In this Business Profile, Todd W. Lillibridge, president and CEO of Lillibridge Healthcare Services Inc., and executive vice president of medical property operations at Ventas, discusses trends in healthcare real estate strategy and key considerations when choosing a partner for managing a healthcare organization's service and capital needs.
Tell me a little about your company.
Lillibridge is the largest owner and operator of medical office buildings (MOBs) in the United States. As of June 2014, our portfolio spans approximately 22 million square feet in 400-plus owned and managed MOBs across 29 states, 163 cities, and 212 markets. And Lillibridge is positioned to grow as the industry consolidates. We really know health care—we provide advisory services, capital funding, property management and leasing, and facility development services to highly rated hospitals and health systems, with more than 400 clients nationwide.
In 2010, Lillibridge became a wholly owned subsidiary of Ventas Inc. (NYSE: VTR), an S&P 500 company that is a leading REIT and the global leader in MOBs and seniors housing. Ventas's diverse portfolio of nearly 1,500 assets in the United States, Canada, and the United Kingdom consists of seniors housing communities, MOBs, skilled nursing facilities, and hospitals.
It’s an exciting time to be in this industry. With the benefit of our national footprint and local execution, the Lillibridge team of professionals brings the best experience and ideas to the table.
What do you see are some of biggest issues that should be on healthcare organizations' radar in terms of their real estate planning?
We are in the trenches; we're collaborating with hospital and health system C-suite executives coast-to-coast every day. I'll drill down on a few top issues, from a healthcare real estate perspective.
Healthcare spending is high. Healthcare spending is expected to rise to 20 percent of GDP by 2022, from 18 percent in 2012. Economists warn there is no greater threat to the economy than soaring healthcare spending. It is a national imperative for the industry to control costs, employ better technologies, maximize efficiency, and continue to shift utilization away from inpatient settings.
The hospital's "front door" has moved from the emergency department to the MOB. As millions of people per year obtain health insurance through exchanges as a result of the ACA, the MOB will become the hospital's "front door" for those who previously may have accessed health care through the hospital's ED.
Outpatient demand is projected to grow 23 percent from 2013 to 2023. Emerging and enhanced care (and payment) models are driving health care to outpatient settings: population health, value over volume; wellness and prevention; retail medicine; team-based care coordination; "distributive care" for managing disease and chronic illness. In this new landscape, hospitals must reexamine their real estate assets to identify locations, scale, and size to meet these cross-continuum service needs and drive economies in their businesses.
Nobody's getting any younger. You don’t need a study or statistics to see this reality—just look at your own family and friends! Statistically, people ages 65+ visit the doctor four times more frequently than those ages 45 and younger. Providers need to ensure they have the resources to handle these escalating needs, and healthcare real estate is a huge part of the solution.
The mismatch between caregiver demand and supply is accelerating innovation. With a projected 14 percent shortfall between physician supply and demand by 2025, we are actively participating in making healthcare delivery more efficient: suite design that increases throughput, smart use of space to accommodate both physicians and mid-levels, practice consolidation, and even configuring non-traditional spaces for group visits.
How are you able to help healthcare providers meet these shifts in patient volume and facility use?
Lillibridge should be the first call—the best choice—to own, manage, and build and reconfigure environments for healthcare providers.
Typically, healthcare organizations have two critical needs: service and capital. Owned and leased real estate is one of the largest assets on a health system’s balance sheet, so we help optimize portfolios strategically, financially, and operationally.
We provide strategic capital through the acquisition of MOBs and outpatient facilities, and by funding new projects. Our experts help clients capture growth by developing a flexible, right-sized building at the right cost, at the right time for their market. And we are the largest property manager of outpatient healthcare facilities in the country. Through best practices, technology, and teamwork, we dramatically improve a healthcare organization’s financial position and patient capacity.
Because we are home to 8,000 physician tenants in 29 states—and Ventas, our parent corporation, is one of the leaders in seniors housing—we are uniquely positioned to understand and address the needs of healthcare organizations across the entire continuum of care. This is one of the values in what we’re doing, and why it is a stable business model: MOBs are a needs-based property and one of the lowest cost environments of care outside the home.
Can you share some key considerations for healthcare leaders when they are choosing among vendors during this time of facility use change?
People and other vendors may come and go, but the ownership of healthcare real estate has a long time horizon. Following are a few considerations for selecting a partner that will support your mission and goals for the long term.
- It is critical for healthcare executives to recognize they are not just engaging "another vendor" when real estate is concerned—because real estate is not just an end in itself, it's often a means by which health systems can achieve other important strategic goals to best serve their communities. Healthcare executives are selecting a high-level leadership team to partner with over the long term to serve not only their real estate needs, but also think strategically and work collaboratively to achieve success. Key considerations: experience and fit.
- When it comes to capital—whether it's acquiring, repositioning, or developing MOBs—the partner's ability to execute is paramount. No hospital wants to find out right before the closing that the deal has changed; you need to feel confident the deal you cut is the deal you get when it closes. Also, you need to have confidence that your partner is going to be there in the years ahead and doesn't have a reputation for "flipping" buildings, which is very disruptive to your business. Key considerations: track record of closing with certainty in every transaction, long-term hold owner and operator.
- "Life after the deal." Does your potential partner have the resources and capabilities to provide solutions over time to meet needs you may not even be aware of yet? Example, if you need a new medical building a year from now, you’ll benefit by having a trusted partner in place to execute quickly and reliably. Key consideration: a partner that has single source solutions.
- If you are looking for a partner to manage MOB operations, make certain it has an in-depth understanding of the healthcare operating environment best practices. Physicians are undergoing transformational change with respect to employment, technology, and accountability. Your MOB partner must understand what your valued physicians are going through in order to help optimize their practice environment and deliver exceptional service and positive experiences for their patients. Key considerations: experience of front-line people and whether they are supported by an organization with a culture of outstanding customer satisfaction.
In general, what can providers expect in working with Lillibridge?
In everything we do, we are guided by integrity, quality, and commitment to our clients. Clients can expect the following:
Commitment to excellence. One of the many ways we measure success is use of the Net Promoter Score® (NPS) methodology to measure customer satisfaction, manage to metrics, and drive accountability. We conduct annual CEL & Associates REACT Tenant Satisfaction & Opinion Surveys. This valuable feedback provides us with information to continually improve and provide an exceptional client experience.
Certainty of financial strength and access to capital. Our firm has immediate access to capital required to move quickly and with certainty to fund our commitments.
Physician-centric culture. Our understanding of physician alignment, productivity and satisfaction are strategically important for our clients to remain competitive in the marketplace.
Alignment of interests. We fully understand the importance of productive, efficient, and well-stabilized facilities that support physicians and patients along the entire continuum of care.
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Publication Date: Tuesday, July 01, 2014