The ‘One Big Beautiful Bill’ May Drive Demand For MOBs And Surgery Centers

The recently enacted One Big Beautiful Bill (OBBB), which extends 2017 tax cuts and curbs federal spending, is expected to significantly impact the healthcare real estate market, according to CBRE.

Stricter eligibility requirements for government-funded health insurance programs like Medicaid and the ACA marketplace may drive demand for medical office buildings (MOBs) and ambulatory surgery centers (ASCs). With fewer restrictions on inpatient-only procedures, there could be increased need for lower-cost outpatient care solutions—especially as the bill forecasts over $1 trillion in spending reductions.

Healthcare systems reliant on public funding may increasingly pursue portfolio optimization strategies, including facility consolidation, asset monetization, and sale-leasebacks to reduce costs and maximize space. While rural hospitals and community health centers are set to receive $50 billion in additional funding over the next five years, they could still face disproportionate challenges under the new spending constraints.

CBRE also projects a 0.7% annual decline in Medicaid enrollment through 2034 due to tighter adult eligibility criteria. States will see their ability to fund Medicaid through provider taxes restricted, with the allowable rate dropping from 6% to 3.5% of net patient revenue, and new taxes prohibited.

“Hospitals heavily reliant on Medicaid revenue may need to reassess their real estate strategies to enhance efficiency and cut costs,” said CBRE. This could lead to increased M&A activity and opportunities for asset sales or leasebacks as systems seek operational efficiencies.

Compounding the challenge, pandemic-era federal tax credits that lowered ACA marketplace premiums will expire at year’s end. Combined with stricter income verification, the Congressional Budget Office estimates this could leave 4 million people uninsured.

The actual effects of OBBB will depend heavily on how individual states respond. Some may increase their own spending to offset federal cuts, potentially reducing the number of newly uninsured individuals. Notably, a 19% decline in Medicaid enrollment between April 2023 and April 2025—following the end of pandemic-era continuous coverage—did not significantly impact healthcare providers.

“Given that many OBBB provisions remain subject to revision and further guidance, flexibility in planning and scenario analysis will be crucial for navigating the evolving regulatory landscape,” CBRE concluded.

Source: GlobeSt