Publisher’s Letter (October 2006)

300 million reasons to grow

POPULATION MILESTONE BODES WELL FOR THE INDUSTRY

Dear Reader:

One new patient every 11 seconds.

Sorry if that’s a little one-dimensional. But we at Healthcare Real Estate Insights^™ tend to view every news item from the narrow perspective of healthcare real estate. So that’s how we reacted to the recent spate of population growth data.

The mainstream media was all atwitter in mid-October as the U.S. population reached an estimated 300 million. Never mind that there was, of course, no way to determine precisely when or where that 300 millionth American arrived. It was one of those made-for-the-media moments based on U.S. Census Bureau estimates.

But the realization that the U.S. population has apparently reached that milestone – and especially some of the underlying reasons for our nation’s accelerating population growth – bodes particularly well for the healthcare real estate industry.

Population growth of almost any kind is a plus for this business, of course. More people equals more demand for healthcare, which typically equals more healthcare real estate demand. One reason for the growth is that our birth rate (14 births for every 1,000 people annually) far exceeds our death rate (eight per 1,000). Add immigration, which accounts for 40 percent of our population growth, and that’s how the statisticians arrived at a net gain of one person every 11 seconds.

Beyond pure population growth, however, a major change in the makeup of the population is driving – and will continue to drive –healthcare real estate demand. The elderly population is the largest it has ever been. People aged 65 and older now constitute 12 percent of the total U.S. population. That’s expected to soar to 21 percent by 2050. Older folks tend to need more healthcare, as we all know.

As you drill down into the statistics, there are also some interesting niche opportunities. Almost 60 percent of Americans now live in the South and West, up from about 50 percent in 1970. Sun-seeking retirees are clearly a primary reason for this shift. The opportunity to serve the growing Sun Belt population is obvious.

Similarly, about half of Americans now live in suburbs or exurbs, up from 38 percent in 1970. Many hospitals and health systems recognized that trend long ago, as did many healthcare real estate professionals. Even so, that large and fast-growing non-urban population will only become more insistent in their future demands for increased and more convenient healthcare services.

The 35 million foreign-born people who now live in the United States also constitute a large and frequently underserved market. Healthcare providers and real estate professionals who cater to that growing market – especially Hispanics, a driving force behind population growth – could find great success.

There is one more thing to keep in mind. It took 139 years for the United States’ population to reach 100 million, as it did in 1915. It took only 52 more years to hit 200 million in 1967, and only 39 more years to reach 300 million this year. It is now projected that it will take even less time – 37 years – to reach 400 million in 2043.

The way we look at it, that’s 100 million more patients.

You keep moving dirt, and we’ll keep our keyboards clicking.

Murray W. Wolf, Publisher