Mo­men­tum no longer build­ing

Modern Healthcare - - SPECIAL REPORT -

While there’s still pent-up de­mand for new health­care con­struc­tion and plan­ning for new projects con­tin­ues at a heavy pace, eco­nomic and po­lit­i­cal uncer­tainty are lead­ing to an­other slow­down in the sec­tor.

“The acute-care in­pa­tient space has been slow and will con­tinue to be slow,” says Shawn Janus, man­ag­ing di­rec­tor for health­care de­vel­op­ment at Jones Lang Lasalle, a Chicagob­ased fi­nan­cial and real es­tate ser­vices firm. “We’ve seen that busi­ness get di­min­ished quite a bit.”

Janus ex­plains that the cloudy fu­ture of the Pa­tient Pro­tec­tion and Af­ford­able Care Act— which has yet to be fully en­acted and faces a cru­cial U.S. Supreme Court rul­ing this year— is one rea­son. “There’s in­de­ci­sion that has crept back in,” he says.

Chip Cogswell, for­merly with Jones Lang Lasalle and now national health­care di­rec­tor for Turner Con­struc­tion Co., agrees and ex­plains how uncer­tainty over fi­nances along with the in­crease in merg­ers and ac­qui­si­tions is “con­sum­ing in­tel­lec­tual cap­i­tal” that would other­wise be di­rected to­ward ex­pan­sion and ren­o­va­tion projects. But Cogswell adds that the uncer­tainty hasn’t di­min­ished the de­mand for new fa­cil­i­ties as the av­er­age age of hos­pi­tals con­tin­ues to rise. Health­care fa­cil­i­ties “aren’t get­ting any younger,” he says.

Janus says plan­ning has be­come the busiest area of Jones Lang Lasalle health­care op­er­a­tions, not­ing that, “We’re grow­ing by leaps and bounds there,” and this is partly driven by sys­tem merg­ers and hos­pi­tal ac­qui­si­tion of real es­tate held by physi­cian prac­tices.

Also, out­pa­tient fa­cil­i­ties are be­com­ing more of a fo­cus, and he ex­plains that to­day’s med­i­cal of­fice build­ings are in­creas­ingly com­plex in terms of the equip­ment they con­tain and pro­ce­dures that can be per­formed there. The own­er­ship and op­er­a­tion of the fa­cil­i­ties is be­com­ing more elab­o­rate as well. Dif­fer­ent par­ties may oper­ate their own sur­gi­cal, dial­y­sis and imag­ing op­er­a­tions but share wait­ing, pro­ce­dure and treat­ment rooms.

“It’s not the old MOB doc in the box,” he says, adding that the med­i­cal of­fice build­ing of old was typ­i­cally about 40,000 square feet, but new mod­els are now be­tween 100,000 and 200,000 square feet.

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