Jefferson Health System, Philadelphia Strategic Real Estate Management and Disposition Plan

In 1998, as now, Jefferson Health System (JHS) was the largest health care provider in the Philadelphia region. Originally comprised of two provider organizations, with five acute care hospitals and over 6 million square feet of space, mergers with two additional organizations more than doubled these numbers. JHS asked for assistance in addressing its changing real estate requirements with specific focus on:

  1. Management of medical office buildings
  2. Creation of ambulatory care facilities
  3. Redundancies of space within the system
  4. Excess land holdings

The process began with an intensive data-gathering process, interviewing key executives and real estate personnel and touring every major facility in the system. The data-gathering process revealed that the information available from the system’s various organizations was inconsistent. Additionally, JHS management was not receiving necessary data and thus unable to assess how its operating units’ real estate was performing. These problems pointed to deficiencies in JHS’s methods and organizational design that had to be addressed before any specific problems could be effectively resolved.

Our strategic analysis of the organization showed that JHS was not realizing the economies of scale that consolidation should have yielded. Real estate operations, record-keeping and reporting were not standardized, as each operating unit continued to manage its real estate independently. We made several recommendations to reorganize real estate operations including an entirely redesigned organizational structure, newly designed personnel positions to manage system-wide operations, creation of standard practices and procedures, development of strategic alliances for outsourcing non-core functions, and various approaches to strategic dispositions and using financial markets.

The resulting strategy and organizational design enabled JHS to operate its real estate more efficiently and to respond to a rapidly changing industry.