Our Health Care Real Estate Briefing is your comprehensive summary of weekly health care real estate highlights currently happening across the nation.
News surrounding skilled nursing facilities (“SNFs”) continued to dominate headlines after President Biden took aim at the quality of care being provided at privately-owned SNFs. Additionally, a number of operators and trade associations fired back claiming that low reimbursement rates are one of the reasons why SNFs continue to struggle. In other news, staffing issues continue to plague health care providers across the board with many exploring new tactics to recruit and retain employees.
1. President Biden targeted privately owned SNFs in his State of the Union address, claiming the quality of services at privately owned SNFs has gone down and the cost of care has gone up. He vowed to improve safety and the quality of care in SNFs
2. To improve care within SNFs, The White House issued a list of initiatives to be implemented by CMS, including establishing minimum staffing requirements, reducing the number of residents in a room, increasing the number of SNF inspections, expanding penalties imposed on poorly performing SNF operators, scrutinizing “chain owners” of SNFs and providing assistance to help SNFs provide better care.
3. AHCA/NCAL released a report with CliftonLarsonAllen, stating that SNFs have been hit hard by COVID-19, the staffing crisis and low reimbursement rates. The report says nursing wages have doubled from 2020 to 2021 and predicts the median SNF operating margin in 2022 will be negative 4.8% with a median occupancy of 77%. Additionally, 32% to 40% of SNF residents are living in facilities at risk of closure per HomeCare.
4. Health care providers are implementing unique strategies to recruit and retain staff. Trends include providing affordable housing or housing assistance, educational opportunities, child care and mental health benefits per The Advisory Board.
5. Hall Render is hosting a webinar on housing strategies to help health care providers recruit and retain employees. Register for the webinar here.
6. Fitch Ratings issued a report on the Healthcare Realty-Healthcare Trust of America merger and placed HR’s ratings on “Negative Watch” citing that HTA’s portfolio will dilute HR’s exposure to on-campus assets (Fitch likes on-campus), and the merger will increase HR’s leverage from around 5x to 6x. The report does cite several benefits of the merger, including that it should strengthen HR’s access to capital, it will scale HR’s portfolio in certain markets and that, with certain health systems, HR’s ratings are in line with Ventas and HealthPeak.
7. JLL published new telehealth data. Virtual visits peaked at 52% of all visits in Q2 of 2020 and are now around 11% of all visits, 75% of behavioral health patients had a virtual component of care, 31% of telehealth visits resulted in a physical office visit and telehealth utilization is higher on the East and West Coast.
8. VA officials are reportedly planning a $1B VA hospital in Buffalo, NY to replace the existing VA facility according to The Buffalo News.
9. Investment in U.S. life sciences real estate reached $21B in 2021, an increase of 62% over 2020. Investment has grown 111% since 2018 according to a CBRE report per The World Property Journal.
10. Philly is experiencing growth in the life sciences sector. Gwynedd Mercy University sold 150 acres to Beacon Capital Partners for a life sciences project. Oxford Properties Group plans to develop 3M sf of life sciences space in the Philly Navy Yard per Philadelphia Business Journal.
