Duke Realty’s Deeni Taylor Looks to The Future of Healthcare

Cutting costs top the list of priorities for hospitals and health systems, but there’s only so much they can do when it comes to the lease rates, says Duke Realty EVP of healthcare Deeni Taylor. Deeni outlines four trends to watch next year:

1) Continued rapid growth in off-campus MOBs. Outpatient facilities are surpassing inpatient facilities in many health systems’ portfolios because of their positive impact on providers’ margins.

2) Lower reimbursement rates and the need to invest in new healthcare reform-mandated processes and systems. They're causing a reduction of major capital expansion projects, such as bed towers. That’s leading to more small-scale off-campus developments. The emphasis has been on opening new facilities in local communities where people live, providing ease of use and a retail approach.

3) Beyond a good location, healthcare execs need to consider whether the new facility can be repurposed in the future, if necessary. In addition to the location, development teams also spend more time analyzing potential risks with the length of the lease, who they’re partnering with and how they’re underwriting the project.

4) The healthcare real estate sector is seeing new types of partnerships such as unaffiliated physician-owned buildings, hospital-developer partners and JVs. The sector is also seeing new competitors developing MOBs such as general contractors, and many types of capital including foreign investors, institutional pension endowments, private equities, REITs, more banks, individuals and primaries.