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Convenient access to quality, affordable health care has never been more vital, nor has it been more viable in terms of available real estate. As retailers continue to shutter stores, many retail landlords are looking for fresh tenants to fill excess space—creating fresh opportunity for health care providers to reach more patients closer to where they live.

In the ongoing movement to expand patient accessibility and value, health care organizations have already been locating primary care, dental, vision, pharmacy, specialty care, diagnostics and urgent care offerings in retail settings—growing their presence from 19% in 2013 to 24% in 2019, according to a recent ICSC study. What’s more, in the 12 months just prior to COVID-19, 69% of adults surveyed had received care in a shopping center. New research from JLL bolsters this point, finding that 83% of consumers prefer to be close to their medical care, over other factors, with 72% reporting that they had driven 20 minutes or less to a recent care appointment.

Despite health care’s increasing interest and occupancy in retail locations, there has continued to be a bias against healthcare in many retail settings. Health care uses of retail property have long been limited by property owner concerns on impact to investment value and by provisions common to retail leases that prohibit and restrict health care uses seen as potentially off-putting to shoppers and diners. A silver lining to COVID-19 appears to be that retail property owners and tenants have been so devastated by the pandemic that they are rethinking their biases and exploring opportunities to lease, sublease and sell to medical care providers.

Health care leaders can now explore a wider selection of off-campus settings that may be more convenient for patients to access than the anchoring hospital—driving patient convenience not only with sheer proximity to patient communities, but also with quality-of-life perks like ample parking or the ability to combine grocery shopping and/or a haircut in the same trip as a doctor’s appointment.

With the right mix of retail locations, health care providers can improve patient experiences and outcomes, while saving critical costs across their facilities portfolios. But having more retail location options to choose from doesn’t answer the question of which locations are most appropriate for health care. To unlock that full potential, health care providers must borrow from the same techniques that retailers employ, including advanced analytics of detailed data on consumer behavior and competition.

Robust data and other key considerations in health care retailization

Forget relying solely on simple population, age and income demographics data. From consumer psychographics to insurance claims to cellphone tracking, a rich combination of disparate datasets and predictive analytics is key to the prudent expansion of ambulatory care into retail settings.

With a variety of relevant health care data points, health care organizations can pinpoint optimal retail locations based on everything from consumer travel and spending habits to the types and locations of physician affiliates and competitors to physician referral patterns and more. They can explore expansions into new markets and of new service lines in existing areas, leveraging predictive analytics to identify market opportunities, estimate the likelihood of success of each option, and speed decision making.

The key (and the challenge) is to first obtain the many kinds of data required and then apply the time and tools necessary to assemble into an analyzable structure to support the practical act of making decisions. In the past, the process would have begun with a notion about a new location followed by an examination of potential real estate options and costs—putting the cart before the horse. A data-driven approach starts with assembling the various data needed and then using the combined data to develop an understanding of the healthcare market and to inform formulation of the healthcare organization’s strategy. Clearly understanding the basic population in the target service area and the healthcare organization’s existing care-delivery network (including the real estate portfolio) are two of the initial steps.

But it goes further.

An effective data-driven real estate strategy can help organizations gauge the probable success of any given location, for any particular service. Do underserved patient communities live or work nearby? What are their health spending habits? What are the local insurance trends? How would a particular retail location fit in with the existing real estate outpatient network?

Coming from sources as disparate as commercial insurance companies and mobile phone monitoring systems, these data points can be difficult to uncover and track—but are invaluable as part of a comprehensive analytics program for enabling the health care organization’s strategy.

Approach health care portfolio decisions like a retailer

While the retail industry faces unprecedented pressure, its historic knowledge of location strategy can be a source of new inspiration for health care real estate leaders.

As health systems increasingly move away from the hospital-centric model of yesteryear, and toward the patient-friendlier, decentralized model of the future, they can take cues from retail real estate portfolio strategy. When looking at expanding to several hundred medium-to-large locations across a metro area, for example, it’s important to consider factors like how each location could perform on its own—and as part of a vast, connected care-delivery network.

What are the real-world implications of lease versus own in a given location? What will be the micro- and macro-impacts of establishing any new outlet where services meet location, from primary, specialty, or urgent care to imaging centers? And once the numbers are crunched and the optimal spot has revealed itself, what lease or sales terms may be reasonably negotiated?

It takes diligence, deep market insight, and shared commitment to create a more efficient, optimized health care portfolio. By leveraging data-driven real estate strategy, however, health care leaders can tap into the information and insights it takes to rally diverse stakeholders around a worthy path forward: smarter locations that bring good care closer to patients—enhancing patient value and experience, one location at a time.


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