When it comes to strategic real estate capital investments, it’s no coincidence that for-profit provider return on investment is typically higher than not-for-profits. Navigant Managing Director Fred Campobasso provides insights on why for-profits are more successful, and steps not-for-profits can take to drive equivalent outcomes.

HealthCare Business News: Why are for-profit providers more successful than not-for-profits at generating ROI on their real estate investments?
Fred Campobasso: The secret to for-profit organizational momentum lies not only in their mastering of team-based decision-making, but also their ability to quickly implement informed strategies. For-profit leadership is much more likely to rapidly assess the data, to listen to their trusted advisors, and to weigh the risk-reward analysis around options. Combined, these attributes allow them to succinctly make informed go or no-go decisions.

HCB News: Why is it essential that provider leadership mitigate indecision and uncertainty in real estate development?
FC: As a healthcare real estate developer, our aim is to enable providers to make decisions in a timely fashion. But the bottom line is, we are not in control of when these decisions are made.

Herein lies one of the greatest challenges and risks to the development process and provider-tenant investment. Speed to market is a critical success factor in the world of healthcare real estate. On the other hand, indecision unnecessarily inflicts havoc on strategic development opportunities, and can lead to weeks, months and, believe it or not, years of delay. During these periods, projects once deemed feasible risk becoming impractical due to such changing market dynamics as increased competition, interest rate increases, construction cost escalation, site availability, mergers and acquisitions, and more.

HCB News: What can not-for-profit providers do to overcome indecision and associated risk?
FC: They need to deploy a development approach that addresses key questions around location, timing, costs, risk, and ROI. Ideally, a well-informed solution incorporates a disciplined process, to include market and financial assessment underpinned by data analysis and benchmarking of similar investments. It also requires a leader or project champion who understands the science and art that enables timely and informed decision-making. Together, these aspects can provide an accurate forecast of the future.

The reality is even successful projects leave a lot of money on the table due to indecision. For example, Navigant recently worked with a health system to create a regional ambulatory care network as a part of its enterprise-wide population health strategy. The system wanted to develop highly-accessible sites of care to complement their existing locations and service offerings, and maximize the return on these investments.

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