A Health System that Owns Real Estate or a Real Estate Company Whose Tenants Deliver Healthcare.

Since I started consulting, I’ve been contacted to interview with a number of large health systems that, in the end, declined to purchase my services.  Of course, I’ve been contacted by more who have.

 

What was the difference between the non-purchaser and purchaser—besides, of course, that the purchaser ended up doing fantastically well?

 

For months I’ve been trying to puzzle it out. The pitch was the same, the need the same, the potential the same.

 

Why did some bite and some not?

 

After talking to a contact on the inside, I finally received an answer.

 

Real estate.

 

Do you work for a large health system, possibly one that is a tax-exempt “non-profit?”

 

Do they own a lot of service locations, offices, diagnostic centers?

 

Do they seem to increasingly ignore care delivery, with little or no thought put into innovation, physician wellbeing or workforce levels?

 

What you got there isn’t a health system, it’s a real estate holding company.

 

Real estate is very profitable. Except for Medicare Advantage,  it’s more profitable than actually delivering healthcare in our massively regulated environment.

 

I know it from my own experience in creating my own health system.

 

Real estate appreciates and its book value can be leveraged with willing bankers and venture capitalists to purchase even more property.

 

Of course, you need a reasonable occupancy rate of renters who can afford to pay market value—but if you employ your own clinicians you have excellent occupants readily at hand.

 

And if the organization you work for are free riders and don’t have to pay any property or capital gains taxes as “non-profits,” the potential for financial gain is truly bananas—so much so that given the choice between investing in mentorship for their clinicians with me or purchasing and new piece of property, the property wins every time.

 

That’s most likely why you sense that your health system isn’t really interested in you or the work you do. You and your patients and the care you deliver are a tool, a means to an end, a locked-in tenant of a real estate empire. You and your potential to realize a financial return on your skills and education are an afterthought, a side-line to the main event.

 

Is that what you want to be?