Last year, Florida’s annual property insurance premiums soared 27% for the second year in a row. The higher premiums have become a new tax on an industry that already has had its margins squeezed. At the same time, the state’s population has been surging with aging Baby Boomers, who have filled its senior care facilities, from independent living to skilled nursing and everything in between.
Social and cultural shifts are making big impacts on the way healthcare facilities are built, managed and used. So said panelists at the recent GlobeSt. Healthcare conference in Scottsdale, AZ.
A rise in med-tail services, and the robust growth of life sciences have provided new avenues for CRE executives to invest and build medical properties and panelists said that business discipline has never been as important as it is today.
When Angie Weber, first vice president at CBRE, asked Ross Caulum, regional real estate director at Trinity Health, about what are some of the ways that owners, brokers and developers can do to make their life easier at Trinity Health, he simply said to “have patience,” noting that it takes a while to make a decision, then joked about rethinking that decision once everyone comes to a consensus.
“The way that the best transactions happen is when there is a compelling business case for advancing healthcare delivery, and that takes time,” Caulum said. “Today’s medical office building isn’t like yesterday’s MOB. The MOB of then was five days a week, 8-5. Not, it is seven days a week and is about providing the platform of delivering healthcare where and when it needs to be. But the challenge of that is finding the staff and the physicians, noting that there is a major shortage. The labor shortage, he noted, has affected the thought process in real estate decisions. We constantly have to ask ‘will the staff be there? You have to get to a stabilized staffing cost and I am not sure how it will get done.”
“Back in the day, staffing wasn’t part of the thought process,” Weber explained “Now, decisions are being made with staffing in the forefront of the mind.”
“There has become more business discipline because of the capital constraint and the pressure on profitability too,” said Caulum. “You have to really walk through what the business case is, view it with open eyes, and not just think you can get the staff onboard because when you look at the past few years and track record, it hasn’t happened that way.”
Source: GlobeSt.
Nashville, Tenn.-based HCA Healthcare may be coy about giving guidance for 2024 but it has big plans for the next few years as it seeks to build its market share to 29% by 2030.
To help do that, the 183-hospital system is investing $5.3 billion in already approved projects. That figure came out of the company’s investor day Nov. 9.
Included in the $5.3 billion figure, HCA has 62 approved outpatient projects to build freestanding emergency centers and ASCs, totaling $1 billion, and has an additional 200 projects under consideration. HCA is aiming to grow its freestanding ER footprint by 36% over the next two years.
In addition to those investments, the for-profit system expects to drive growth through cost savings and improved benchmarking where facilities can share best practices to improve outcomes and reduce variable costs.
“All in all, management expects $600 million to $800 million of savings over the next five years,” Ben Hendrix, analyst at RBC, said in a research note. “Those savings can help HCA drive EBITDA growth toward the higher end of its targeted 4% to 6% over the next few years.”
HCA is also investing heavily to address labor shortages, building its Galen College of Nursing from five to 20 campuses, according to the research note. An additional 10 campuses are expected to open by 2026, increasing nursing enrollment from 13,000 to 29,000.
HCA, which reported operating income of $1.63 billion for the third quarter on revenue of $16.2 billion, expects its targeted EBITDA growth of the next few years will be met in 2024.
“While our planning process for 2024 is not complete, we currently believe that our 2024 expectations will fall within the targeted ranges above,” HCA CEO Sam Hazen said in a statement ahead of its investor day.
Source: Becker’s Hospital Review
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