Perusing the Wall Street Journal this weekend, I came across an interesting article: ‘Ok Boomer, Who’s Going to Buy Your 21 Million Homes‘. The article talked about the staggering number of houses across the country that will be up for sale over the next 20 years due to baby boomers moving (to assisted living or in with a family member) or passing way. Some areas that are more dense with older population, like the one mentioned in the article (Sun City, AZ), could have a significant number of homes come on the market at the same time. This could make them difficult to sell and could affect all sorts of businesses in a local area, not the least of which being medical groups and providers. It got me to thinking. So much of the conversation in the industry right now is about placing medical services out into the community to be more convenient and cost effective for patients. But what is that community going to look like in 10 years? 20 years? Flexibility becomes the name of the game.
Our sector is known for being somewhat insulated from major overall market shifts. Part of that is the fact that doctor groups tend to stay in the same location long term and aren’t as likely to turn over the way that tenants would in a regular office building. But what if a large portion of your patient demographic is gone or now on the other side of town? This isn’t only the baby boomers. Any area can be vulnerable to demographic shifts and some aren’t as easy to see coming around the bend. What if a large employer moves? What if the new generation wants to live downtown? in the suburbs?….somewhere else? As we continue to migrate away from the main hospital, these are factors more at play than they have been in the past. This doesn’t mean we should put the breaks on community expansion, not at all. This speaks to careful placement of your community healthcare location and the importance of flexibility. Health systems still need ways to build and maintain market share and being convenient and visible is a major part of that.
Taking a look at the Revista data, you can see it’s not just anecdotal – we are indeed building more medical offices further away from the hospital. Roughly 17% of stock built between 2000 and now is more than 3 miles away from a hospital, up from around 10% in the 60’s and 70’s. That’s a 60% increase. However, it’s still the minority when compared to the other ~83% being built within 3 miles or on campus. Being close to a healthy hospital or medical district reduces the risk of being affected by demographic shifts since it is a destination for healthcare, and most of the building still falls into this category.
Are you looking at exploring community based locations? Check out how Revista can help you get a lay of land!