Spotlight On: Didier Choukroun, Founding Partner, President and CEO, SPHERE Investments
December 2024 — In an interview with Invest:, Didier Choukroun, founding partner, president and CEO of SPHERE Investments, discussed the company’s transition, expansion, and strategic focus. Key highlights include their rebranding, growing focus on public health, the shift toward workforce housing, and plans to expand into the European market.
What have been some of the key milestones and achievements for SPHERE Investments recently?
The past two years marked a pivotal transformation for our organization, culminating in a comprehensive rebranding and strategic repositioning that reflects our evolved vision and capabilities. Twelve years ago, we formed Flagler Healthcare Investments to focus exclusively on the healthcare sector. After those 12 years, we decided to expand our mission, which was initially focused on better outcomes and experiences for patients. Our new focus now includes public health more broadly, looking at the built environment as a social determinant of health.
The built environment, encompassing the human-made physical spaces where we live, work, and play, is a crucial component of the social determinants of health, directly influencing factors such as access to resources, education, physical activity levels, environmental quality, safety, social interactions, transportation, economic opportunities, and housing conditions, which collectively shape health outcomes and contribute to health equity or disparities across communities.
We realized that beyond just the built environment of healthcare, other structures — impacting housing, education, and transportation — also have a significant influence on population health. So, we shifted from just focusing on the well-being of patients to addressing human life as a whole. SPHERE is, in fact, an acronym for Strategic Public Health Equities and Real Estate. That’s been one of the major changes in the past year.
Additionally, the “E” in Sphere stands for equities, marking the first time we’ve decided to invest not only in real estate but also in operations. We’ve started initiatives and invested in four companies that align with our goals.
What are some of the unique challenges and opportunities you’ve encountered in reshaping the built environment to promote holistic health and prevent disease?
Starting with healthcare, improving health through the built environment requires acknowledging the limitations of existing structures. If you look at hospitals, evidence suggests we have been building them all wrong and are paying a high price. Many hospitals were designed over a century ago, focusing on the delivery of care but not necessarily on patient experience or outcomes. Hospitals’ design flaws are not simply unaesthetic or inconvenient; they are killing patients and critically affecting care providers and caregivers.
Due to the obsolescence of current healthcare infrastructure, the future of healthcare ecosystems is evolving. There is a need to reinvent the care delivery model from an environment of incremental care to a reimagined model where the patient is placed at the center of care. We ought to break down silos within healthcare and bring together the delivery of care, industry, academia, and research under one roof to foster innovation and better outcomes for patients.
Beyond healthcare, we also looked at housing as a social determinant of health. Over the past year, we’ve reflected on how to create a new housing prototype that addresses issues like affordability and access while also tackling mental health challenges. Our first prototype is focused on workforce housing for healthcare systems. Nurses, who make up more than 50% of employees in large healthcare systems, face many challenges such as burnout and lack of engagement, so we aim to provide solutions to these issues through the built environment.
How does your healthcare business intelligence platform give you an edge in identifying new growth opportunities and addressing complex market needs?
Intellectual property and intellectual capital are two of the most fundamental assets of our company. We wanted to change the way we approached healthcare real estate investment by anchoring our strategy in real data. In 2014, we initiated a strategic investment in data healthcare analytics by acquiring Prime Healthcare Analytics, formerly a Konica Minolta subsidiary. This acquisition served as the cornerstone for developing our proprietary platform, which has since evolved into one of the most innovative BI engines in the real estate and healthcare sectors.
SPHERE Analytics enables us to inform our investment strategies, identify opportunities, and eliminate bias in our decision-making process. It has also been essential in growing the business in a robust way. We’ve also strategically recruited data scientists, physicians, and public health experts with in-depth operational knowledge. Their expertise enables us to leverage unique insights, drive innovation, and solidify our competitive edge in the market.
What key trends are you seeing in the global healthcare real estate market, and how are you positioning yourself to address them?
