Prior to the disruptions wrought by COVID-19, healthcare real estate was already experiencing a sea change. More and more, providers were offering—and patients were happily using—health services in non-traditional locales.
Nestled in retail strips, main shopping centers and proximate to busy commercial offices, this “medtail” trend has only grown more prominent in the months since the onset of the global pandemic. “COVID-19 has acted as an accelerant to the inevitability that preventative wellness is no longer a choice,” said Willie Hoag, principal at Tether Advisors.
A new survey of 220 executives who work in private equity, commercial real estate and retail healthcare, as well as consumers brings this trend into sharper focus. The survey was part of a research initiative from July through November 2020 by Tether Advisors, which was founded in 2020 with a focus on national real estate consultation for the pioneers, innovators and category leaders in the medtail field.
The primary takeaway from the survey is that nearly 80 percent of private equity, commercial real estate and retail healthcare respondents believe that medtail investment will intensify in the near future as a direct result of COVID-19. And there’s plenty of room for growth as the pandemic has struck a blow to many traditional retail tenants.
“The retail (more formally called ‘consumer’) space is overbuilt, mediocre and redundant. What we have seen of late to better use that space is just the beginning,” Hoag said. “It’s exciting that a new group of players is filling former retail spots while providing access and convenience to consumers. Most importantly, the convergence could make us a healthier society.”
A booming sector
According to the survey, 83 percent of retail healthcare respondents and 82 percent of commercial real estate experts had optimistic outlooks for medtail in 2021. While private equity respondents proved to be a bit more cautious, nearly three-fourths of this group agreed on the likelihood of the sector’s positive performance in the near term.
“The bullishness about medtail is encouraging, and it might understate the opportunities we’re seeing,” said Katie Killeen, vice president of Tether Advisors. “Some obstacles remain—the staffing hurdles most medical retailers face are larger than ever, which is significant as reliable personnel are the backbone of every concept. But the larger trends driving medtail that have been turbocharged by COVID-19 clearly have staying power.”
Half of all respondents think that the increased focus on personal health has boosted the sector. Private equity, commercial real estate and retail healthcare professionals reported with 72, 85 and 70 percent confidence, respectively, that the prospects for medtail have improved since February 2020, before the start of COVID-19’s broader disruptions.
Convenience is king
Before the pandemic, the selling point for medtail was consumer convenience. If providers could bring their operations out to the neighborhoods where people live and work, they could offer a higher and wider level of service.
That enticement has only grown since the onset of COVID-19, as people are now more circumspect of entering a hospital setting unless absolutely necessary. With one caveat, however—proximity to consumers’ homes is more important than it was a year ago, while proximity to centralized office centers is potentially less so.
But when considering what encompasses “convenience,” ease of access is only part of the equation. Commercial real estate and private equity respondents both said that expanded medtail provides better access to everyday, traditional shopping. Retail healthcare respondents, on the other hand, pointed to “patient-friendly amenities” while consumers were more focused on shorter wait times.
Demographic due diligence
All of the survey respondents believe that the 36 to 50 age group is most effectively served by medtail—though it’s is unclear if this is due to the convenience of offerings align with the schedules of busy parents or wishful thinking among those eager to tap into a market segment with strong earning potential.
The age group that is the largest user of healthcare, the 65-and-older cohort, receives the least benefit from medtail, at least according to most of those surveyed. Private equity respondents dissented from this view, with 30 percent looking favorably on medtail’s service for older individuals. They also rated Oak Street Health and ChenMed—which both specialize in senior care—as innovative brands.
Commercial real estate and retail healthcare respondents professed bullishness for the 18 to 35 demographic. While this group doesn’t make regular doctor visits a habit, the hope is that subscription models—which can be quite profitable as younger people generally aren’t major users of healthcare—will align with shifting attitudes in a post-pandemic world.