5 Steps to Assessing a New Market Opportunity in Healthcare Real Estate

Leverage the power of data-driven healthcare real estate insights


Written by: Fady Barmada


As the healthcare market continues its rapid growth and evolution, successful organizations are staying one step ahead of the trends to ensure they offer what patients need, where they need it. But that’s a lot harder than it sounds.


Whether you run a healthcare system that’s ready to expand, you’re a real estate developer looking to build out new healthcare assets, or you’re an investor deciding whether to add or reposition assets, you can’t make healthcare real estate investments based on assumptions. You need data-driven healthcare real estate insights to make informed decisions that deliver high ROI.


These 5 steps will help you leverage the power of data – including nontraditional data such as patient medical claims and healthcare engagement profiles - to assess a new market, identify the largest care needs and types of services and assets most needed, and make healthcare real estate investments that deliver strong returns.


Healthcare Real Estate Insights - Step #1: Define the Market of Interest


Let’s say you’re seeing a shift to ambulatory surgery centers (ASCs), and you want to capture your share of demand by expanding your ASC network. How do you decide where to place your next site?


It starts by accurately zeroing in on the market or sub-market you’re interested in analyzing. Defining your geographic focus sets the stage to run a data-driven study, so it’s important not to short-change this step.


You can define your market of interest in different ways—at the zip code or address level, by patient drive time, or by trade area, for example. Once you’ve defined the market using one or more parameters, you’ve set a solid foundation for obtaining relevant data, gleaning insights, and developing visualizations that paint a picture of the opportunity.


Healthcare Real Estate Insights - Step #2: Assess Relevant Care and Demand


Before you plunk down significant capital for a new facility, you need assurance there’s enough demand to support it. If you’re contemplating a new cardiology center, then knowing how demand for cardiology services is trending locally will help you quantify the opportunity and decide whether to proceed.


But which data will accurately assess demand?


Ideally, you want a mix of sources that provide a clear perspective on current and expected healthcare activity in this market. That means reviewing traditional, readily accessible data sources and non-traditional sources that are tougher to access, but equally important.


For example, medical claims reported in your market of interest indicate how demand is trending locally, while demand projections help forecast the future market.


One note: Be careful not to rely solely on benchmarks based on national use rates. The best projections use analytical tools to calculate anticipated use rates that are region specific, scaled to the local population, and reported at a granular level—by service lines, sub-service lines, and procedure types; by facility; and by encounters and revenue. Robust data like this, mapped geographically, will help you start to visualize the relevant opportunity.


 

CASE STUDY: A top five academic medical center in the Midwest uses Pivotal’s BI to develop its new market ambulatory expansion strategy.

 

Healthcare Real Estate Insights - Step #3: Analyze Physician Need


Hopefully at this point, your market of interest shows high current and future demand for the specialty or specialties you have in mind. But are there enough physicians to meet the unmet demand for this type of care? Or is there an oversupply of providers for this service?


The right data will help answer this question, bringing you closer to a decision on whether this real estate investment will yield a high ROI.


Predictive analytics can tell you where certain types of care are being delivered today, where they’re expected to be provided in 5-10 years, and by which providers. From there, you can identify hot spots where demand is expected to outpace supply, pinpointing gaps that represent profitable opportunities. For example, consider the value of knowing the expected revenue potential for the ASC center you’re considering, based on local unmet need!


Healthcare Real Estate Insights - Step #4: Assess the Population


The population in your market of interest is critical to defining the opportunity from two perspectives:

  • Demographic data, such as total population, average household income, and population growth rates, paints a picture of the opportunity for a new care facility.

  • Payer data, such as coverage types offered in this market, helps you understand the revenue and profit potential for a service or sub-service line.

Together, these insights help you answer key questions before moving forward. Is this market large, stable, and growing? Which specialties will see the greatest demand from this population? Based on household income and payer mix, what’s the profit potential?


Healthcare Real Estate Insights - Step #5: Understand Healthcare Utilization


Demographic data helps you understand the need for certain services in a market, but it’s only part of the story. Many factors influence how a patient uses healthcare services—including lifestyle, risk, preferences, and behaviors, as well as the social determinants of health that are increasingly integral to care access and use.


To truly understand the opportunity, you need to know how those factors impact utilization for the services your facility will provide. New analytical tools can provide that insight, using consumer psychographic data and behavior data to answer key questions, such as:

  • Based on this population’s transportation risks, what’s the ideal proximity to a new facility to ensure reasonable access to care?

  • Will certain segments of this population need ancillary support to ensure quality outcomes?


How Pivotal Analytics Can Help: Your Healthcare Real Estate Insights Partner


When you’re assessing a new market for your next healthcare real estate investment, you need robust data to guide your decision.


That’s why leading healthcare organizations, commercial real estate developers, and investors turn to Pivotal Analytics. Our proprietary analytics platform and business intelligence solutions improve how healthcare business decisions are made—by delivering data-driven healthcare real estate insights that help you identify, visualize, and capitalize on healthcare real estate opportunities.


Ready to learn more? Request an introductory call or demo with a Pivotal Analytics specialist today.



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