Design is Strategy: Why Investing in Your Healthcare Facility Pays Off
Your real estate isn’t just a cost center — it’s an engine for retention, outcomes, and enterprise value.
As a healthcare founder, you scrutinize every number on your pro forma. You work relentlessly to optimize revenue, run a lean team, and stretch every marketing dollar. The instinct when it comes to real estate is to cut corners: “Every dollar we save on construction is a dollar back into the business.”
But in risk-bearing care models, where outcomes and retention directly drive revenue, your physical space is a growth engine. Design isn’t cosmetic. Design is strategy.
Why the Physical Space Matters More You Think
Healthcare is delivered by people, but it’s experienced through space.
A bare-bones facility may check the regulatory boxes, but it sends subtle messages that undermine your entire model:
Patients feel like they’re in an institution, not a community.
Staff morale suffers in an uninspiring or inefficient environment.
Referral partners see you as “minimum viable” instead of mission-driven.
In a risk-bearing model, that experience translates directly to dollars. Every missed visit, every disengaged participant, every burned-out staff member has a measurable cost to your bottom line.
PACE as a Case Study: The ROI of Design
Nowhere is this dynamic clearer than in the Program of All-Inclusive Care for the Elderly (PACE) — a fully capitated model funded by Medicare and Medicaid where organizations take on full risk for participant outcomes.
Participants are frail older adults. The PACE center is their medical home — and the quality of that environment directly shapes engagement, retention, and outcomes.
The Upfront Investment
Let’s look at a 20,000 SF PACE center:
Additional Construction Cost: $75/SF × 20,000 SF = $1,500,000
Additional FF&E Cost: $15/SF × 20,000 SF = $300,000
Total Additional CapEx: $1,800,000
The Revenue Impact
In PACE, small improvements in acquisition and retention create outsized results.
Assumptions over 5 years:
A modern, welcoming center adds 1 new participant per month compared to a standard facility.
The same environment retains 1 participant per month who might otherwise have left.
Average PMPM: $10,000
Average enrollment duration: 3 years
Results over 5 years:
From acquisition: $15.3M
From retention: $21.6M
Total: $36.9M additional revenue
The Payback
So, what’s the return on that $1.8M investment? The math is simple and proves the value.
When you factor in the full revenue from both acquisition and retention, the project generates an average of $615,000 in new revenue each month over a 5-year period.
With a $1.8M investment, that pays for itself in just 3 months.
Conservative Case
Even if you cut those assumptions in half — 1 new participant every other month, and 1 retained every other month — the math still holds:
$18.5M in added revenue
10x ROI on the $1.8M investment
Beyond the Numbers: The Human Multiplier
The ROI math is compelling, but the real win comes from engagement:
Patients: When a frail older adult like Mrs. Jones feels safe and comfortable, she comes more often. The care team notices subtle health changes earlier, and she trusts the center enough to call instead of defaulting to the ER.
Staff: People want to work in spaces they’re proud of. A thoughtful environment reduces turnover, boosts morale, and improves care delivery.
Brand & Referrals: Especially in underserved communities, your space is a statement of intent. Families and referral partners see the investment, and it builds trust.
Enterprise Value: The Boardroom Lens
For venture-backed or growth-oriented companies, enterprise value matters as much as cash flow.
At a conservative 3x revenue multiple, the $36.9M in added revenue from design translates to over $100M in enterprise value. That’s the kind of return that moves investors.
The Bottom Line
The numbers prove it: design is strategy.
A well-built facility fuels retention, strengthens outcomes, inspires staff, and builds trust in the communities you serve. When you invest in design, you’re not just spending more — you’re aligning your physical space with your care model.
That alignment is what turns a clinic into a growth engine.
Ready to Build Smarter?
At Retained CRE, we help founders and executive teams translate their care models into physical spaces that accelerate growth, de-risk execution, and create lasting enterprise value.
If you’re planning your first healthcare facility — or scaling your footprint — let’s talk about how thoughtful design can pay off for your patients, your team, and your investors.