With the onset of the coronavirus pandemic, healthcare professionals pivoted to serving more patients online than ever before, through telehealth. In the years before the pandemic, the percentage of patients using telehealth services steadily increased to 0.8% of all doctor/patient visits in February 2020. April 2020 saw the largest percentage of telehealth visits comprising 52% of all doctor/patient visits. This 52% was a 6,400% increase in the baseline from February 2020.[1] The number of patients using telehealth services has leveled off to between 13% and 17%, depending on specialty, as of July 2021.[2] The increase in the use of telemedicine is causing some to wonder how much space medical office users will need in the long run.
According to a study done by McKinsey & Company, the overall adoption of telehealth is about 17%. Practice types vary in the percent of uptake of telehealth. Below are some of the specialty types with the highest share of telehealth claims per total outpatient and office visit claims as of February 2021:
- Psychiatry – 50%
- Substance use and disorder treatment – 30%
- Endocrinology – 17%
- Rheumatology – 17%
- Gastroenterology – 13%
- Neurological Medicine – 13%
Some of the specialty types with the lowest share of telehealth claims per total outpatient and office visit claims as of February 2021 were:
- Ophthalmology – 2%
- Orthopedic Surgery – 2%
- General Surgery – 4%
- Neurosurgery – 4%
- Poisoning / Drug Tox – 7%
In general, there are more healthcare visits in-person than through telehealth channels. As of June 2021, the modality of patient appointments was between 70 and 84% in-person, excluding psychologist visits that saw only 37% in-person visits and 63% via telephone/telehealth.[3]
The adoption of telehealth varies by region. According to a study done by The Chartis Group, the average adoption of the use of telehealth by healthcare providers was 7% in Indiana, 14% in Michigan, 9% in Ohio, and 6% in Kentucky in May 2021. These numbers are all up from between 0 and 1% before the pandemic.[4] Per a study done by McKinsey & Company, the average adoption of telehealth across the US and across all disciplines was between 13 and 17%.[5] Indiana, Ohio and Kentucky are behind the national average and Michigan is within the average range. The increased interest by both patient and care provider to utilize telehealth through either a hybrid in-person/telehealth or solely telehealth model means that more people can be reached by providers and may continue the growth of adoption.
Additionally, the demographics of those adopting telehealth show that younger generations are keener on electronic medical care than older generations.[6] This means that as more people fill out the new generations, there will be more use and demand for telehealth services. So, healthcare providers will need to implement telehealth solutions into their business models. Telehealth solutions may drive innovative ways of utilizing medical office space, which may increase or decrease the space needed for specific specialty types.
With the increased use and demand for telehealth, commercial real estate professionals are wondering if the amount of square feet needed by practices will increase, decrease, or stay the same. Telehealth will not totally replace, but will supplement, in-person medical care due to the hands-on nature of most medical practices. Not every patient nor provider will want to have their healthcare services conducted via video conference, telephone call, or text. Additionally, not every type of practice is geared toward providing virtual healthcare. There are some instances where patients need to be physically present in a doctor’s office.
A decrease in the size of a care provider’s space will most likely be an outlier. In the short-term, care providers may reconfigure their office space to suit their needs with less waiting room space and more office and exam room space. Due to the long-term nature of medical office leases, most tenants will likely not be able to downsize their space, so the effects of the outlier downsizing may not be felt until a few years down the road. Some practices may need to increase their square-footage due to the increased number of patients they can reach and the potential of those patients coming in for a physical doctor’s visit. There are industry estimates predicting that there may be a 20% increase by 2030 of total patient volume due to telehealth.[7]
Additionally, there may be more healthcare providers coming online and needing space to service the clients they generate through telehealth. Totally virtual telehealth providers my find that they want to keep their clients in-house, instead of referring them to another provider with a physical location. Those healthcare providers seeking to refer patients to their physical locations will need to strategically plan what type of spaces they want to own or lease, depending on their business model.
Overall, telehealth makes healthcare more accessible. More accessibility means more potential clients. In the long run, it looks like telehealth will increase the amount of square feet demanded my medical office tenants to accommodate more clients and physicians.
[1] https://reports.chartis.com/telehealth_trends_and_implications-2021/
[2] https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality
[3] https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality
[4] https://reports.chartis.com/telehealth_trends_and_implications-2021/
[5] https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality
[6] https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality
[7] https://www.globest.com/2021/07/20/breaking-down-telehealths-impact-on-healthcare-cre/
