While hospital and health system executives face cost pressures from new regulations, consolidations and shifts in the delivery of care, they control a historically underutilized asset that can be used to their advantage: $1 trillion of owned real estate.
The report establishes the extent to which real estate affects the health-care industry:
- Core hospital real estate (inpatient facilities) accounts for more than 42% of all health-care real estate in the U.S.
- Outpatient facilities—many of which are hospital-affiliated—account for another 27%.
- CBRE believes cost savings of 10% to 12% of total real estate costs may be achieved through outsourcing.
- Real estate occupancy accounts for 8% to 12% of hospital costs.
- The top-50 owners of health-care real estate in the U.S. include 34 health systems that collectively own $227 billion worth of real estate.
CBRE’s goal in undertaking this analysis of managing, operating and financing hospital real estate is to provide an objective assessment of how real estate can be used to address the challenges facing health system executives, to identify options for reducing costs or generating capital for reinvestment and to stimulate consideration of these options. To accomplish this goal, CBRE engaged Jerry L. Doctrow to undertake this independent analysis and prepare this report. Mr. Doctrow is a former stock analyst who spent 15 years following health-care REITs, and also has experience as a real estate advisor. For additional information on Mr. Doctrow and the complete list of professionals who provided input, please reference the closing pages of our report.