How Artificial Intelligence is Transforming Healthcare Real Estate Planning and Development

Chris Kay IAIA. ACHE. AICP. DBIA

Article By: Healthcare Infrastructure Research Institute.

The Healthcare real estate sector is a growing faster than ever but it’s a complex industry that requires careful planning, and accurate demographic, social - economic analysis, and market forecasting,?led by experienced professionals that can process and?interpret?the data that drives early planning and development decisions. Several key trends are re-shape the healthcare real estate planning, design, and construction of healthcare facilities today that are changing the real estate development landscape.

The real estate industry is facing significant challenges due to current inflation and interest rate hikes that as of the past 16 months, the central bank has raised the fed fund rate by more then 5 percentage points. This has helped reduce the red-hot inflation that we have experienced with construction material purchases, but as interest rates raise so does the cost of borrowing to build new hospitals and medical office buildings, making new real-estate development projects more expensive and in many cases out of reach - forcing delays or even canceling plans to break ground all together.

Additionally, the US’ aging population is increasing as has been projected for some time now. This demographic trend continues to create new demand for?health and wellness facilities including hospitals, clinics, senior living facilities ?and many other types of ambulatory and wellness related services that require new construction and or adaptive-reuse planning and development solutions that can effectively cater to the unique needs of seniors who?currently represent 17% of the population but account for approximately 37% of all healthcare spend in the US. And the number of seniors over 70 is growing even faster according to CMS statistics.

Healthcare providers are actively pursuing strategies to meet this growing demand , including broadening access and improving care delivery, in part by developing new state of the art facilities, and by adapting their current real estate assets to accommodate the future public health and wellness needs, that are in large part driven by a combination of demographic, and other social economic?trends of which the topic of aging is one of many.

Healthcare executives responsible for the planning and development of their healthcare systems facilities and real-estate strategies must adapt to these demographic and social economic trends and remain focused on their patients’ and customers' needs for convenient, safe and cost-effective health and wellness services. These state-of-the-art services almost always require specialized environments to deliver care safely and effectively. As a result healthcare providers are exploring new alternative space planning solutions including taking more of a mixed-use development approach to help them better capitalize on the real estate assets they already have in place, as well as build new when the need exists, and a sustainable plan is put in place that will make it socially and economical viable to do so.

In this current market environment, Healthcare executives know that remaining at the forefront in providing an optimal patient experience means planning for spaces that support innovation hence requiring new buildings or newly adapting existing spaces to safely and effectively support those innovations that promote a better overall patient experience.

The good news is that in today’s digitized world, innovation often takes the form of integrating new technology into existing workflows and today, more than ever, we are able to "use AI to model spaces more accurately which allows planners and developers to increase efficiency, resilience, and efficacy.?Innovation however, comes with inherent risk. It’s about asking questioning and challenging the norm, being open to feedback, and securing the necessary information needed to make better, more informed decisions when it comes to planning and design of facilities and real estate. Today innovative planning coupled with multiple development options, previously not attainable in a timely and cost effective manner are now enabled and evaluated accurately with the use of AI. Furthermore, healthcare real estate professionals are leading the way in planning new and innovative mixed-use healthcare facilities through the use of AI, which is helping healthcare executives make more informed decisions which lead to adapting new ways of planning and developing their real estate assets with the coincidence that changing how the traditional hospital campus or medical office building is designed and operated will in-fact lead to a better outcome.

These new, what we are calling, "Buildings for life" are mixed-use designs that support care delivery better and more efficiently in part, by focus on first understanding the relevant demand, and supply factors that together with technology, life science innovation, and environmental changes accurately and with greater certainty ensure that these new facilities will meet the needs of today as well as the anticipated future, including addressing; patient access, resilience, and emergency preparedness for both changing weather and unexpected pandemics. Mixed use healthcare facility designs are also exploring alternative settings in which clinical operations can deliver safer and more efficient care in new space configurations that are programed to remain flexible enough to accommodate the ever changing requirements that will continue to impact healthcare service delivery in the future.

In recent years, the advent of artificial intelligence tools (AI) has brought about significant advancements in the real estate sector as a whole, with healthcare real-estate planning leading the way. AI is revolutionizing the way properties are analyzed, valued, planned, built and operated. AI is streamlining site selection, early planning, programing, building design and construction processes, in ways that measurably improve a facilities performance more then ever before. AI is also helping improve overall quality, and efficiencies in both clinical, support, and environmental operations, while contributing to mitigating risk, and providing an overall better personalized client/patient and staff experience during the planning, design, and construction process - through facility activation and the entire lifecycle of operations.

