Healthcare Innovation Arbitrage Meets Real Estate

By Barry Didato

An interesting opportunity is emerging in the midst of the equities market chaos in China, the US, and elsewhere. As the healthcare industry evolves, spurred by the Affordable Care Act (ACA) and its emphasis on making healthcare more accessible, efficient, and patient-centric, so do the opportunities in healthcare real estate -especially for those with an inside track to identify investment opportunities. Independent private physicians continue to merge and evolve relationships with larger health care providers and to take full advantage of co-location efficiencies that offer benefits for health systems, physician practices and consumers. Underlying all of these shifts is a perpetual and growing need for healthcare systems to contain cost. One of the best ways that healthcare systems are seeking to reduce debt and improve operations is to de-lever and untangle their balance sheet by making better use of their real estate assets and relationships. For groups such as Healthcare Property Advisors (HPA) and the Innovation Institute, these trends set the stage for their investors to target perpetual 12+ percent returns on investment in a dynamic, growing asset class: medical office buildings (MOB’s). More…