A significant transformation in healthcare delivery is the evolving landscape of care settings. Historically, hospitals were the primary hub for medical procedures, managing approximately 80% of all cases. However, this paradigm has shifted dramatically. Today, over 75% of procedures are conducted in outpatient facilities, reflecting a substantial move towards ambulatory care. There’s a growing trend towards home-based care, which is increasingly becoming the preferred option for many treatments and services.
The place of care is the place of needs, and many companies like Medically Home, which specializes in inpatient home care, have grown significantly. Real estate must adapt to this trend. Our investments focus on ecosystems that bring care closer to patients, improve outcomes, and reduce costs.
In senior living, the trend is shifting toward improving health outcomes, not just focusing on resident experience. The real challenge is building environments where seniors want to go, rather than being forced to. As baby boomers enjoy longer, more active lives, the senior living industry must pivot from a model triggered by health crises to one that proactively enhances lifestyle, wellness, and independence for a new generation of older adults.
For example, addressing social isolation and loneliness, key determinants of mental well-being will be paramount in developing innovative and holistic solutions for senior care in the coming decades.
What challenges and opportunities do you see in improving elder care in Europe?
The most striking paradox emerged when we expanded into France and Spain. In Latin cultures — Spain, Italy, Latin America — there’s a deeply ingrained tradition of caring for aging parents at home. People recognize the impending ‘silver tsunami’ of aging baby boomers, but they’re convinced this cultural practice will soften the blow.
But here’s the paradox: when you actually visit the few elder care facilities in Spain, it’s shocking. Compared to what we see in the States, these places are downright depressing — you wouldn’t dream of putting your loved ones there. Despite their cultural reverence for elders, the conditions for those in care homes are some of the worst I’ve encountered. It’s baffling, really. You’d expect a society so committed to elder care to offer more dignified solutions.
The demand for quality elder care is only going to skyrocket, and we see a massive opportunity all over Europe. We’re thrilled about the prospect of creating vibrant ecosystems where seniors truly thrive and receive top-notch care. It’s a formidable challenge, no doubt, but one we’re eager to tackle.
What obstacles did you encounter when expanding into European healthcare markets?
Many told us we were crazy to expand into Europe, citing lower fee structures, lower returns, and the challenge of navigating multiple healthcare systems across thirty markets. They also doubted we could emulate our US data-driven strategy.
While skeptics may doubt the transferability of U.S. strategy to Europe, we remain confident in our approach. Despite regional differences, the fundamental challenges of an aging population and rising chronic disease burdens are universal. Our proven methodologies for addressing these issues in the United States have strong potential for success in the European context, with appropriate adaptations for local healthcare systems and cultural nuances. There’s also a personal element: two of our partners are from France, and I lived in Spain for five years. For us, it’s a homecoming, and we’re motivated by the challenge.
What is your approach to new real estate categories like workforce housing and community health assets?
Our focus on workforce and student housing, education facilities and community health assets stems from our desire to impact people’s health through the built environment. Healthcare accounts for only 15-20% of overall health, while factors like housing, environment, transportation, and education have a much larger impact.
For example, access to public transportation affects your ability to work, and economic stability influences your ability to afford nutritious food. We realized that improving community health requires engaging in urban planning and development. We approach this through data and intelligence.
Looking ahead, we may also explore life sciences, though it’s a challenging market dominated by a few key players.
As you expand into these new assets and markets, what do you see as the greatest opportunities for your firm to make a lasting impact on community health and wellness?
Our mandate is to responsibly manage our investors’ capital while making a positive impact. Over the past 12 years, we’ve shown it’s possible to deliver strong returns while doing the right thing. Our primary objective is to identify and acquire or develop properties that align with our core mission: enhancing the health outcomes and overall quality of life for its users; the strategic approach to asset selection presents both a significant challenge and a unique opportunity in the current market landscape. Our core challenge lies in the limited availability of suitable existing properties.
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