- Finance

How does changing reimbursement models impact healthcare real estate?

The healthcare industry is undergoing massive changes, from new technologies to shifts in care delivery models. The major change that is impacting healthcare real estate is the move towards value-based reimbursement models that focus on patient outcomes rather than fee-for-service. This fundamental shift is forcing healthcare systems to rethink their real estate strategies to better align with new incentives and care models. According to Greg Appelt, a healthcare real estate development company, “We are seeing a major shift in how healthcare systems approach their real estate as reimbursement models change. There is now more emphasis on outpatient facilities, care coordination, and patient convenience and experience.”

Shift toward outpatient care settings

In the past, reimbursement models favored expensive inpatient hospital stays and procedures. Hospitals focused on building large inpatient towers and sought real estate in prominent downtown locations. As payers implement new payment models like bundled payments or accountable care models, the incentives are shifting toward lower-cost outpatient settings. According to greg appelt , healthcare systems are now developing smaller outpatient facilities that can treat patients on a walk-in basis, including surgical centers, urgent care clinics, and medical office buildings in retail settings and neighborhoods, closer to people’s homes. This aligns with preventing unnecessary hospitalizations and providing care in the most cost-effective setting.

Repurposing and right-sizing inpatient facilities

Many hospital systems invested heavily in large inpatient facilities and teaching hospitals. As utilization shifts to outpatient settings, Appelt notes, We are seeing hospitals repurposing and right-sizing inpatient facilities and converting unused floors into needed outpatient service lines. For example, hospital operator Tenet Healthcare made the strategic decision to divest eight of its 65 hospitals to streamline its portfolio and focus more on outpatient facilities. It allows them to redirect capital into more profitable ambulatory facilities.

Investing in care coordination infrastructure

New reimbursement models reward providers for successfully managing patient health rather than the volume of services. This requires investing in care coordination programs, multidisciplinary teams, health IT platforms, and the physical facilities to bring these together. Healthcare organizations need real estate and facilities that foster collaboration and communication across different providers, Appelt explains. We are seeing projects reconfiguring spaces to accommodate team huddles, provider collaboration, and virtual care technologies.

Focus on accessibility and patient experience

Healthcare continues to shift towards a more consumer-oriented approach. Under value-based models, patient satisfaction metrics and convenience help determine reimbursement levels. Healthcare real estate is also adjusting. As Appelt advises, Organizations need facilities designed around the patient experience, not clinical departments. It means easy access to parking, welcoming lobbies, clear wayfinding, retail amenities, and entrance/exit separation from ambulances.

The healthcare industry continues to see new market entrants from retail pharmacies, urgent care clinics, on-demand virtual providers, and health systems partnering with payers. Each competes for their share of patients as care delivery fragments across settings. By fully understanding reimbursement incentives, healthcare systems develop agile real estate strategies that align rather than conflict with the overarching transition to value-based care. Those making the right moves now will have a competitive advantage as the healthcare landscape continues evolving.

About Ralph Price

Read All Posts By Ralph Price