Uncertainty and high risk are kryptonite to any investment community, and the healthcare real estate sector has seen a heavy dose of both since the beginning of the Great Recession.
From the economic crash of 2008-09, to the enactment of Obamacare in 2010, to the feds’ latest experiment—Ryancare, Republicare, Trumpcare, whatever you want to call it—no other major business sector has dealt with the level of chaos that healthcare owners, developers, providers, and consumers have faced.
Even as Speaker Paul Ryan’s Obamacare replacement died on the vine in Congress, President Trump and the GOP have no plans to walk away from their promise to repeal and replace the Affordable Care Act.
So, with a long road of political and financial uncertainty ahead for the healthcare sector, what does this mean for the nonresidential construction industry’s third-largest sector ($41 billion in annual construction spending)?
In the days and weeks following Trump’s historic victory, the consensus among healthcare sector analysts and AEC professionals was that the repeal and replace efforts would cause healthcare owners and developers to pump the brakes on major real estate construction and renovation plans in the pipeline. This, of course, was the case during the early days of the ACA, when many healthcare organizations halted construction projects until they could fully understand the implications of the law, especially the reimbursement structure.
More recent projections paint a slightly more positive picture for the healthcare construction market, at least in the near-term. In its latest healthcare real estate investment update, released last month (http://tinyurl.com/CBREhc17), CBRE Healthcare reported that healthcare providers “appear to be moving along with their strategy”—including their real estate plans—despite the turmoil in Washington, D.C.
“The ACA was a wake-up call for healthcare providers,” the report states. “In the last several years, healthcare providers have focused on ways to deliver care more efficiently and capture a greater market share to further their economies of scale. For developers, this means more outpatient facilities and a push to expand into new markets.”
Other real estate experts are not as upbeat. John Burns Real Estate Consulting, a respected housing market analyst based in Irvine, Calif., released a 68-page white paper last month (http://tinyurl.com/JBRChc17) that identifies healthcare as one of three major industries (the others being technology and automotive) that are “overheated and will likely be shedding jobs sometime soon.”
The most alarming indicator cited by JBRC: the sector’s rapid accumulation of debt—308% since 2009. This rate of growth far outpaces industry job and GDP growth, a circumstance that, historically, has triggered industry downturns.
Related Stories
Healthcare Facilities | Nov 30, 2018
As telehealth reshapes patient care, space and design needs become clearer
Guidelines emphasize maintaining human interaction.
Healthcare Facilities | Nov 28, 2018
$27.5 million renovation of Salah Foundation Children’s Hospital completes in Fort Lauderdale
Skanska USA built the project.
Healthcare Facilities | Nov 7, 2018
Designing environments for memory care residents
How can architecture decrease frustration, increase the feeling of self-worth, and increase the ability to re-connect?
Healthcare Facilities | Oct 30, 2018
Orthopedic Associates of Hartford unveils plans for 45,000-sf surgical center
MBH ARCHITECTURE is the architect for the project.
Healthcare Facilities | Oct 29, 2018
Outpatient clinics bring the VA closer to injured veterans
The Department of Veterans Affairs is making efforts to improve its construction management and align its design guidelines to industry standards.
Healthcare Facilities | Oct 22, 2018
WSP-HKS JV signs deal for U.S. Navy construction work
The contract is not exclusive to the two firms, but it lets NAVFAC assign certain projects to them.
Healthcare Facilities | Oct 12, 2018
N.Y. builder pushes to get military trauma centers up and running quicker
To date, seven NICoE Spirit satellite centers have been built on the grounds of Fort Belvoir in Virginia, Camp Lejeune and Fort Bragg in North Carolina, Fort Campbell in Kentucky, Fort Hood in Texas, Joint Base Lewis-McChord in Washington, and Camp Pendleton in California.
Healthcare Facilities | Sep 7, 2018
Medical office construction isn’t keeping pace with the aging of America
A new Transwestern report suggests a “rethinking” of healthcare delivery approaches that lean heavier on technology.
Engineers | Aug 22, 2018
An electrical engineer’s take on designing successful pharmaceutical lab space
Patrick Licklider, PE, CEM, GGP, LEED AP BD+C, an electrical engineer in Clark Nexsen’s Science + technology practice, shares his perspective on what it takes to successfully design laboratory and manufacturing environments for the fast-changing pharmaceutical and biotech industry.
Healthcare Facilities | Aug 3, 2018
Seismic deadlines approaching for healthcare companies
California hospitals can save money with a holistic approach to retrofit issues.