A Seismic Shift In Healthcare

There is a seismic shift—not in real estate, but in a sector that will fundamentally reshape how we think about how health care services are delivered. 

That in turn will have an impact on the needs for real estate in a health care setting.

Family medicine has evolved. When I was a child, the family doctor was a self employed professional. Their office had one name on the door, and behind the waiting room was a sliding glass window for the receptionist, who often also doubled as the doctor’s assistant. That model is completely obsolete and has been replaced by the family health team clinic which has several owners, numerous associates, nurses, a nurse practitioner, and even other services like a dietitian, a blood lab, an imaging lab. All of these things under one roof in the name of efficiency. Increasingly, these clinics are not owner operated, but instead are associated with a larger healthcare provider. 

But just like technology has disrupted retail and media, it’s now coming for healthcare.

The first wave was simple telehealth—video calls with your doctor. This was multiplied out of necessity during the pandemic. That was a good start. It saved a trip for a quick follow-up or a prescription refill. But it is limited. 

The game changer is the technology that brings diagnostic equipment to the patient. Some health care systems have already adopted the technology. Somewhere between 60-80% of office visits can be handled by telehealth, augmented with the diagnostic equipment.

The change is coming, and it is clear as day. Commercial real estate has taken a beating since the pandemic. Medical office has been one of the remaining segments of stability in the office market. I can’t tell you how quickly the technology will penetrate the market. I predict that within the next five years, today’s existing technology will achieve sufficient market penetration that we will see a significant reduction in medical office footprints. 

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Episode Transcript

(00:01):
Welcome to the Real Estate Espresso podcast, your morning
shot of what's new in the world of real estate investing.
I'm your host, Victor Minash. There's a seismic shift, not in
real estate per SE, but in a sector that will fundamentally
reshape how we think about healthcare services and how
they're delivered. And that in turn will have an
impact on the needs for real estate and healthcare setting.

(00:22):
Family medicine has evolved. When I was a child, family
doctor was a self-employed professional.
Their office had one name on thedoor, and behind the waiting
room there was a sliding glass window for the receptionist.
They often doubled as the doctor's assistant.
That model is completely obsolete.
It's been replaced by the FamilyHealth Team clinic, which has
several owners, numerous associates, nurses and nurse

(00:44):
practitioner, and even other services like a dietitian, a
blood lab and imaging lab. All of these things under one
roof in the name of efficiency. Well, increasingly these clinics
are not owned or operated, but instead are associated with
large healthcare providers. For years, the healthcare model
has been stuck in the 20th century.

(01:05):
If you feel sick, you book an appointment and you drive to the
clinic. You sit in a germ filled waiting
room and then you get a few minutes with the doctor.
It's inefficient, it's a waste of time, and frankly, it's a
poor experience. But just like technology has
disrupted retail and media, it'snow coming for healthcare.
The first wave was simple telehealth.

(01:25):
These are phone calls with your doctor or maybe video calls.
Use of telehealth is multiplied out of necessity.
During the pandemic. That was a good start.
It saved a trip for a quick follow up or a prescription
refill. But it was limited.
Senior citizens make up 18% of the US population and about 20%
of the population in Canada. They make up a disproportionate
share of doctor visits. Many of these visits require

(01:48):
adult children to take time off work to drive aging parents to
the doctor. In other cases, the cost of
transportation and parking make the overall cost of the patient
even higher. Well, there's time lost in the
waiting room, time lost in traffic.
It's just a lot of time. Now a doctor is limited to what
they can diagnose over a video call.
The key to true disruption isn'tjust connecting people

(02:09):
virtually, it's bringing the tools of the doctor's office
into the patient's home. Well, there's a new wave of
products that are starting to transform.
Telemedicine. These are diagnostic products
from companies like Remy Health,Eco Devices and Title Care.
These devices are not just a webcam, many of them are a
handheld examination device. The most capable one is the one

(02:30):
from Title Care. This is an Israeli company.
Think of it as a stethoscope, anautoscope, A thermometer all in
one connected to an app. You can use it to capture high
quality images of a sore throat,record your heartbeat, check a
rash, and all of that data goes directly to your physician, who
then can make an informed diagnosis remotely.

(02:51):
See over a video conference, a doctor can diagnose about 250
possible conditions. With the addition of this
technology, that number increases to over 1000.
That changes everything. A parent no longer has to take a
sick child to urgent care at 9:00 PM, exposing them to more
illness and losing sleep. A person with a chronic heart
condition can monitor themselvesdaily and send the data to their

(03:13):
doctor, preventing a minor issuefrom becoming a trip to the
emergency room. The implications are huge.
For the patient, it's about convenience and control they
have. They save time and money on
travel, they get faster access to care, and they get it on
their own terms. For the healthcare system, it's
about efficiency and cost reduction.
Fewer in person visits means clinics can focus on more

(03:35):
complex, serious cases. It reduces the strain on urgent
care centers in emergency rooms.It shifts the entire model from
reactive to proactive care. Now this isn't just a fad.
It's a fundamental shift to how a multi trillion dollar industry
operates. The need for those massive
medical office buildings for clinics on every street corner,
or the traditional brick and mortar footprint of healthcare.

(03:58):
It's going to shrink. The new clinic is in fact your
home. Well, late last week I met with
the CEO of a national healthcaresystem.
They are already using this technology widely and claiming
that between 60 to 80% of in person appointments could be
diagnosed using this technology.That would remove a lot of
pressure on the clinic. Now let's be clear, there are a

(04:20):
lot of reasons to see the doctorin person, but if the number of
visits can be reduced, then family medicine clinics could
provide full service in a smaller real estate footprint.
This change is coming, It's as clear as day.
Commercial real estate has takena beating since the pandemic.
Medical office has been one of the remaining segments of
stability in the office market. But I can't tell you how quickly

(04:42):
this technology will penetrate the market.
However, I do predict that within the next five years,
today's existing technology, without really any serious
improvements, will achieve sufficient market penetration
and we'll see a significant reduction in medical office
footprints. So while everyone's talking
about the next big real estate play, keep your eyes on the

(05:03):
technology that's quietly makingan entire real estate sector
partly obsolete. As you think about that, have an
awesome rest of your day, Go make some great things happen,
and we'll talk to you again tomorrow.