Healthcare Reform Blog > June 2011 > Healthcare reform boosting medical real estate

Healthcare reform boosting medical real estate

Carolyn McMeekinContributor: Carolyn McMeekin
Topic: Medical-related real estate

Healthcare reform could have an upside for medical-related real estate – and maybe even lead to better coffee.

Despite rhetoric to the contrary, certain sectors of the healthcare industry are experiencing a resurgence, among them hospitals and real-estate investment firms that specialize in healthcare facilities.

The economic downturn resulted in many a building project delay, and created pent-up demand for hospital space. As Healthcare Realty Trust officials note in their recent first-quarter 2011 conference call, hospital competition for market share and continued cost-reduction efforts via use of outpatient treatment will likely lead to new facility construction and to acquisition and development opportunities.

Still, with government reimbursements keeping hospital admission growth low, Healthcare Realty Trust intends to continue investing in outpatient properties, which have more stable cash flows and a lower-risk tenant base than some other healthcare facilities.

Another growth arm is the reform law’s prohibition against Medicare reimbursements to physician groups that own hospitals. Thus, American Realty Capital Healthcare Trust, another realty firm, is buying the Reliant Rehabilitation Center, a new 60-bed rehabilitation hospital in Bedford, Texas, located approximately one mile from Harris Methodist HEB Hospital, five miles from North Hills Hospital, and seven miles from Baylor Regional Medical Center at Grapevine. ARC officials say these three hospitals had 36,000 inpatient admissions in 2010, with more than 2,500 of those admissions expected to require post-acute rehabilitation care. The facility is a joint venture between a private equity firm and a group of physician investors.

“This is a great opportunity to acquire a brand new facility that has already generated higher patient volumes than originally anticipated from the referring hospitals,” says Todd Jensen, chief investment officer for ARC Healthcare. He notes the ban on Medicare reimbursements created “a meaningful barrier to entry for existing physician-owned hospitals and the Reliant facility.”

ARC Healthcare, which launched an IPO in February, also plans to acquire Texarkana Surgery Center, an ambulatory surgery center leased to Texarkana Surgery Center and a clinical outpatient building leased to the University of Wisconsin Medical Foundation near Madison. 

Meanwhile, Healthcare Realty acquired a medical office building in Colorado Springs and another in Frisco, Texas, at the end of 2010. Additionally, a prominent orthopedic group leased space in its Bellevue, Wash., development.

But if you’re searching for real proof of a real estate play, consider this: Healthcare Realty officials also announced that its Bellevue facility is about to be home to a Starbucks, a sure sign that an office building has arrived.

 

Posted on: 6/1/2011 1:03:43 PM | with 1 comments


Tags: Healthcare Realty Trust, Healthcare reform, Medicare

Comments
James dosung
The House of Congress' approval for comprehensive healthcare reform is on the same plane of significance as the election of the United
10/3/2011 8:49:22 AM

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