CREJ

January 2017 — Health Care Properties Quarterly —

Page 13

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he collision of three health care

trends – the growing popula-

tion of age 65 and older, the

influence of the government

and emerging opportunities in

new technology – are transforming the

health care real estate market.These

trends demand innovative strategies

to meet the increased need for a con-

tinuum of health care services.

The synergies between medical real

estate and senior housing sectors

will present a growing and innovative

approach. In the past, they have been

entirely separate markets; however,

investors realize the opportunity to

take advantage of this continuum of

care. Health care real estate investment

trusts like Griffin-American,Ventas

andWelltower all invest in both asset

classes.

• Growing population of age 65 and

older.

By 2030, one in five Americans

will be 65 or older, according to a U.S.

Census Bureau report.The aging popu-

lation will drive increase demand for

health care therefore increasing the

interest in investing in health care

assets. Brookdale, a senior living pro-

vider, reports that health care utiliza-

tion for seniors over age 65 include:

• 26 percent of all physician office

visits;

• 35 percent of all hospital stays;

• 34 percent of all prescriptions;

• 38 percent of all emergency medical

responses; and

• 90 percent of all nursing home use.

Longer lifespans present investors

with opportunities to enter at multiple

stages. A good example is the city of

Thornton Health Care District develop-

ment that was approved by the City

Council in December.The Opus Group

will be developing a health and living

campus near North

Suburban Hospital.

The project will

contain senior living

with retail and medi-

cal office.The project

will leverage the

presence and sup-

port of the executive

leaders at North Sub-

urban Hospital.

• The influence of

the government.

The

three most popular

means by which the

government funds

health care are Patient Protection and

Affordable Care Act, Medicare and Med-

icaid.When DonaldTrump takes office

there could potentially be an immedi-

ate influence as he vowed to repeal the

PPACA. Many experts are saying there

will not be a sudden impact on real

estate, nonetheless, with uncertainty,

we may see decisions put on hold until

there is a better understanding of the

government’s role.

Medical real estate includes acute

care hospitals, medical office and retail

health clinics. Most of the services the

providers offer in medical real estate

are reimbursed by private insurance

or government funded plans, such as

PPACA, Medicare and Medicaid.

Senior housing has two primary

methods of reimbursement; private

pay and government funding. Pri-

vate pay includes independent living,

assisted living and memory care while

skilled-nursing facilities and long-term

rehabilitation typically are government

compensated.

• Emerging opportunities in new tech-

nology.

Digital innovations will continue

to make an impact on the way care is

delivered. Accord-

ing to an Accenture

report,TeleDoc

and AmericanWell

are in the top 10

for on-demand

apps. Health care

technology is trans-

forming the way

we think about

health care.

Telemedicine is

one example of

how technology

is linking patients

with doctors.

According to the

AmericanTelemed-

icine Association,

15 million Ameri-

cans received some

kind of medical

care remotely last

year.Typically, these

are for nonemergency issues such as

colds, flu, earaches and skin rashes, but

critics worry that such services may be

sacrificing quality for convenience.

In aWall Street Journal article from

June 26, 2016, Melinda Beck noted the

Cleveland Clinic is working to create

a “Cleveland Clinic in the Cloud” that

would allow patients across the coun-

try to access its physicians without

going to Ohio. Medical office floor plans

and space did not decrease in 2016,

however, if technology continues to

improve then the need for larger offices

will shrink.

Long-Term Living Magazine esti-

mates that around 25 percent of annu-

al hospital admissions for senior living

residents can be prevented through

telemedicine technology.Telemedicine

removes the walls between the health

care provider and the patient, allowing

care to be available anywhere at any

time. Senior communities who provide

telemedicine technologies ensure that

their residents have access to health

care, no matter their condition.

Based on the trends presented in this

article, the real estate community and

developers can harness the massive

potential in the continuum of care for

health care services.When Medicare

started in the mid-1960s, life expec-

tancy was 74, today it is 86.The larger

senior population is being aided by

advances in medicine that are helping

extend the average life expectancy we

are seeing today. Invariably, the three

convergent trends will meet and this

increasing number of seniors who, by

choice or by need, will undoubtedly

require some form of housing as well

as medical care.

Trends

The synergy of medical RE and senior housing

Cheryle Powell

Health care

services, Colliers

International,

Denver