What the Rise of Digital Healthcare Means for Real Estate and Facilities

The integration of technology will lead to changes in facility function and workplace strategy.

By Alison Flynn Gaffney, Contributing Writer
January 6, 2023

Like so many other sectors, healthcare is experiencing a technology revolution. From telemedicine to the digitization of services to automation, the sector is evolving to improve access to care and to better meet patients where they are. Providers are making historic investments in technology, and big tech giants are expanding into the healthcare market. 

Encouraged by this evolution, commercial real estate investors purchased a record $20 billion in medical office assets in 2021 and are poised to break that record again, according to JLL’s 2022 Healthcare and Medical Office Perspective report. The integration of technology also will lead to changes in facility function and workplace strategy. 

Real estate owners and healthcare facility managers should closely track the sector’s adoption of technology and adapt facilities to meet the sophisticated needs of healthcare delivery. These advancements are coming quickly. Progress over the last year offers a peek into the robust future of digital healthcare and the way real estate can support the industry’s growth. 

Tech investment skyrockets 

Healthcare systems are voraciously investing in proprietary digital infrastructure. Digital healthcare and technology are among the top capital expenditures among healthcare systems, according to an Advisory Board survey from JLL. Likewise, venture capital investment in digital healthcare topped $15 billion in 2021, more than double the previous record. The funding has favored start-ups developing innovative tools for healthcare services and healthcare technology systems. 

Shifting economic fundamentals have derailed some of this growth. In 2022, venture capital investment will fail to surpass spending from the previous year. But it will likely outpace 2019 investment volumes, and that alone shows the venture capital commitment to technology adoption. 

Much of the outsized growth in 2020 and 2021 was catalyzed by the pandemic, but according to a recent article in “The Wall Street Journal,” 2022 remains a “really good year” for digital health investment. This year, capital is funneling into technology workflow solutions that solve real economic challenges, such as labor shortages. 

Big tech enters the market 

Enterprise technology companies are compounding the investment in digital healthcare and solving pain points in medical care through tech-fueled improvements in personal health tracking, health insurance and access to pharmaceuticals. These companies have the budget and the experience to pioneer marketable new technologies that gain mainstream adoption. 

Wearable products such as Fitbit are good examples of that approach, but big tech’s healthcare investment runs even deeper. Artificial intelligence tools are improving and scaling virtual health platforms and automating labs to support drug discovery. These companies also are making inroads in genetics and DNA testing, genomics and disease testing. 

Traditional healthcare organizations are partnering with big tech to advance internal goals, training and education, and to meet their missions. There are plenty of examples seen industrywide. Among them are these: 

  • The Memorial Sloan Kettering Cancer Center in New York City is working with Microsoft to expand its telemedicine program.  
  • The diabetes non-profit JDRF is using Amazon cloud intelligence to advance research for its juvenile program. 
  • New Jersey-based Hackensack Meridian Health is working with Google Cloud AI for medical imaging diagnostics. 

Technology partnerships are gaining momentum, and they stand to redefine healthcare by expanding services and patient outreach. Although the industry is facing headwinds, including compressed margins and labor shortages, technology investment is offsetting these temporary setbacks. This year, outpatient revenues increased 30 percent and inpatient facility revenues were up 8.5 percent, gains that are largely attributed to innovation and technological developments, particularly in outpatient facilities. 

Workplace strategies adapt 

The investment in digital healthcare has been a necessary first step toward integrating new technologies, and it is driving growth across the industry. Next, healthcare workplace strategies also will need to adapt. Facilities need to function around people and advancements in technology and equipment with flexible, multi-use spaces. 

These are areas where physicians can conduct virtual appointments and rooms to test new diagnostic tools as they are released. Healthcare providers need access to flexible and adaptable environments while maximizing the value and efficiency of their real estate footprint. Striking this balance will be critical as healthcare continues to advance. 

Technology is doing more than increasing access to care. It also is improving operational efficiency. On the backend, healthcare organizations can reduce pain points by using technology dollars to invest in workflow solutions and automate processes. These tools are poised to have a meaningful impact by increasing productivity and easing the burden of rising labor costs, but the healthcare sector also is suffering from a labor shortage. 

Investments in workflow technology create a workplace environment that values employees and supports them. Ultimately, these tools improve retention and recruitment and allow organizations to deliver on their missions while being good fiscal stewards. 

While technology has tremendous benefits, it also has exposed the sector to new risks. Cybersecurity is an ongoing challenge as healthcare organizations have fought hackers, information leaks and ransom requests. But technology is also the solution to this problem. Healthcare companies should prioritize investments in secure networks, anti-virus software and firewalls to protect patient and corporate information. 

Digital healthcare is the future of medicine. The technology is touching every aspect of the business, from patient care delivery and environment to workforce and operations. The transformation is coming over the next decade. Now is the time for healthcare facility managers to prepare for the digital future. 

Alison Flynn Gaffney, FACHE, is president of healthcare with JLL. 

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