A Seat at the Ta­ble for Health Care Real Es­tate

The im­por­tant role of phys­i­cal in­fra­struc­ture for ac­cel­er­at­ing value-based care

Modern Healthcare - - REGIONAL NEWS - Thomas DeRosa CEO Well­tower

Well­tower is one of the world’s largest own­ers of health care real es­tate. The com­pany has a ~$ 40 bil­lion en­ter­prise value and owns in­ter­est in 1,400 prop­er­ties in the U. S., U. K. and Canada in­clud­ing se­nior liv­ing com­mu­ni­ties (in­de­pen­dent liv­ing, as­sisted liv­ing and mem­ory care), out­pa­tient med­i­cal of­fice build­ings and post-acute cen­ters. Well­tower re­cently an­nounced a strate­gic re­la­tion­ship with Johns Hop­kins Medicine to drive col­lab­o­ra­tion be­tween health sys­tems and se­nior care providers with a fo­cus on well­ness and de­liv­er­ing bet­ter care at a lower cost for aging adults. In this in­ter­view, DeRosa dis­cusses the in­ter­sec­tion of real es­tate and health care de­liv­ery.

What role does real es­tate play in the de­liv­ery of health care?

TD: The health care real es­tate foot­print in the U.S. is mas­sive. The mone­tary value of acute care and the out­pa­tient med­i­cal build­ing real es­tate mar­ket is val­ued at $1 tril­lion to­day, ac­cord­ing to Re­vista. But a fair amount of it is ob­so­lete. It’s not well aligned with the fu­ture of health care de­liv­ery. Hos­pi­tals his­tor­i­cally were stand­alone build­ings: build­ings where peo­ple were born, build­ings where peo­ple en­dured dis­ease and build­ings where many peo­ple died. In the past 20 years, we have seen a revo­lu­tion in out­pa­tient pro­ce­dures and a shift in pa­tient care to out­pa­tient med­i­cal cen­ters. Now, as we move to a value-based model, health providers are in­creas­ingly mea­sured on how ef­fec­tively they are able to de­liver health care. To tran­si­tion to a value-based sys­tem, we need more ef­fi­cient health care de­liv­ery set­tings — so in­creas­ingly real es­tate needs a seat at the ta­ble.

How is the state of health care real es­tate to­day im­pact­ing the move to a value-based model?

TD: Of the $1 tril­lion real es­tate mar­ket that ex­ists to­day, ~$600 bil­lion is in acute care real es­tate. That real es­tate will limit the speed at which we can tran­si­tion to value-based care be­cause it in­cludes a lot of an­ti­quated in­fra­struc­ture that can­not sup­port mod­ern tech­nolo­gies. For ex­am­ple, there are hos­pi­tals to­day with­out a re­li­able Wi-Fi sig­nal, and in many cases, the in­vest­ment needed to mod­ern­ize these build­ings is Her­culean. An­ti­quated real es­tate is forc­ing health care to do the job with one hand tied be­hind its back. So, the old real es­tate can be an ob­sta­cle for what needs to hap­pen in our health care sys­tem, but, con­versely, mod­ern real es­tate can help ac­cel­er­ate the tran­si­tion to value-based care.

Why would a health sys­tem be in­ter­ested in part­ner­ing with Well­tower?

TD: The frail el­derly are the high­est risk pop­u­la­tion for a health sys­tem to man­age, and by far the costli­est. We ac­tu­ally don’t start by talk­ing about real es­tate. We start from the per­spec­tive that we are a well­ness de­liv­ery model for the most at-risk pop­u­la­tion. If we can keep peo­ple eat­ing prop­erly, if we can keep peo­ple ex­er­cis­ing and keep their minds acute, we can ad­dress many health care is­sues. Well­ness is so im­por­tant. Well­tower com­mu­ni­ties are home to a pop­u­la­tion of more than 200,000 el­derly res­i­dents. One thing they have in com­mon is they pay out of pocket to get well­ness care (in­clud­ing nu­tri­tion, hy­dra­tion, so­cial and cog­ni­tive en­gage­ment and safety) from the coun­try’s best as­sisted liv­ing and mem­ory care oper­a­tors. Un­for­tu­nately, in many other cases, the frail el­derly and peo­ple with de­men­tia are liv­ing in real es­tate that puts them at risk. For ex­am­ple, a two-story sub­ur­ban house with four be­d­rooms and three bath­rooms presents a ma­jor risk to an 88-year-old woman who has had her joints re­placed and also has mac­u­lar de­gen­er­a­tion. Her home be­comes an en­vi­ron­ment filled with land­mines. When she falls down the stairs, she will land in a hos­pi­tal bed with a num­ber of acute is­sues that will make it very chal­leng­ing for that hos­pi­tal to treat her in the num­ber of days for which they will be re­im­bursed. Health sys­tems want to man­age this pop­u­la­tion in a more ef­fec­tive way and we are their part­ner in meet­ing that chal­lenge. We are a $40 bil­lion en­ter­prise with ex­tra­or­di­nary ac­cess to cap­i­tal at a time when health sys­tems have a pro­found need to evolve. Health sys­tems are fo­cus­ing their limited cap­i­tal in­vest­ments on tech­nolo­gies that cost bil­lions of dol­lars. And, while his­tor­i­cally hos­pi­tals have owned 98% of their real es­tate, that is chang­ing and they are look­ing to com­pa­nies like Well­tower that bring a plat­form of value to help­ing them man­age their own busi­nesses more ef­fec­tively.

What changes do health sys­tems need to make as this pop­u­la­tion con­tin­ues to age?

TD: Hos­pi­tals will al­ways be a crit­i­cal link in the health care de­liv­ery chain, but they can­not ad­dress all of the aging pop­u­la­tion’s needs. Many health sys­tems are pre­pared for meet­ing phys­i­cal chal­lenges faced by these pa­tients, but not the com­plex­i­ties of treat­ing de­men­tia and other dis­eases of aging they will face on a vastly grow­ing scale. To pre­pare for a more phys­i­cally and cog­ni­tively im­paired pa­tient pop­u­la­tion, we need to re-think the en­vi­ron­ments in which care is de­liv­ered. Acute care and se­nior care providers need to work to­gether. Real es­tate can be an im­por­tant link that brings them to­gether. The over-65 pop­u­la­tion will in­crease by nearly 50% over the next 25 years. No one en­tity can face the chal­lenges of the el­derly pop­u­la­tion alone, but we can do it to­gether.

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