Page 34 - SFHN0319finalJG.qxp_Page layout

HEALTHCARE REAL ESTATE, CONSTRUCTION, DESIGN & FACILITY PLANNING

Cover Story: Baby Boomers Fuel Need for More Medical Facilities in South Florida

that one-third of existing medical build- Consider this:
ings are or soon will be functionally • The S&P municipal hospital bond
obsolete. The reasons include location, index shows hospitals are paying
size, age, layout, or construction quality. investors 4.09% to use their money.
• According to Revista, medical real
Should Healthcare Systems estate investors are receiving a return of
Own or Lease? 6.5% for the average medical facility and
There is no one answer to the ques- are willing to accept a return as low as
tion; should healthcare systems own or 5.5% for top tier properties.
lease outpatient care facilities? • Fitch Ratings reports the 2017 medi-
Sometimes the right space is only avail- an EBITDA margin (earnings before
able for lease, other times ownership is interest, taxes, depreciation, and amorti-
By 2045, South Florida’s healthcare • Changing payment patterns by pri- the best choice. zation) for nonprofit hospitals was
providers will be straining to handle 9.8 vate payers, more people covered by When a healthcare system has a 10.3%. For hospitals rated AA, AA-, and
million additional patient visits a year. Medicare and Medicaid, and advances in choice, Sister Irene Kraus had a good A+ it’s over 12%.\
Moving patients through a medical facility medical technologies are driving services metric: “No margin, no mission.” Sister Baby Boomers are driving the demand
quickly and efficiently is a major issue fac- out of hospitals to lower cost off-campus Irene, founding chief executive of for more outpatient care facilities, non-
ing medical and architectural profession- facilities closer to the population served. Daughters of Charity National Health profit hospitals need to maximize mar-
als. Based on metrics for patient visits a While less costly to build than a hospital, System and the only woman to chair the gins to fulfill their mission, and investors
day and space needs, South Florida they represent a significant capital out- American Hospital Association, felt have a strong desire to own medical facil-
needs to build at least 2 million square lay. strong fiscal management, not just char- ities.
feet of outpatient facilities between now • Convenience is a deciding reason for ity is what nonprofits hospitals must do
and 2045 – a financial commitment in where many people get their healthcare. to fulfill their mission. Alan Whitson is President of Corporate
the billions. For healthcare providers proximity to Historically, nonprofit hospitals enjoy Realty, Design & Management Institute and
the right patient mix translates to better a low-cost of borrowing. The decision director of a regional series of healthcare
Demographics Isn’t the margins. In the contest for larger market now facing trustees is where to invest to educational summits conducted throughout
Only Driver share among healthcare providers, out- maximize margins so they can fulfill major metropolitan areas of U.S. (posted at
Reasons other than demographics are patient care facilities are now a competi- their mission. Are people, systems, and www.squarefootage.net). He can be reached
driving the demand for outpatient care tive necessity. technology or bricks and mortar the bet- at (971) 219-0561 or
facilities in South Florida. • While often ignored, it’s estimated ter way to improve hospital margins? awhitson@squarefootage.net.

34 March 2019 southfloridahospitalnews.com South Florida Hospital News