The Rising Cost of HealthcareCenters for Medicare & Medicaid Services
The Hospital / Physician Relationship • Physicians are transitioning back to hospital employment • Physician reimbursements are going down, while costs are going up • Younger physicians are attracted to the stability of an employer/employee structure and the opportunity to spend more time with their families • 85-90% of independent physicians will consolidate into some type of system. (*2011 BOMA Medical Office Conference) • How will these shifts impact the healthcare real estate market?
Demand for Medical Space• The employment of physicians by hospitals creates higher demand for space from health systems and reduces the demand for smaller individual medical office spaces• There is a need for new, well designed, efficient medical space.• Typical medical office leases: – In years past: 1,000-3,000 SF for 1 to 3 physicians – Today: 5,000-8,000 SF for up to 8 or 9 physicians• New York City, in particular, lacks large blocks of quality medical space to meet current and expected future demands
Ambulatory Surgery Centers (ASCs) • Traditionally located adjacent to or in close proximity to a hospital • Base cost for developing an ASC is substantially higher than a medical office building • Construction, equipping and licensing a surgery center on average ranges from twelve to fifteen months • ASCs can operate more cost effectively and efficiently than hospital based surgery and are more desirable to both patients and doctors alike