The Shift from Hospital Based Practices to Retail Locations
By Chris Thompson
Consumer-centric healthcare in the form of retail clinics in neighborhoods and shopping areas is taking the place of traditional doctors' offices on large medical campuses. Healthcare organizations are shifting their focus from inpatient revenue to outpatient revenue, and convenient access for patients is now a driving force behind provider location decisions.
As described by Greg Hagood, senior managing director with SOLIC Capital, in Modern Healthcare about the Boston provider market, "a number of prominent physician groups, fed up with the high cost of doing business in medical office buildings on hospital campuses, are moving their practices to off-campus retail settings where rent is cheaper and the locations are convenient for patients."
The evolving value- and population-based models by which the healthcare industry is transforming place a greater emphasis on preventive care in an attempt to keep patients healthy and avoid costly hospital stays, further encouraging the push away from acute inpatient care to outpatient care.
The article also states that based on a survey by NRC Health, 80 percent of patients would be willing to switch providers based on convenience alone.
The Dana-Farber Cancer Institute of the greater Boston area is an example of this shift, as it has plans to lease approximately 34,000 square feet of space in a shopping center. The new retail clinic, to open in early 2020, will offer cancer treatment and hematology services.
This trend does not affect all specialties equally, with those oriented towards frequent patient visits often impacted more noticeably. Oncology and infusion, for example, as well as chronic disease management, are among specialties most likely to shift out of the traditional hospital setting and into retail clinics.
As a result of the increase in high-deductible insurance plans, patients are spending more of their own money on healthcare, making it more important for providers to be low-cost and convenient in order to maintain market share in an increasingly competitive healthcare market.
JLL, a real estate services company, issued a report that takes an in-depth look into the mutual benefits for providers and retailers that this shift provides, as well as tips to help providers create a positive experience for patients in a retail facility.
The various benefits of retail locations for providers, as described by JLL, include:
According to JLL, only 27 percent of new healthcare construction in 2018 was on healthcare campuses; the other 73 percent was in off-campus locations.
Though the mutual benefits for retailers and providers are substantial in retail clinics, there are a number of factors providers need to take into account in order to provide the best customer experience in a retail location.
First, as noted by JLL, providers need to evaluate the level of acuity which they are targeting. Low-acuity services such as flu shots and routine health exams have become somewhat the norm across retail settings. There is much greater market opportunity for higher-acuity services, such as the aforementioned oncology, infusion and chronic disease management services, particularly as the baby boomer generation ages.
Second, providers reaching into the retail space need to have an adequate picture of their target group. This will involve profiling the provider's patient base. JLL states that "[d]eveloping patient/consumer profiles and mapping them to retail consumer profiles will produce logical tenant mixes for retail locations."
Finally, as more and more retailers look to establish partnerships with healthcare providers, providers should jump on the opportunity to maximize a retailer's location network and distribution points, potentially allowing providers to gain a large following in a short period of time.
Ultimately, questions still remain as to the full impact in this hospital-to-retail provider shift. Could retail healthcare transform how patients make their healthcare decisions? Might increased patient convenience actually raise rather than reduce overall healthcare expenditure? Will this shift increase access to healthcare for populations that most need it, improve healthcare outcomes, or affect relationships between physician groups and medical centers? Only time will tell.
Chris Thompson is an associate with Waller where he specializes in healthcare law.