an outpatient setting, reducing the need for overnight stays, and thus the need for larger facilities. Where does this leave traditional general acute care hospitals?

With the rise of outpatient centers, micro-hospitals, and other community tending medical office buildings, traditional hospitals face challenges that will erode the value of a core asset: their real estate. Should health systems consider selling and leasing back their facilities in the near future?

With the economy at the top of an economic cycle and healthcare institutions facing headwinds, timing for real estate monetization is opportune. By selling their healthcare facility at today’s premium values, health systems and hospitals can create significant liquidity, allowing them to focus financial and management resources on core, acute care business, while still maintaining control of their facility.

Given the need for healthcare organizations to stay competitive in their respective markets, liquidity can be vital for embracing operational efficiencies and technological changes, which will only increase in importance as patients demand more specialized services and amenities. Monetization allows healthcare institutions to cash out at a peak in the market, while keeping occupancy costs stable.

As healthcare headwinds continue to rise due to industry change, many health systems and hospitals recognize the need to improve liquidity.  A sale and leaseback transaction could be the solution to ensuring a sustainable and credible practice into the future.