AI is transforming the facilities development landscape, including the way we execute design, and build healthcare projects, enabling a more integrated process, and helping us deliver better healthcare facilities faster and much more efficiently. For example, we are exploring new ways to plan and develop healthcare facilities in what we refer to as "mixed-use", a term not often used in healthcare. By design, mixed use is a new program approach for healthcare facilities that focuses on designing environments that can provide a greater number of healthcare and wellness services to patients, in the same program space of site which may have been designed for a single purpose. By rethinking how we plan and utilize our traditional healthcare campus's and the buildings and how we design the interior space improvements in these buildings and on those campuses we are creating safer more efficient care environments that can offer increased convenience and make it safer for the patient to receive the care they need. And these same outcomes are also true for support staff, nurse's, and doctors who are providing that care.

Patients today are already benefiting from the scientific advances that have enabled service providers to become more and more specialized. While they see better outcomes, patients often must now travel to different locations to receive the specialized treatments they need. Thus, here in rests the problem? It becomes a challenge to receive treatment from multiple providers in multiple locations, and sometimes its simply not practical, or safe for the patient, to travel long distances from one location to another.

Mixed-use facilities can offer a wider range of services. An "all-in-one” building and or fully integrated campus, or " healthcare and wellness village" that provides patients more convenience and better comfort, and in most cases faster more cost effective treatments - integrating specialties, support services, and consumer amenities and even entertainment and lodging in one convenient location. This approach also opens a lot of social and economic opportunities for the communities these new mixed use healthcare facilities or "health and wellness villages" are located in - including new high paying job opportunities, demand for housing development and promoting local small businesses that can enhance both the patient and staff experience, as well as realizing added economic benefits from the increased supply and demand in the surrounding area.

AI is also playing a crucial role in healthcare real-estate development today with; how we conduct property analysis and valuation. By leveraging machine learning techniques, AI algorithms now enable us to collect and analyze more data faster, and to analyze many more diverse sources of information. What took months to assemble and review before now essentially takes weeks, including evaluating many more unique property attributes and market conditions required to plan and develop mixed use environments. And we can now model and track results faster and more accurately. For example, we can secure, track, model and predict social and economic and demographic trends in record time create and track population trending with enhanced visual aids including "heat maps" traffic patterns and other digital tracking pattern techniques which help healthcare executives to make decisions with greater confidence earlier in the process thus resulting in faster times to market and ability to plan for?future demand more accurately .

IN SUMMARY, Two ways Artificial Intelligence (AI) tools can help:

I. IMPROVE PREDICTIVE ANALYTICS FOR MARKET FORECASTING

One of the key advantages of AI in planning and real estate development?is its ability to leverage predictive analytics. By analyzing demographic, social-economic and a wide range of other historical business makers, AI algorithms can identify patterns, correlations, and trends, enabling planning and development professionals to more accurately forecast market conditions and make more accurate and better-informed decisions. Predictive analytics can help developers and healthcare executives anticipate fluctuations in property prices, identify areas of high demand, and determine the optimal timing for property sales, or acquisition, including where the best locations are to provide needed services with greatest access and convenance for customers.

A.I. is also helping architects and contractors design and build better healthcare facilities resulting in improved quality, more sustainable building designs, and greater operational performance, including helping evaluate different complex clinical space layouts and designs best suited to operate safely and at peak performance levels.

Today healthcare facilities project teams?are using algorithms and machine intelligence in ways that enable them to have much more real-time, dynamic insights on what’s actually happening in clinical space environments and to accurately measure where there is room for improvement. AI tools now also track staff, patient movement, and environmental changes and conditions in facilities including; ?temperature, air quality, noise levels, humidity, building envelope performance, energy use, carbon dioxide levels, and changes in daylight levels to name only a few. Architects, builders, facilities professionals, and developers are collecting and analyzing building data and then cross-referencing it, using AI to get a better picture of actual needs which in turn informs future designs and building means and methods, helping reduce cost and time while improving safety and quality .

II. SUPPORTS SMARTER BUILDING FACILITIES MANAGEMENT SYSTEMS.

Once properties are constructed, AI continues to play a significant role in their efficient operations. The majority of the cost for a new facility is after completion of construction, during its operating life cycle. Smart building management systems can now befit from AI to improve performance and control operating costs, through improved monitoring and control of various aspects of a buildings operations, including energy consumption, security, and maintenance. Other environmental conditions related to regulatory compliance?and patient safety in the case of healthcare facilities also apply.

