Changing Demographics Will Impact Healthcare CRE In Surprising Ways

Healthcare isn’t one thing but rather a broad set of practices, and the interplay of medical needs and social particulars have a foundational impact on commercial real estate for the industry.

Currently, there is a major demographic shift that is having a big impact. “This year the greatest number of baby boomers will reach 65,” Shawn Janus, national director of healthcare, U.S. at Colliers, tells GlobeSt.com. “There’s a greater need for healthcare.”

It seems like a simple statement, but the implications run wide and deep, and sometimes not exactly the way that would seem obvious. “There’s the whole behavioral health continuum,” Janus says. “Your incidence of cancer obviously go up — a lot of prostate cancer,” for example. “Without question, interestingly I’ve heard a couple of different theories about orthopedics.” One is that older people aren’t as active, and so in greater need of bone treatments. But then, “it’s [also] a more active lifestyle of seniors,” like those playing tennis, golf, or pickleball.

Some of the effects on healthcare are the types of technologies that have to be hosted. Imaging, radiation, chemotherapy, infusion . Space for physical and occupational therapy. Facilities to treat such eye disorders as cataracts or glaucoma.

Another view of demographics with implications is not a vertical slice but horizontal one that connects with a need for behavioral health. Depression coming out of the pandemic affected many age groups: school age children, elders, working adults. “Remote working, you don’t have that daily interaction with colleagues,” says Janus. There has been an increase in suicide rates by age. The space requirements are more restricted, can be done via remote communications, but might be more widespread, given room in more places when it comes to building planning.

One of the trickier areas is in using data to better plan development and acquisition strategies. “Health systems have so much data that sometimes I think it overwhelms a bit,” Janus explains. There’s been a big switch in what pays for itself. “Medicaid has always been a money-losing proposition. Medicare isn’t necessarily profitable anymore and the Medicare population has been booming. Some of the biggest drivers are where are the private pay patients, the insured populations, are.”

But getting the data can be expensive. There is public government claims data, but then comes the private data compiled by niche firms. It is expensive to gather, but also necessary to better locate facilities to not only where services are needed, but how a care provider can get the payment to keep the business running.