Weekly Health Care Real Estate Briefing: CMS Releases Plan to End Public Health Emergency I Construction Starts Way Up I Colliers and Fitch Publish Mid-Year Hospital Outlook Reports

1. CMS released a roadmap for ending the COVID-19 Public Health Emergency (“PHE”). CMS will be terminating numerous regulatory waivers that were put in place to offer flexibility to health care providers during the pandemic and will give notice to providers 60 days before ending the PHE.
2. Fitch published its mid-year outlook for non-profit hospitals. The sector will remain challenged for the remainder of 2022 and for part of 2023. Labor costs and inflation have impacted margins. Growth in liquidity that occurred in 2021 is helping some of the providers weather the storm. Non-profit health systems typically have lower margins when compared to for-profit health systems per Fitch.
3. Colliers published its Q2 health care real estate report, including: 1) Hospitals and health care providers are struggling to drive down costs and sustain profit margins; 2) Labor and supply chain issues continue to challenge providers; and 3) Reimbursement rates haven’t kept up with the cost of care.
4. Hall Render interviewed Michelle Mader and Mark Furgeson from Ankura on its Health Care Real Estate Advisor Podcast to discuss financial and regulatory issues affecting health care real estate. Listen to the full podcast here.
5. Hall Render will be hosting its Virtual Practical Counsel Institute in September. Attorneys looking for CLE credit on health care topics can sign up here.
6. For the month of July, new commercial construction starts were up 79%, while residential construction starts were down 8%. Over the past 12 months, commercial construction starts were up 22% and residential construction starts were up 1%. Rising interest rates will likely impact the number of construction starts later this year per Dodge Data.
7. Recruiting and retaining staff at senior housing facilities has been a challenge. A number of providers are offering more money and more flexibility in shifts. Operators are also looking for ways to build trust between management and employees, offering more support services to employees and building morale by telling stories about the importance of their work per Senior Housing News.
8. NPR published a story about the sale of rural hospitals for pennies on the dollar, including: 1) Rural hospitals are struggling and many are on the verge of closing; 2) Private investors are swooping in to buy the real estate; and 3) Since 2010, 16 rural hospitals have closed in Tennessee and 21 have closed in Texas.
9. Kaiser announced a $1.7B capital improvement plan for several hospitals in California.
10. Intermountain recently acquired an old Sears store in Salt Lake City. Several other health systems have redeveloped old Sears stores over the past few years.

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