Hospitals and health systems can reap significant short- and long-term benefits by proactively addressing their real estate strategies as part of the mergers and acquisitions process, says financial services firm Jones Lang LaSalle (JLL).
As healthcare providers continue to consolidate at a record pace, providers have an opportunity to reduce costs through real estate portfolio optimization, according to Mindy Berman, managing director of Healthcare Capital Markets group at JLL.
“We fully expect healthcare merger and acquisition activity to be a dominant theme again in 2012 as health systems look to strengthen their market positions and physician alignment strategies come into greater focus with impending healthcare reform,” said Berman.
“With strong levels of M&A activity, health systems will have a need for strategic portfolio realignment,” added Berman. “As this occurs, health systems will rationalize their real estate occupancy and look to release capital and lower operating costs through dispositions, monetization and sale-leasebacks.”
JLL identifies five key opportunities for M&A transactions to open the door to real estate-related financial and operational success:
● Organizational improvements from the centralization of administrative services and processes
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● Capital release through sale, or monetization, of non-core real estate assets
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● Reduced costs and increased efficiency from leveraging the size and scale of shared services
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● Environmental benefits and expense savings through improved energy management
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● Assurance of regulatory compliance through a careful evaluation of hospital real estate practices.
“Longer term, there is also an opportunity to rationalize the entire real estate portfolio through a comprehensive, strategic analysis,” said Berman. “This can yield benefits derived from portfolio rightsizing, improved operations and the further release of equity through additional real estate transactions.”
Follow HFN Editor Rene Letourneau on Twitter @ReneLetourneau.