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Healthcare startups face complex challenges as they grow, from securing funding to meeting regulatory standards. But one factor that can make or break their long-term success often gets less attention: real estate strategy. Where a startup is located, how its space is configured and whether it leases or owns can all affect patient access, operational efficiency and investor confidence. Joe Kiani, founder of Masimo, recognizes the need to reduce burdens for patients, a goal that often depends on how care spaces are designed and delivered. As more healthcare startups look to scale, their approach to real estate will continue to shape how effectively they compete in a fast-changing market.
The Role of Location in Healthcare Startup Growth
Selecting the right location is essential for healthcare startups aiming to attract patients, talent and investors. A well-placed facility can enhance brand visibility, improve access to healthcare services and create an ecosystem for collaboration. Proximity to hospitals, research institutions and biotech hubs can facilitate partnerships and drive innovation.
Accessibility to public transportation and major highways can improve patient convenience and staff recruitment. Local demographics and population health trends should also be analyzed to ensure the location aligns with the startup’s target market. Choosing a strategic location not only enhances operational efficiency but also strengthens credibility within the healthcare industry.
Key factors to consider when choosing a location include:
Proximity to major healthcare institutions—Being near hospitals, research centers and academic institutions fosters collaboration, innovation and the recruitment of top talent.
Patient demographics and accessibility – Understanding the target market and ensuring easy access through public transport, highways and walkable areas improves patient engagement.
Regulatory and zoning requirements – Healthcare facilities must comply with local, state and federal regulations, which influence site selection and operational flexibility.
Cost-effectiveness and financial sustainability – Balancing affordability with quality ensures that startups can maintain operations without excessive overhead.
The Impact of Facility Type on Healthcare Innovation
Beyond location, the type of facility chosen directly affects a startup’s ability to scale, innovate and optimize patient care. Startups must decide between options such as medical office buildings, co-working healthcare spaces or purpose-built clinics.
Medical Office Buildings (MOBs) – Ideal for startups needing long-term stability and credibility. MOBs provide an established presence in a professional healthcare setting but may require significant upfront investment.
Co-Working Healthcare Spaces – Emerging as a flexible and cost-effective solution, these shared spaces allow startups to scale operations based on demand, reducing initial capital requirements.
Retail-Based Clinics and Urgent Care Centers—Positioned in high-traffic areas, these facilities improve patient access and brand exposure while offering lower leasing costs than hospitals.
Tech-Integrated Facilities—With the rise of telehealth and AI-driven diagnostics, startups are increasingly investing in spaces optimized for remote consultations, wearable technology integration and data-driven healthcare solutions.
Leasing vs. Owning: Weighing the Options
Real estate decisions for healthcare startups often involve leasing or purchasing a property. Each option has unique benefits and drawbacks that impact financial planning and operational flexibility. Choosing the right real estate strategy requires careful consideration of growth projections, budget constraints and long-term business objectives.
Leasing Benefits
Lower upfront costs – Leasing reduces the need for capital investment, allowing startups to allocate resources toward research, staffing and technology development.
Greater flexibility – Short-term leases allow for adaptation to market changes, patient demand and regulatory shifts.
Access to premium locations – Leasing enables startups to establish a presence in high-demand healthcare hubs without the financial burden of property ownership.
Easier scalability—As startups grow, leasing allows them to relocate or expand without the constraints of owning a fixed property.
Reduced maintenance responsibility – Landlords typically handle property upkeep, allowing healthcare startups to focus on operations rather than facility management.
Ownership Advantages
Long-term cost savings – While the initial investment is higher, owning property eliminates recurring lease expenses and provides equity growth.
Customization and control – Startups can design spaces tailored to their technology, workflow and patient needs.
Asset appreciation – Real estate often increases in value, offering a financial cushion for future expansion or investment.
Tax benefits – Property ownership can offer tax deductions on mortgage interest, depreciation and other expenses.
Increased stability – Owning a property provides security against rent increases or lease termination, ensuring continuity in operations.
Ultimately, the decision between leasing and owning depends on a startup’s financial position, long-term vision and operational needs. Startups should carefully assess market conditions, cash flow stability and future expansion plans to determine the most strategic choice.
The Influence of Real Estate on Investor Confidence
For healthcare startups seeking venture capital or private equity investment, real estate decisions can signal financial stability and growth potential. Investors evaluate:
Location viability and market demand – Startups in well-chosen areas demonstrate market understanding and patient accessibility.
Scalability of operations – A strategic real estate plan shows the ability to expand without major financial strain.
Operational efficiency—Efficient space utilization, smart facility design and the integration of digital health solutions indicate strong leadership and strategic planning.
The Future of Healthcare Real Estate for Startups
The healthcare industry is rapidly evolving, and real estate trends are shifting to accommodate new care models and technological advancements. Some key developments shaping the future of healthcare real estate include:
Telehealth-driven space optimization – With virtual consultations reducing in-person visits, startups are rethinking the need for large waiting areas and traditional office layouts.
Hybrid healthcare facilities – Combining in-person and remote services enables startups to streamline operations while maintaining a strong patient-provider connection.
Sustainable and wellness-focused spaces—Green building practices, natural lighting and ergonomic designs are becoming priorities to improve patient experience and employee well-being.
Designing spaces that support patient needs is just as important as choosing the right site. Managing a chronic condition often requires ongoing appointments, daily monitoring and regular interactions with healthcare providers. Joe Kiani notes, “The people who have this disease don’t get to really live a good, easy life; they’re constantly managing their disease.” That reality reinforces the need for healthcare facilities that reduce friction in the patient experience through convenient locations, efficient layouts and integrated digital tools that simplify care access.
Why Real Estate Strategy Still Matters for Healthcare Startups
Real estate decisions influence how healthcare startups operate, grow and serve patients. Choices around location, facility type and ownership structure can affect everything from brand credibility and patient trust to staff recruitment and investor interest. As healthcare delivery shifts toward more tech-enabled and patient-centered models, physical spaces must evolve to support those changes.
Startups that plan carefully can develop flexible, efficient facilities that accommodate remote care, digital tools and changing patient needs. A strategic approach to real estate supports not only current operations but also long-term stability. For healthcare startups working to establish a strong presence in a competitive market, real estate remains a practical factor in building lasting success.