Furthermore, AI algorithms help facility managers predict equipment failures, enabling predictive maintenance and minimizing operational delays. These advancements not only enhance productivity but also contribute to cost savings, improved outcomes and?an overall better occupant experience. Through real-time data analysis, AI tools and algorithmics enable systems to better optimize energy usage, track life safety systems in real time, and improve security response time while preemptively identifying areas for improvement with surveillance systems by automatically detecting and alerting security personnel to potential threats. Additionally, access control systems utilizing AI streamline the entry and exit process, which is another basic example of how AI enables healthcare systems to improve overall safety and security in their facilities. The integration of AI with modern building automation systems (BAS) can significantly contribute to improving building operations, including, a better safer, more sustainable, and more cost-effective building life-cycle.

FUTURE OUTLOOK AND OPPORTUNITIES

As technology continues to advance, emerging trends such as augmented reality (AR) and virtual reality (VR) are also expected to reshape how we plan – design, construct, and operate our buildings. These technologies enable building owners, operators, and developers to visualize a sites potential and experience a properties?space plan?virtually before the building is constructed which helps enhance decision-making, improve design, and reduce uncertainties that lead to unexpected changes, cost overruns, or time delays. The integration of AI with these new immersive technologies has the potential to truly revolutionize the way we plan, design, build and operate our healthcare facilities – improving safety and performance which helps lead to better patient outcomes.

Furthermore, AI holds immense potential for increased sustainability, and profitability in the real estate development industry by leveraging AI algorithms and data analytics, which help?real-estate professionals?to optimize resources, reduce waste, and minimize environmental impact. AI-powered systems can contribute to the development of smart and sustainable buildings, entire cities, and more specifically the quality of healthcare delivery in the built environment. AI truly empowers and makes the?“Builds for Life” concept a reality.

CONCLUSION

The integration of AI in real estate development is already transforming the industry, including new mixed-use facilities which are designed to support safer, more efficient delivery of specialized health?and wellness services in a more integrated and consumer friendly manner.

AI is revolutionizing how we plan, design, build and operate our healthcare facilities. AI is helping control construction costs and, enhance building management systems like never before thought possible. And AI is improving energy management, mitigating risks, improving safety, and presenting us with new opportunities to operate healthcare facilities more efficiently.

As technology continues to evolve, the real estate industry will continue to embrace AI as a tool for innovation and growth because it makes good business sense to do so. By harnessing the power of AI, planners, developers, real-estate professionals, and healthcare facility executives?can make more informed decisions, and deliver exceptional services and a better experience to patients. The future of real estate development will continue to be powered by AI, creating new opportunities for improvement in the built environment that are endless.

HIR WOULD LIKE TO THANK OUR SPONSORS.

Thank you to our corporate sponsors and partners including; KHJR Real Estate Advisors, Collaborate Architects and Planners, Oppenheimer Investments, Kay Properties, TIG Advisors, Raymond James Financial, Walker Green Advisors, The Mayo Clinic, Advent Health, Methodist Health, St Luke's Health, Stanford Health, Legends Senior Housing, and Union Village - The first fully Integrated mixed-use health and wellness community of its kind.

ABOUT, THE AUTHOR AND HIR. THE HEALTHCARE INFRASTRUCTURE RESEARCH INITIATIVE.

Chris Kay IAIA, AICP, ACHE, DBIA. is a healthcare facility planning and design professional with over 33 years of experience in delivering integrated healthcare master planning and facilities design and construction projects across the US and MENA regions. Chris is an internationally accredited healthcare architect, (IAIA) Certified Urban Planner, (AICP) and experienced real-estate development professional, Design/Builder (DBIA), and a member of the National Institute of Building Sciences, (NIBS). He serves on the boards of KHJR Real-estate Advisors, and Collaborate Architects, Planners and Developers and as the Executive Director of The Healthcare Infrastructure Research Initiative, supported in part by the The University Research Institute. HIR is a collaborative research program helping bring leading healthcare real-estate, hospital and life sciences professionals together to address industry challenges at a national level. HIR's mission is to present the latest thinking from nationally recognized experts, providing an arena that facilitates interaction and collaboration among healthcare real-estate, hospital, and research leaders, with a focus on creating actionable programs that help improve the delivery of cost effective, safe, sustainable and operationally efficient healthcare and life science facilities across the US.

For additional information regarding our sponsors or to learn more about HIR's mission, contact Chris Kay @ [email protected]

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