How Healthcare Providers Approach Real Estate Site Selection

by Coy Davidson | December 26, 2022

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Factors in Healthcare Real Estate Site Selection

Healthcare real estate is fundamentally different from standard office selection. The variables that determine whether a location will succeed clinically and operationally go well beyond what the space costs and how many square feet it contains. Getting site selection right in healthcare requires evaluating factors that don’t appear on a standard listing sheet.

As healthcare providers, it is imperative to consider various factors when selecting a potential real estate location for new facilities. Some of these considerations include:

Accessibility: Patients should have easy and convenient access to our facilities, whether through personal transportation, public transit, or other modes of transportation.
Visibility and Signage: For patient-facing healthcare facilities, visibility and signage rights are more than marketing considerations — they’re operational ones.
Proximity to other healthcare providers: For the benefit of their patients, they should consider situating healthcare locations near other healthcare providers such as specialists or pharmacies.
Population density: It is important to take into account the population density and growth projections in the area when determining the future demand for their services.
Affordability: The budget should be a consideration when choosing a site, as real estate costs can vary greatly depending on location including costs to develop particular sites based on existing infrastructure.
Zoning and land use: It is crucial to ensure that the proposed location complies with all relevant zoning and land use laws.
Demographics: They should consider factors such as the population’s age, income, insurance coverage (payor mix), and overall health status when selecting a location.
GAP Analysis: GAP analysis is used to identify areas where improvements can be made by adding or establishing new service lines to better support patient care and business operations.

I should note that Texas is not a certificate of need (CON) state. A Certificate of Need is a regulatory process used in many U.S. states to control healthcare costs and improve the quality of care by requiring healthcare providers to obtain government approval before constructing new facilities or expanding existing ones. Currently, 35 states and Washington D.C. have CON programs in place, although the exact requirements and procedures can differ widely between states.

Ultimately, the choice to pursue a particular location will be influenced by a combination of these and other factors, as well as the mission and goals of the healthcare providers.

The Use of Analytics in Healthcare Real Estate

Using predictive analytics to pick locations for new ambulatory care facilities can help you make better judgments by taking the guesswork out of the equation. You can guarantee that your ambulatory care network is best positioned to address the requirements of a community by leveraging data-driven insights. There are now numerous data providers and software systems to assist in healthcare facility site selection.

In conclusion, selecting a healthcare real estate site is a complex process that depends on several factors, including accessibility, proximity to other healthcare providers, population density, pricing, zoning and land use restrictions, demography, and potential service gaps. Notably, the specific circumstances in non-Certificate of Need jurisdictions such as Texas add another layer of complexity.

Using predictive analytics in this process can considerably streamline decision-making and minimize uncertainty, ensuring that new ambulatory care facility locations are optimally positioned to address community requirements. As a result, healthcare providers may make more informed, strategic, and cost-effective decisions that are consistent with their mission and goals while providing top-tier patient care.

The Bottom Line

At its core, healthcare site selection is a strategic clinical decision, not just a property search. While rent and square footage are the easiest numbers to track, they’re ultimately secondary to the complex interplay of demographics, service gaps, and regulatory nuances. To build a practice that lasts, you have to look beyond the floor plan and choose a site where operations, clinical strategy, and patient experience truly align.

Frequently Asked Questions

What is GAP Analysis in Healthcare Real Estate Site Selection?

GAP analysis, in the context of healthcare real estate, is a strategic assessment tool used to identify discrepancies between the current availability of healthcare services in a given area and the ideal or desired level of service based on community needs. It focuses on pinpointing “gaps” in service coverage, such as underserved populations or lacking facilities, to guide decisions on where to locate new ambulatory care centers, clinics, or expansions. This goes beyond simple market research by highlighting opportunities for improvement through the addition of new service lines, like specialized treatments or preventive care, to enhance patient outcomes and operational efficiency.