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Jones Lang LaSalle Advises Healthcare Clients to Carefully Evaluate Internal Structures

Impact of “game changing” affordable care act can be mitigated with preparation and focus

CHICAGO, Feb. 13, 2013 — With healthcare reform and the significant pressures it will place on volume, reimbursement and profitability on the horizon, Jones Lang LaSalle says hospitals and healthcare systems must evaluate internal structures to respond to the impact of imminent changes. The firm also outlined five considerations for hospitals to minimize reform’s financial and operational impact.

“The Affordable Care Act, and the various issues it touches, is substantially different from all of the previous issues the industry has faced,” said Sydney Scarborough, Managing Director of Jones Lang LaSalle’s Healthcare Solutions group in a video blog. “It requires a significant organizational restructuring to increase value and ensure profitability, let alone survival.”

In today’s healthcare environment, profitability is contingent on a platform that focuses on patient care and population health. Payment systems will provide incentives based on performance metrics that include reduced readmissions, favorable patient satisfaction scores and better overall outcomes.

According to a perspective paper produced by JLL’s Scarborough, there are five considerations hospitals should make to be truly prepared:

  • Identify worst-case scenarios—In the face of uncertainty, it is important for hospitals to assess risk and understand the ramifications of flat or declining patient volumes, or reimbursement that falls to Medicaid or Medicare levels, and to have contingency plans to keep expenses and profitability in check.
“The Affordable Care Act is a force more powerful than just another economic or regulatory hurdle,” Scarborough said. “It’s a game changer. And only those prepared for all scenarios will survive.”
  • Act more like an insurance company—Acquiring or partnering with an insurance company to access actuarial tables and population health data represents a paradigm shift for most hospitals. This isn’t completely novel as systems like Kaiser have already perfected the hospital/insurance hybrid company model allowing them to anticipate and proactively care for populations while managing risk, and focusing on preventative care and case management.
  • Look beyond healthcare for best practices—Healthcare executives can learn from other industries, and specific companies, that also have faced intense pricing pressure and consolidation issues. By looking outside of healthcare, hospitals and networks can apply best practices in customer satisfaction, innovation and logistics used by companies that include Nordstrom’s, Apple and FedEx, respectively.
“There is no reason to spend already limited resources to re-invent the wheel,” Scarborough said.
  • Focus on core business—At its core, the business of healthcare is about patient care and population health. Business lines or service areas that don’t impact the quality of care should be outsourced to companies where it is a core competency. The most common of these service areas include food, laundry, grounds and housekeeping, real estate and facilities management, project management and commercial property ownership.
  • Don’t wait to implement changes—With elements of reform taking place later this year and into 2014, and the timing it takes to implement change, healthcare organizations should act sooner rather than later.

“A wait and see approach is a doomsday approach,” Scarborough said. “Those systems that are flexible and nimble will be able to adapt to the hurdles of healthcare reform.”

Jones Lang LaSalle’s Healthcare Solutions group works with hospitals and healthcare systems throughout the nation, delivering comprehensive inpatient and ambulatory facility management, strategic consulting, real estate capital advisory, program management, development, property management, transaction services, lease administration and energy/sustainability advisory services. Through its work, the Healthcare Solutions group connects healthcare business strategies to real estate solutions, driving efficiencies and enhancing quality.  For more news, videos and research resources on Jones Lang LaSalle, please visit the firm’s U.S. media center Web page. Bookmark it here:

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For more news, videos and research resources on Jones Lang LaSalle, please visit the firm’s U.S. media center Web page.  Bookmark it here:

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. For further information, visit