Banner Ad

Embracing Location Strategy to Drive Systemness Across Healthcare Organizations

Photo credit: Depositphotos

By Jay Johnson, Managing Director and National Practice Leader, JLL Healthcare

When choosing the site for a new healthcare facility—whether it’s a hospital, surgery center, urgent care clinic or other facility—location is key. Among other factors, location influences market brand perception, patient accessibility and acquisition, and undoubtedly affects the overall care experience. For larger health systems, location strategy is also a critical element of building an integrated delivery network.

The case for achieving greater “systemness” in healthcare organizations

- Advertisement -

“Systemness” means leveraging service lines, facilities, regional divisions and stakeholder groups to optimize the performance of the health system organization as a whole. By operating as a unified system rather than as an assemblage of siloed functions and facilities, a healthcare organization can provide better care to more people at lower cost. 

The trend of hospitals consolidating under larger healthcare systems reflects a shift toward systemness: between 2000 and 2021, the number of U.S. hospitals integrated in a larger healthcare system increased by nearly 37%. And when it comes to operating successful healthcare organizations, systemness and real estate are inextricably linked. 

Strategic real estate decisions beget greater benefits of systemness, and a more systematic operational approach can improve real estate asset performance. Real estate can also be used to scale costs across a larger integrated delivery system—offering care that spans the continuum from preventative programs to post-acute and home care services—but the opportunity is not always as simple as lowering leasing costs. 

At the same time as the continued shift toward outpatient services is driving demand for more outpatient real estate, the growth of telehealth and telework has reduced the demand for space in some other facilities. The integration of a health system outside the hospital hub is increasingly necessary for managing costs at scale, and a systemness strategy is key to managing facilities operations and services utilization.

Follow the people: the importance of location strategy

Health systems are developing and deploying sophisticated location strategies in order to identify growth opportunities that align with their broader goals. As new demographic patterns emerge, location considerations are shifting at both a macro and micro level. These changing patterns can inform healthcare system strategies and location selection within the broader systemness framework.

According to the JLL Midyear 2021 Healthcare Real Estate Outlook, large gateway markets are likely to maintain dominance based on sheer size, but emerging growth markets offer greater opportunities to scale than in years past. Location analytics can sharpen insights around growth opportunities and inform potential M&A decisions, but in the simplest terms, a good rule of thumb when it comes to location strategy is “follow the people.” 

JLL’s report indicates that due to the expansion of high-growth industries like tech, finance and advanced manufacturing in the sunbelt, as well as an influx of people seeking greater affordability and better quality of life, markets in this region are recording strong growth. Currently, the fastest-growing metros are small in scale, but present opportunities in the form of target growth markets. When it comes to the country’s largest population centers, high-growth affordable markets like Dallas and Phoenix continue to attract businesses and new households, while growth in expensive metro areas such as New York and Los Angeles is slower.

On a local level, health systems continue to move away from the hospital-centric model of yesteryear, and toward the broad, off-campus ambulatory model of the future, which is more patient-friendly and cost efficient. But when offering more healthcare services in smaller, scattered settings, health systems must determine both how each location can perform on its own—and as part of a vast, connected network.

Three ways location strategy drives systemness

Achieve market coverage and optimal saturation as a system

In a survey conducted by JLL in December of 2020, 83% of patients preferred to be near their care facility rather than driving to a new or renovated location farther away, and 71% of patients reported driving less than 20 minutes to medical appointments. Inevitably, the location of a clinic, hospital or other healthcare facility plays an essential role in the health system’s ability to deliver care to patients. Location strategy helps the system evaluate care needs and growth opportunities in the context of patient demand, provider specialties, and competition. Geospatial analysis tools such as Geographic Information Systems or GIS, fueled by a robust combination of clinical performance data, demographic data and real estate data, can create visuals to identify gaps in coverage and opportunities for growth. These data and analytics can also be critical to building consensus among health system regional and service line leaders for the prioritization of scarce capital dollars to develop or expand sites that better serve the local population.

Manage the care delivery network as an integrated systemwide portfolio

Far too often, care locations are planned and operated by regional and service line leaders within their business silos to meet specific, discrete needs. Each site may be perfect in isolation, but collectively inefficient and costly as a whole. The acquisition of smaller hospital systems and physician practices often compound the problem when their legacy locations continue to operate as before without thoughtful integration into the merged health system. A system-level “portfolio approach” to planning and managing locations can identify opportunities to consolidate into fewer, more efficient locations; use location to amplify the health system brand; and use less space for support functions such as waiting, storage, etc. It also provides greater leverage for negotiations with landlords by identifying opportunities to bundle and renegotiate multiple leases under a single landlord, and helps prioritize capital expenditure decisions.

Provide property services as a system

Service line leaders within the health system as well as the clinicians at specific sites should be focused on patient care and clinical efficiency, not facilities and real estate. Both hospitals and ambulatory locations can be operated more efficiently and reliably when property services such as maintenance, housekeeping, landscaping, etc. are performed at the overall health system level rather than at the site or divisional level. A system-level approach maximizes the deployment and effectiveness of specialized facilities personnel, technology and vendor contracting. It also ensures that facilities resources are deployed according to system-level needs rather than local or divisional priorities and that facilities performance standards are consistently defined and managed.

As the medical field continues to evolve, demand for healthcare services continues to grow, and healthcare costs continue to rise. These ongoing upward trends create both challenges and opportunities for health systems. By leveraging real estate to achieve the greater benefits of systemness, healthcare organizations can increase patient access, reduce costs, increase patient satisfaction and more.

Healthcare Business Today is a leading online publication that covers the business of healthcare. Our stories are written from those who are entrenched in this field and helping to shape the future of this industry. Healthcare Business Today offers readers access to fresh developments in health, medicine, science, and technology as well as the latest in patient news, with an emphasis on how these developments affect our lives.

- Advertisement -

Related Articles

Latest Articles