Weekly Health Care Real Estate Briefing: The Federal Reserve Increases Rates I House Bill Endorses Use of Online Notarization I U.S. News Releases Best Hospital Ratings

Last week, a number of stories broke that impact health care real estate. The Federal Reserve increased its incremental borrowing rate for the third time this year. The rate increase will impact borrowing rates and could impact the number of new transactions that take place this year. In other news, a bill passed by the U.S. House of Representatives could result in remote online notarization being authorized across the country. A number of reports were released comparing charity care provided by for-profit and non-profit health care providers. Some reports suggest that non-profits provide more in charity care than their for-profit competitors. It depends on how the data is analyzed according to experts. Finally, a number of new hospital expansion projects were announced this week.

1. The Federal Reserve unanimously approved a .75% rate increase, the third rate increase by the organization this year. The Fed is attempting to curb inflation, as they would like inflation to be around 2% per CNBC.
2. The U.S. House of Representatives passed a bill that would permit the use of remote online notarization (“RON”) nationwide. Currently, 42 states allow for some form of RON. The bill would establish minimum standards for the use of RON per ALTA.
3. U.S. News released its 2022-2023 Best Hospital Ratings. Several hospitals made the U.S. News Honor Roll because of their expertise in multiple area, including Mayo Clinic, Cedars-Sinai Medical Center, NYU Langone Hospitals, Cleveland Clinic and The Johns Hopkins Hospital.
4. 2Q MOB transaction volume is expected to hit $3.6B, slightly lower than 1Q with $4.6B in transaction volume and way off 4Q/2021 with $7.3B in transaction volume. Rising interest rates and fear of a recession may have impacted the pace of transactions in 2Q per Revista.
5. WSJ published an article comparing the amount of charity care provided by for-profit, non-profit and government-owned hospitals. The government-owned hospitals wrote off the most charity care (4.7% of patient revenue), followed by for-profit hospitals (3.4% of patient revenue) and then non-profits (2.3% of patient revenue).
6. A Washington State legislative committee looked at whether non-profit hospitals provided charity care and community benefits in excess of their property tax benefits. The committee found that 91% of hospitals delivered more in charity care and community benefits than the value of their property tax benefits.
7. The NIC published The State of the Nursing Labor Market. Nurses account for 79% of employees in the home health industry, 60% of employees in the SNF industry, 52% of employees within the senior housing industry and 40% of all employees in the hospital industry. RNs make the most working in hospitals ($40/hr on average) and the least working in SNFs and senior housing facilities ($34/hr on average). LPNs and LVNs made the most working in SNFs and in senior housing facilities ($25/hr on average) and the least working in hospitals ($23/hr on average).
8. Ziegler published its mid-year Senior Housing Bond Market Report. Tax-exempt debt issuance for the first half of 2022 was down 9% from the same time period last year, the total amount of debt issued during the first half of 2022 was also down over the previous year ($1.8B vs. $1.6B) and rising interest rates were cited as the reason for the slowdown in financings.
9. Housing and health care are often linked – The National Apartment Association released a new study on apartment demand, finding that 3.7M units will be needed through 2035, 3 states will be responsible for 40% of the demand for apartments (California, Florida, Texas), secondary markets account for most of the demand and people 65 and over are increasingly choosing to rent vs own.
10. Vanderbilt University Medical Center announced plans to add a 15-level inpatient tower to its campus that would add 180 beds and 10 operating rooms. The project is expected to cost $500M per Becker’s.
11. Atrium Health announced plans to build a new hospital and medical office building near Lake Norman, NC that is expected to cost $154M per the Charlotte Observer.

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