Joseph Fetterman, Executive Vice President of Strategic Initiatives for Colliers International in the Tri State region, kick starts the Colliers in Philadelphia blog with key takeaways from last week’s Bisnow Philadelphia Healthcare Real Estate Summit at the Ritz Carlton.
The event featured representatives from many of the region’s major health systems and healthcare consulting groups, providing local perspective on the seismic shifts occurring in the healthcare industry nationwide - a consequence of long term changes in demographics and near-term structural and policy changes. Here’s what you need to know:
- Health systems continue to focused on delivering services closer to the patients. This is causing a migration from a “hub and spoke” model to a “constellation” model of health care facilities and service delivery.
- Larger hospitals and systems are facing increased competition from urgent care providers. The Affordable Care Act is causing health systems to aggressively seek ways of taking cost out of the system, in a variety of ways ranging from reducing energy costs to more efficient patient throughput
- The Philadelphia healthcare market is particularly challenging:
The insurer side is dominated by two providers – Independence Blue Cross and Aetna who control reimbursement rates. The provider side is fragmented and the largest providers represent only 10% share of total market. There is excess capacity with too many competing systems for the patient requirements in the market and there will be consolidation among the systems to address this inefficiency. As systems consolidate and the transition to outpatient procedures in ambulatory facilities expands, hospitals will be closing of necessity.
- Healthcare systems are challenged to provide “commonly available care” in an intensely competitive provider marketplace.
- Academic hospitals will always involve a premium because their cost structure includes the cost burden of supporting research with state-of-the-art research facilities, the salaries of scientists performing the research, and the cost of training residents.
Looking for a deeper dive?
Colliers US Research’s Medical Office Trends and 2014 Outlook report is available here
for more information regarding Colliers’ multidisciplinary services (institutional/medical office/med-tail) for healthcare providers in the Tri State region.