Hospitals, corporate real estate management and alternative real estate financing structures

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Healthcare systems across the globe are under continuous reform. Thus, it is important to note that healthcare systems are still evolving. Moreover, in Europe a distinction is made between so-called Bismarck “mixed” and Beveridge healthcare models.

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Bismarck systems are based on social insurance, and characterized by a multitude of insurance organizations, who are organizationally independent of public and private healthcare providers. Examples are such as in France, the Netherlands and Germany (“Krankenkassen”). In Beveridge systems, however, financing and provision are handled within one organizational system and based on taxation. This implies healthcare financing bodies and providers are completely or partially within one organization, such as the National Health Service (NHS) in the UK and Spain (Lameire, et al. 1999; Finfacts, 2007). Throughout history, healthcare systems across the world have evolved from Bismarck into Beveridge systems and vice versa. Usually, such reforms are a bone of contention. A recent example is the highly controversial debate in US politics on reform of the American healthcare system, which is unique in its application of the Private Insurance model (Lameire, et al. 1999). Democrats have long called for a universal health insurance program, which involves the expansion of coverage and restricting the power of insurance companies. Proponents argue that health insurance should be affordable and accessible to all, while opponents (mainly Republicans) fear too large a role of the government and the use of tax money to finance the – arguably – enormous costs involved. Both parties seem to agree that the power of insurance companies should be restricted by banning underwriting practices that prevent many Americans from obtaining affordable health insurance. However, though U.S. president Obama has praised various aspects of the Dutch social security-based (Bismarck) healthcare system, a similar evolution of the American healthcare system yet has to commence (NY Times, 2009). This section begins with a brief historic overview of the Dutch hospital (or cure) sector, with a focus on its evolution. Second, the interdependencies between healthcare real estate, (strategic) corporate real estate management, and alternative real estate financing structures will be elaborated upon by using corporate real estate management (CREM) theory and comparing various sources from academic literature. These are intertwined since healthcare heavily depends on real estate as a resource in fulfilling its core business activity. By opting for alternative ways to finance real estate, hospitals are able to free up additional capital to support their clinical activities. As the Dutch healthcare system currently is under reform and hospitals become responsible for real estate investments themselves, they are under increasing pressure to consider more cost-efficient options and enhance their competitive position. Alternative real estate financing structures such as public-private partnerships, where hospitals profit from the knowledge and experience of private sector parties through various partnership agreements, could provide a alternative feasible alternative here to more traditional real estate financing structures.

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