Written by: Gordon Soderlund
Since Flagship last examined telehealth’s potential impact on the medical office building (MOB) in 2021, much has transpired. The pandemic has become endemic and we’re learning to live, work and play with another virus in our midst. Patients and physicians have grown comfortable communicating via phones, iPads, text messaging and patient portals. Healthcare providers have fully embraced the use of communicative technology to supplement their care delivery strategies.
So, how did telehealth impact MOBs and the care delivered within them?
First, some perspective. According to the Chartis Consulting Group, telehealth use peaked in 2020 at the height of the COVID-19 pandemic in which over 60% of patient visits happened virtually. Those of us in the healthcare real estate industry were uncertain of telehealth’s impact on our properties. Would physicians require less space? Might we experience higher vacancies as patient encounters shifted to the virtual realm? Would our tenants default under their leases as they experienced dramatic reductions in patient volumes?
We quickly learned that telehealth, rather than a disruptor, became an additional gateway through which care could be delivered. Rather than supplanting medical office space, it has supplemented the environment in which physicians deliver care. Property owners and tenants adapted to the needs of an effective telehealth strategy. Waiting rooms and MOB lobbies were reconfigured to accommodate spacing. Telehealth pods have been designed to accommodate virtual visits in compliance with HIPAA requirements. For example, virtual visits require privacy, so acoustics were a critical design component. Enhanced network infrastructure and redundant power supplies ensured uninterrupted connections and communications and provided consistent access to the cloud.
And through all that? Occupancies remained robust, rent delinquencies were minor and temporary, and tenants’ financial performance has recovered, though inflation, high interest rates and a looming recession present new threats.
The Advisory Board canvassed its healthcare provider clients and confirmed that, even with more virtual visits, providers overall still used all available exam room space, but patient wait times to schedule an appointment were conveniently reduced. While some were concerned about a reduction in net occupancy, spaces used for higher intensity uses, i.e. outpatient surgery or imaging, saw a smaller decrease than those buildings primarily offering physician offices. Overall, given the continuing and consistent shift of care to outpatient facilities, additional in-person volumes outpaced any decreases in space needs due to virtual visits.
What is the future for telehealth? From that 60%+ peak in 2020, roughly 10% of care was virtual by mid-2022.
However, a panel of experts sponsored by the American Medical Association suggested that telehealth will continue to evolve, improving its usability between patients and physicians on a regular basis. Wearable technology and sensors, chat boxes and symptom management tools will be developed to improve chronic disease management. Provider reimbursements are expected to improve, but additional regulatory requirements and licensing will ensue as patients are treated across state lines. Capital investment will be attracted to innovations in virtual care and digital health solutions.
As technology continues to permeate the physician-patient dynamic, one foundational aspect of care is certain: One-on-one, personal interaction between the physician and patient remains the primary interface of quality care. Primary care physicians work with the same patients year after year, forming long term bonds and a deeper understanding of each patient’s needs. Specialists, particularly when required to communicate unnerving complex and life-altering diagnoses, prefer face-to-face communications.
Outpatient healthcare real estate remains on firm ground. As the shift of procedures, surgeries, exams and consultations continues away from the inpatient environment, where care for the most critically ill will be preserved, to outpatient settings. Medical office buildings, ambulatory surgery centers, digital imaging facilities, specialty medical clinics and other ambulatory care facilities will stand ready to deliver the convenience, efficiency, effectiveness and successful outcomes that providers and patients demand and expect.
- A Better Answer to the Ventilator Shortage as the Pandemic Rages On, World Economic Forum; April 3, 2020; link here
- COVID’s Impact on Hospital Operations: Physician Perspective, Government Technology, December 14, 2020; link here
- Real-Estate Investors Bet on Patients’ Return to the Doctor’s Office, Wall Street Journal, April 13, 2021; link here
- Telehealth is Transforming Healthcare Real Estate, According to OrbVest CEO, Tech Times, April 21, 2021; link here
- How Covid-19 is Helping to Change the Doctor’s Waiting Room, Wall Street Journal, May 23, 2021; link here
- Is it Time to Permanently Incorporate Telehealth into our Health Care Delivery System?, JD Supra, May 26, 2021; link here
- Chicago’s Northwestern plans $39M medical office building, Modern Healthcare, May 26, 2021; link here
- Earnings releases for Healthpeak, Welltower and HTA