LA Healthcare Real Estate Bracing For Slow-Moving Impacts Of Big Beautiful Bill
The impacts of the nearly $1T in Medicaid cuts included in the One Big Beautiful Bill Act are likely to cause healthcare systems to pause capital expenditures at least temporarily once the bill fully comes into effect beginning in 2026.
The cuts will result in an estimated 11.8 million Americans losing their insured status, a reversal from the implementation of the Affordable Care Act more than a decade ago. Expansions for clinics and hospitals followed the ACA, but that could be reversed with the cuts included in the OBBBA, according to panelists at Bisnow’s Southern California Healthcare Real Estate Conference.
Still, panelists looked for potential upside as the behemoth law rolls out.
“It will affect the critical care access facilities, the [federally qualified health centers], but I offer that’s going to be creating an opportunity, too, with that,” Steven Stubbs, former Glendale Adventist Medical Center regional director of clinic and ancillary and business development, said at the event, held Wednesday at the Hilton Los Angeles Culver City.
Stubbs said that opportunity will be in outpatient locations as more and more procedures shift to these types of facilities.
The American Health Association warned the bill would “drive up uncompensated care for hospitals and health systems, which will affect their ability to serve all patients” and increase wait times in emergency rooms and other critical healthcare services as hospitals reduce staff numbers to offset those funding losses.
Those reductions could send more people to outpatient clinics.
The full scope of the bill’s impact on hospital systems will likely take awhile to play out, said Sanford Smith, a senior adviser to Hoag Memorial Hospital Presbyterian and the system’s former real estate facilities adviser.
“I think what you're going to see is a lot of health systems freeze their capital plans until they can sort out what the true economic impact is going to be and when it's going to occur,” Smith said, adding that much of the bill goes into effect in 2026 or later.
Smith drew a parallel to the way that the effects of the Affordable Care Act took time to percolate into the healthcare system and for its impacts to be seen.
Healthcare providers will likely pump the brakes on any growth initiatives until they have a clearer picture of what’s to come, Smith said.
Some in the field are already seeing the effects of the bill. Meridian Chief Financial Officer John Pollock said that what he termed social safety net providers, such as those federally qualified health centers, are already seeing the legislation’s impacts in some cases, such as with a reduction in reimbursements for women’s healthcare.
Larger systems could start to see the effects as more patients begin to come straight to the emergency rooms because of a loss of coverage, Pollock said.
With this all hanging in the balance, Pollock echoed that he was already seeing healthcare providers press pause until there is more clarity about how this massive piece of legislation will impact the business of healthcare.
Many panelists were focused on an anticipated increase in demand for outpatient facilities, where they saw a growth opportunity in hospitals shifting services.
The AHA has forecast “robust growth” in this area as technology allows for more procedures to be done outside of hospitals and as the needs of an aging populace translate into a greater need for procedures provided in these locations.
Another motivator is demand for these centers from patients, who increasingly want the convenience they experience elsewhere in their lives to spill over to their medical care.
“If you can do an ambulatory care center off-site, if you can do clinics off-site, close to where people work, close to where they live, it has far better outcomes,” SLS Consultants Director Cynthia NeSmith-Montanez said.
