Magazine article Journal of Property Management

Medical Diagnosis

Magazine article Journal of Property Management

Medical Diagnosis

Article excerpt


Medical Office BuildingS (MOBS) embody a unique relationship between a community of Healthcare providers and their patients.

This symbiotic dynamic produces a niche real estate product with many complex and competing goals: A highly regulated industry with constantly growing technology must be developed, managed and maintained to produce an efficient, aesthetically pleasing, state-of-the-art environment that's focused on the patient experience and physician satisfaction.

Further, MOBs are at the intersection of two enormous industry movements. In the real estate industry, investors are seeking a recession-proof haven. In the healthcare industry, the United States is amid one of the largest reform initiatives in its history. As a result of both movements, the utilization and design of MOBs will likely be affected.


Currently, health systems rely upon MOBs to achieve many objectives: They provide office space for physicians to accommodate patient visits; augment critical components of their acute care facilities; and provide market access points to their service offerings network.

The roles of MOBs are expanding, as extraordinary hospital construction costs- an estimated $1 million per bed- have caused facilities to downsize and shift their focus from in-patient to outpatient care, according to the Marcus andMillichap report: Medical Office Sector Remains Healthy in Ailing Economy. This shift has led to increased care at physicians' offices, and ambulatory and diagnostic offices, creating opportunities for medical office buildings.

The current economic climate is also impacting the utilization of MOBs. While the asset class isn't recession proof, it has proved resilient in the economic downturn. MOB construction completions peaked in 2008 with more than 17 million square feet of space. And while completions are estimated to have dropped in 2009 to 14.1 million square feet, MOBs are outperforming other asset types, like standard office buildings, according to the Marcus and Millichap report.

Their proven economic resilience, along with the projected expansion of the healthcare industry has resulted in MOBs attracting more investor interest.

To turn a profit, however, it will be incumbent upon owners and healthcare systems to constantly fine-tune their services at each location to meet the needs of that community. This will likely result in an increase in the use of MOBs as specific centers for cardiac, oncology, neurological and orthopedic services. Each of these will still contain a primary care and community-based services component.

Also potentially affecting utilization of MOBs, is the national discussion on healthcare reform. It has brought out a definable trend amid increasing concern about current and long-term rising healthcare costs: Patients will increasingly become responsible for their own care choices.

In Price waterhous e Cooper s Health Research Institute's report, Top Nine Health Industry Issues in 2009, two relevant predictions are made: "From vaccines to regulation, prevention is on the rise" and "Payer and employers move the needle on healthy living through incentives."

In response, Medical Office Buildings will be more accessible to the community they serve. In fact, medical malls and healthcare offices in mixed-use developments are already gaining popularity, according to Marcus and Millichap.

I personally foresee patients- depending upon the preventative and corrective treatment schedules prescribed by their plans- shopping online for the most effective provider. …

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