| • | Difficulty accessing real estate data |
| • | Limited technologies to assimilate and interpret data |
| • | Competing internal priorities limiting time and focus |
| • | Natural inherent challenge to impartially assess areas essential to cost savings such as vendor relationships, staffing and decision-making rights |
| • | Lack of a proven roadmap for executing in a complex healthcare environment |
The Guiding Principles: What, Why and When
| 1 | Ensure real estate control over space supply - Set standards, approach and frequency of revision for how the end user occupies space
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| 2 | Evaluate opportunities to add tools and improve planning process
The client felt the evaluation process was greatly improved using CBRE’s proprietary tool, Portfolio Optimizer powered by Tableau. By visualizing the portfolio on a map overlay, we could identify underutilized spaces that were near other underutilized spaces or owned properties, presenting consolidation opportunities. We could also visualize leases by expiration or option date, addressing the most actionable opportunities first. |
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| 3 |
Ensure planning is proactive –The internal real estate division, and the end users agree on a strategic direction for all leased or unoccupied owned space CBRE outlined an approach to address underutilized space targets. After developing a list of targets and potential actions for each, meetings were established with appropriate decision-makers. For this healthcare system, it was the Hospital Finance Officer (HFO) and regional clinical managers. These influential leaders had knowledge of the spaces under evaluation, as well as the power to initiate action on each lease. Each opportunity was presented via CBRE’s Portfolio Optimizer tool. Based on leadership’s knowledge of the spaces, unfeasible opportunities were removed and others not previously identified were added. |
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| 4 |
Leave No Stone Unturned – Target every lease for reduction opportunity Regional leaders may present myriad reasons that a portfolio optimization action may not work, from difficult landlords to hesitant physicians. However, it is important to engage in conversations with the end users as they can reveal deeper insights about opportunities or unveil new, better strategies. Leaders may also not be aware that opportunities exist to start new leases within owned properties rather than in third-party properties. |
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| 5 |
Plan granularly with a global mindset – Individual lease decisions are made within context of the plan, after being vetted for reduction opportunity
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| 6 |
Protect the System’s Best Interests The right decision isn’t always the easiest or most popular. When necessary, involve health system leadership to drive actions that will have significant positive impacts on the system’s portfolio. |
In Conclusion
Portfolio Optimization is not for the faint-hearted. It requires a phased, strategic approach utilizing proven processes and experts who have previously achieved such success in a healthcare environment. We know our clients know their healthcare organization better than us, or anyone else for that matter. But often, it is this intimate knowledge that gets in the way of delivering deeper cost savings through which new healthcare delivery opportunities could be realized.
Whichever path you choose, this article is meant to help you succeed. If you’d like to discuss any of these concepts, or get a sense for what is involved in a site assessment, please tell us how to reach you.
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About the Authors
Angel Benschneider is the CBRE Alliance Director for one of the largest non-profit healthcare systems in the US. She has an MBA from the University of Texas and a Masters of Science Degree in Healthcare Management from the University of Texas at Dallas. Prior to CBRE, Mrs. Benschneider served as a Senior Vice President with Caddis Partners - a development company specializing in healthcare real estate development, operations, and leasing. Mrs. Benschneider has been in real estate for over 20 years with experience spanning property management, development, and leasing.
Seth Ramey is the Account Strategist for one of the largest non-profit healthcare systems in the US. He previously served as a member of CBRE Labs, CBRE’s Global Corporate Innovation Team. Seth has led a variety of strategic initiatives within CBRE including strategic portfolio planning, rapid technology development, business analytics, data strategy, process improvement, and new business pursuits. He is currently completing a Professional MBA from the University of Texas.