July 1, 2019 Comments Off on Expert Q&A: The Intersection of Retail & Healthcare Views: 497 Healthcare News

Expert Q&A: The Intersection of Retail & Healthcare

Connect Healthcare was curious about the intersection of healthcare and retail today, so we tracked down two experts to give us their insights: Joseph Fetterman, executive vice president of Colliers International’s Healthcare Services Group and Anjee Solanki, national director of retail – USA for Colliers International.

CONNECT HEALTHCARE: The retailization of healthcare began more than 20 years ago and continues to change the way providers deliver care. How will it evolve over the next five to 10 years?
JOSEPH FETTERMAN: The retailization of healthcare is not surprising given that retail and healthcare share a number of critical requirements: convenience, prominence, visible and accessible location, and strong socio-economic demographics. The delivery of healthcare is evolving rapidly and it is driven by convenience, technology, integrated care and outcomes. As a result, in-home telemedicine has become an emerging trend with aspects of primary care, specialty care (check-ups, monitoring and some diagnosis) and even non-acute urgent care that can be performed via telemedicine. At the same time, the changing face of brick-and-mortar retail will create continued opportunities for healthcare services to locate in repositioned mixed-use retail centers.

ANJEE SOLANKI: The spend in health and wellness is outpacing retail spend. There are approximately 77 million baby boomers seeking to outlive prior generations and the generations that follow are no different. Roughly 81% of baby boomers plan to spend more on health/wellness products compared to 19.4% in general retail. All demographic groups are relatively saturated with general products and there is now an increasing willingness to invest in products and services that enhance the sense of wellbeing. This means wellness is a major opportunity for retailer and for retail property.

CONNECT HEALTHCARE: As more and more drug stores and grocery chains add clinics to their locations, how does that impact demand for traditional medical office space?
FETTERMAN: The increasing presence of clinics in drug stores and grocery chains is further evidence of the trend to convenience in healthcare delivery. It is also another way that healthcare is integrating diagnostic medicine with the pharmacy. This trend will impact demand for the delivery of primary and urgent care, but will have little or no bearing on the demand from specialty practices for traditional medical office space for two reasons – the specialized equipment required for many specialty practices, and the demand for specialty care doesn’t justify a mini-clinic approach.

SOLANKI: There will be impact on traditional medical office space, however, there will still be a need. As we continue to see growth in the retail sector for all things wellness, and more specifically in specialty offerings, which is driven by consumer demands, we are also seeing the need to have such services easily accessible. The idea for a one-stop-shop for wellness needs is extremely appealing for consumers. This function could be fulfilled by drug stores, but the lack of a targeted approach towards specialty wellness, (i.e., meditation spas, vitamin IV drip, modern acupuncture spas) or creating an engaging experience makes it difficult for drug/grocery stores to implement.

CONNECT HEALTHCARE: Many health systems and MOB owners have experimented by adding retail uses to their facilities and achieved mixed results. Do you think there’s a place for retail in acute care and MOB settings, and if so, what kind? What determines the success or failure of this retail?
FETTERMAN: Yes – pop up convenience like coffee, tea and snacks, healthy food stands, etc. The most important role retail can play in the acute care environment is to change the institutional character of the hospital by energizing and transforming the patient experience and creating a familiar, inviting and healthy environment. Much as airport retail is an amenity to the traveler experience, hospital retail can soften and improve the often anxious and uncomfortable experience of patients and accompanying family members during a hospital or on-campus MOB visit.

SOLANKI: It goes back to my prior comment; engaging the consumer through education and experience that does not feel like you’re walking into a clinic or hospital is the key. Wellness cuts across many sectors and verticals. As mentioned, newer, innovative services such as wellness advice centers to cryotherapy, are seeking retail sites. From the storefront in, immediately you’ve escaped reality and transformed to a new experience. When I go to a MOB or health provider, I immediately enter pale painted walls surrounded by medical pamphlets and an office environment.

CONNECT HEALTHCARE: Across the nation, it’s common to see medical uses in retail properties, from strip centers to regional malls. But there still seems to be a disconnect between owner and medical tenants. What are you seeing and hearing in the market?
FETTERMAN: The disconnect between owners and medical tenants has more to do with the tenant improvement requirements of medical tenants than rental rates, except in the most high-end urban retail environments. Accustomed to retail tenant improvements that are limited to finishes and displays, retail landlords are often reluctant when pressed to fund medical tenant requirements for HVAC, plumbing and electrical infrastructure, and extensive hard wall construction in excess of $100 per square foot. Well-capitalized retail landlords need to figure out how to support the improvements required for medical users.

SOLANKI: Wellness tenants are willing to pay market rent, but seeking landlord contribution for the needed / customized build out. However, having a mix of wellness concepts in a retail project or mall has shown an increase in footfall. It is likely to drive spend as consumers come to use other services and shop, including eating at healthy establishments. The ROI for a landlord with the added contribution may prove to be beneficial, especially if they are receiving market rent. In a recent survey conducted by GlobalData, 72% of those surveyed stated they would spend more money in a retail project if they also had access to wellness concepts. There is strong synergy between fitness, shopping, healthy dining and wellness services.

CONNECT HEALTHCARE: As health providers continue to emphasize preventative medicine and wellness, do you see them focusing more on retail locations as options to serve patients?
FETTERMAN: Preventative medicine and wellness will take place across the continuum – at the hospital, in the traditional medical office, at retail locations, in drug stores and grocery markets and at home. While retail locations will benefit, this emphasis will more likely increase the pace of at-home healthcare utilizing developing technologies like wearables and telemedicine.

SOLANKI: The emphasis towards preventative wellness will grow in various methods of outreach. We see each day through commercial and digital ad campaigns, wearables, and from our insurance providers. More importantly, people in general are seeking a healthier lifestyle and the information is readily available. The focus to have wellness retail locations serves consumers easy access and convenience. Having most of everything under one roof, it will be highly-used and cross-shopped/serviced.

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For questions, comments or concerns, please contact Jennifer Duell Popovec

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