Last week, CMS announced a new hospital provider status for rural hospitals. A significant number of rural hospitals have closed over the past decade. CMS created the new provider status in an effort to preserve rural hospitals. In other news, South Carolina is exploring a minor modification to its Certificate of Need (“CON”) law after a previous legislative effort to repeal the CON process failed. Two organizations released commercial real estate market sentiment reports that suggest the real estate market may be cooling off. Finally, several hospital systems announced new projects.
Friends – Here is my Independence Day health care real estate briefing.
1. CMS proposed a new rule that would create a new hospital provider status – the Rural Emergency Hospital. The rule, if finalized, would allow rural hospitals to provide access to emergency services, maternal health, behavioral health and substance abuse services to rural communities. The rule is designed to preserve rural hospitals. Since 2010, 138 rural hospitals have closed and rural communities represent a fifth of the U.S. population per Healthcare Finance News.
2. South Carolina is considering a bill that would modify its CON law. The bill includes an exception to the CON law for hospitals that want to establish an emergency department within 35 miles of their hospital campus per The Center Square.
3. A group of 12 Pennsylvania legislators penned a Letter to the Editor criticizing private equity firms that acquire hospitals. The legislators are considering a legislative package that would regulate for-profit ownership of health care facilities, provide oversight of hospital sales and regulate transactions that split real estate from hospital facilities per Daily Times.
4. PwC published its mid-year health care M&A outlook, finding that: 1) Deal volume is down 9% in the first quarter, but well above the long-term average for health care M&A transactions; 2) Buyer interest in physician practice acquisitions is up; 3) Private equity firms and health systems are competing for physician groups; 4) Home health and hospital transactions are highly sought after and valuations are up; and 5) REITs own 8% of all health care properties in the U.S. per Healthcare Dive: Healthcare and Health IT News.
5. The commercial real estate industry may be cooling off. According to RCLCO Real Estate Consulting’s Market Sentiment Index, CRE professionals believe that a slowdown is around the corner and a recession may occur within the next year or two. CRE financial professionals have a similar outlook per GlobeSt.com.
6. JLL published a summary of the Australian health care real estate market, including: 1) PE firms and REITs have targeted Australia in recent years; 2) The total value of health care real estate in Australia is expected to hit $41B; 3) By 2041, 20% of the population will be 65 and older; 4) Over the next 8 years, 2,200 hospital beds will be added; and 5) About 25% of the private hospital market is owned by institutional real estate investors per The Australian Financial Review.
7. Cincinnati Children’s Hospital Medical Center announced plans to develop an outpatient facility in a $150M mixed-used project per Cincinnati Business Courier.
8. Allina Health announced plans for a new $150 hospital in Cambridge, MN per Finance & Commerce.
9. UK HealthCare is planning to purchase 27 acres for a new hospital campus near Lexington, KY.
10. A vacant movie theater near Orlando is being converted into an ASC per Orlando Business Journal.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
