Healthcare Systems Bracing For 'Repeal And Replace,' But Not Stopping
For the second time in six years, the entire healthcare industry is bracing for sweeping nationwide change. But this time, systems are not slowing their real estate expansion.
President Donald Trump is pushing to repeal the Affordable Care Act, leaving uncertainty about the new administration’s plans for a replacement.
"The biggest thing is what does repeal and replace mean, how does it impact our industry, who are the winners and losers. We just don’t have a lot of data to go on," said Eric Johnson, Transwestern’s national director of healthcare.
The uncertainty is very similar to the lead-up to the Affordable Care Act, when systems halted all decision-making about expansions or relocations until the legislative direction became clear. But, that's not happening this time.
"One of the interesting trends from the potential of repeal and replace is that we haven’t seen much of a slowdown,” Johnson said. "Healthcare systems know the landscape and playing field, they’re moving forward. There’s still a lot of capital being deployed."
Regardless of what becomes of the ACA, demand for healthcare will remain high as Baby Boomers age and healthcare real estate moves into retail and new markets. Experts persist that there is an enormous appetite for health-related tenants in retail centers as surgeries are increasingly done through outpatient procedures. From a landlord’s perspective, medical offices are attractive because they are strong financially, have robust balance sheets, invest in their own space (for the most part) and generate traffic to the center.
"Everyone understands the more leverage you have with insurance companies and reimbursements, the more stable you are in the long term. A lot of that depends what your market share is," Johnson said. "That’s where the growth is, hospitals reaching out to complete their coverage areas."
Despite the struggles of Obamacare — like Humana announcing this month that it will stop selling those health plans next year — the nation has fewer uninsured residents than ever. About 20.4 million people have gained coverage since 2010. Still, nearly 11% of Americans remain uninsured. Meanwhile, healthcare expenditures are on the rise, surpassing $10k per capita in 2016, and are forecast to grow at an average annual rate of 5.8% through 2025.
Providers are receiving less insurance income and are under constant pressure to protect operating margins while still innovating, improving and enhancing services.
With a mixed bag of data and little indication of the Trump administration’s plans, Johnson concluded, "we don’t know how anything will shake out yet."
With so much uncertainty, you cannot afford to miss presentations from Eric Johnson and more than 30 other health industry experts and execs at Bisnow’s premium Big South Healthcare event. The all-day national conference will take place March 7. Register today.