Attaining Triple Aim: How healthcare can leverage real estate

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triple aim

In today’s capital-constrained environment with shrinking reimbursements from insurance companies, health systems are rethinking their business models by rethinking their real estate footprint.

“Bold, sweeping changes are a mandate for today’s health systems,” said JLL Senior Managing Director Greg Gerber. “Especially in competitive markets with numerous high quality systems vying for market share and operating at a high complexity level.”

Created by the Institute for Healthcare Improvement in 2008 as a roadmap toward value-based care, the “Triple Aim” has three mandates: improving patient experience, improving health of populations and reducing per capita cost of care. We explored the challenges, opportunities and surprising role real estate plays in each area with our Healthcare Practice Group.

Improving patient experience

In an outcomes-driven, performance-based reimbursement model, patient experience is critical and convenience is key. Locating facilities “closer to home” for patients is a surefire way hospitals can expand patient access and optimize their real estate footprint, reinvesting the savings in their core services.

“On the hospital campus, you’re talking about high-cost acute care. By taking healthcare into the community, you are reducing costs and making it easier for patients to stay proactive and healthy,” said Senior Vice President Sarah Cogswell.

Making sure patients are healthier means providing the right kind of care for each community and health systems are taking a nod from industry best practices in banking, retail and other multi-location corporations. This places a greater emphasis on where, how and what kind of real estate deals are structured, as some locations may call for developing primary care physician offices and others for outpatient surgery centers.

Improving health of populations

The landscape of health systems has to be set up to evolve over time. A system accountable for a specific population may provide one service to the community now, but what is outpatient today may need to be something entirely different tomorrow—physically, organizationally and in terms of lease structure.

“Hospitals are starting to diagnose their own operations,” said Senior Vice President Sylvia van Loveren. “They have troves of data at their disposal and they are beginning to leverage healthcare analytics to forecast community needs and plan accordingly across service lines.”

Hospitals can merge traditional population demographic data with very specific healthcare-related data including care mix and differences by asset class to come up with a strategic plan for their facilities that maximizes results. Systems are also using this data-driven approach internally to improve processes, and in taking on increased risk for the outcome of populations’ health they continue to seek increased reimbursement from insurance companies.

Reducing per capita cost of care

There is a staggering amount of complexity in a health system’s physical assets and the amount of stakeholders involved.

“From systems to subsystems to individual physician groups, each facility is operationally challenging and requires its own specialized facilities management,” said Vice President Scott Merz. “In addition to medical assets, you’re also factoring in administration, data centers and distribution centers as a part of a system’s regional footprint.”

It’s a double-edged challenge to build new, health-driven facilities while reducing cost of care, but there are efficiencies to be found. The flurry of healthy system and physician group mergers and acquisitions nationally marks a battle for economies of scale, and systems continue to aggregate and integrates processes from procurement to facilities management in an effort to reduce headcount and unlock savings.

As C-suite shakeups continue and new, business-focused leadership styles are introduced to the healthcare industry, health systems will continue to rightsize their primary assets and rethink the development of new facilities with a focus on streamlining operations.

With decades of experience partnering with academic medical groups and expertise in corporate, banking and retail real estate, JLL’s Healthcare Practice Group can be the bridge between health systems’ facilities and the C-suite. Tell us about your triple aim and where you are in your trajectory to becoming an Accountable Care Organization, and we will craft and execute a real estate strategy that helps your footprint evolve to complement your value-based care model.

For more information on our healthcare services, contact:
Greg Gerber
Sarah Cogswell
Sylvia van Loveren
Scott Merz