By Jeff Wardon, Jr., Assistant Editor

Shrinking margins, shifting reimbursement models and policy uncertainty are forcing health systems to take a harder look at how their real estate and facilities portfolios support both care delivery and financial performance. 

Healthcare Facilities Today spoke with Matthew Coursen about how healthcare organizations are responding—from maximizing space utilization and monetizing surplus assets to designing adaptable facilities and making tougher capital investment decisions. 

HFT: The report points to shrinking margins driven by insurance coverage changes and funding uncertainty. From a facilities and real estate standpoint, what are health systems doing right now to manage costs without undermining care delivery or long-term asset performance? 

Matthew Coursen: Number one, they’re creating efficiencies within their individual clinical spaces to make sure they’re maximizing utilization of facilities and exam rooms across providers, service lines and even different hours of operation. Efficiency is really the first answer to how they’re approaching this. 

Number two is an overall portfolio optimization exercise. That means taking a hard look at owned properties, leased properties and any excess or surplus real estate that could potentially be monetized. In some cases, that monetization might come through more creative strategies, such as sale-leasebacks or other financing vehicles that put cash in the bank, so to speak, while still allowing them to continue providing care in the community at those facilities. 

So those are the two key approaches: improving space utilization efficiency and undertaking a comprehensive portfolio analysis to identify opportunities to monetize assets, add value or create cost savings across the portfolio. 

Related Content: Healthcare Real Estate: Responding to Shifting Patient Demands

HFT: The report stresses the need for contingency and scenario planning amid Medicare and Medicaid uncertainty. What does effective scenario planning look like for facilities teams, and how should leaders prioritize decisions when the policy landscape remains unsettled? 

Coursen: From a facilities and real estate standpoint, adaptability is critically important. As real estate and facilities teams within healthcare organizations deploy the system’s business objectives, they need to make sure the facilities they’re moving into, expanding, renovating or otherwise modifying are as adaptable as possible for the future. 

There is a lot of uncertainty around how care delivery models may evolve in the coming years. If a space serves one purpose today, the more easily it can be adapted to serve a different need tomorrow, the better it is as a form of risk mitigation for the system. 

HFT: Consolidation is expected to accelerate, particularly for financially vulnerable providers. How does this environment change the way facilities leaders should think about portfolio optimization, deferred maintenance, and capital investment decisions? 

Coursen: It’s about ruthless prioritization. Undertaking a comprehensive portfolio diagnostic is a critical first step. During that phase, we help clients look closely at the physical assets themselves—what condition they’re in and how they’re performing. We conduct facility condition assessments that result in detailed reports outlining where deferred maintenance exists, what maintenance is coming due and the costs associated with that work. 

From there, we work with them on the capital planning side to prioritize projects, focusing investment on the facilities that are performing the best—or are best positioned to perform—from a patient throughput and revenue perspective. 

So number one is evaluating the portfolio through facility condition assessments. Number two is looking at the overall network—where locations sit relative to the patient base, both current and future. If that patient base is likely to shift due to insurance reimbursement changes or policy adjustments, organizations need to take a hard look at their market presence and service areas. That may mean consolidating, relocating or otherwise adjusting the portfolio and clinical locations to serve patients more effectively and conveniently, while keeping competitors at bay. 

Jeff Wardon, Jr., is the assistant editor of the facilities market.