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What Trends in Healthcare Are Northeast Developers and Investors Keeping an Eye On?

May 15, 2018
by Josh Anderson

JERSEY CITY, NJ — Healthcare delivery in the Northeast is changing in many ways. So at CapRE’s CAPRE’s Seventh Annual Greater New York Healthcare Real Estate Summit on March 20, we gathered a group of industry leaders for a panel titled Financing for and Investment in the Northeast Healthcare Real Estate & Medical Facilities Marketplace: Analysis of the Evolution of Healthcare Delivery, and the Impact of Inflation and Interest Rate Hikes on the Industry. The panel kicked off with a rousing question: What trends relative to the healthcare delivery industry – changes, modifications, etc – will you be paying attention to as investors and developers moving forward? Below, we highlight a pair of responses to that question.

Cheri Clarke Doyle, Senior Vice President – Development Management, Trammell Crow Company: One thing that we’re seeing is more of the micro hospitals throughout the country. We see them more in our southern markets like Texas. But we’re also seeing them in Pennsylvania. And the benefit of the micro hospital is that it kind of goes around reimbursement issue. With a micro hospital, you can treat an outpatient at the hospital rate, because it’s technically a hospital.

The other thing I like about micro hospitals is that it’s a lower cost setting into the community. So it serves all of those purposes that the healthcare environment is scheduled to have. You have lower costs, you’re in the community and serving the entire population, but it’s also effective because there is a partner involved with the health system. So the execution is faster. It’s run more like a for-profit rather than a non-for-profit, so it’s a little more efficient. And I suspect that we’re going to see more of these as time goes on.

Robert Atkins, Owner, Atkins Companies: I would say that the trend that I’m following most closely is pretty much like everybody else that goes into this space, and that’s the trend away from solo practitioners and smaller groups, and into more major, integrated facilities. The case study that was presented earlier today is a classic case of where medical offices are moving, in my opinion. Having been in the medical office space for many, many years, I still have some properties where I still have a number of buildings full of older, solo practitioners. And it’s a concern. Because when they leave, when they retire, there aren’t going to be practitioners lining up for these spaces. Those calls that we used to get on a weekly basis just don’t exist anymore.

So the question is, can those properties be slowly turned over? And are they desirable locations for either healthcare system to take larger space, or for a larger group to come in and take bigger space? Or, sometimes, we see that the best thing to do is to sell the property. There is so much money chasing deals, and there are a lot of different buyers out there. Everyone doesn’t have the same fundamentals in mind.

Banner Photo: Robert Atkins, Owner, Atkins Companies

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