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Feature Story: Cash-strapped health systems? Not exactly…

Pandemic pressures haven’t prompted more third-party development, as some had hoped

By John B. Mugford

The InterFace development panel included (from left to right) moderator Nathan Golik of NexCore Group, Ken Henry of PMB, Mike Conn of Meridian; Andy Lawler of Cornerstone Companies and John Stubbs of Davis Moore. (HREI photo)

A few months after the onset of the COVID-19 pandemic, there was a notion in healthcare real estate (HRE) that the crisis would actually provide more opportunities for HRE developers to finance and own projects.

The reason? Because the country’s health systems were – and would continue to be – strapped for cash. Yes, despite the fact that they had to shut down the most lucrative aspect of their businesses – providing elective procedures – during the pandemic, they would still see the need to expand their ambulatory footprints. They would still need to grow to stave off competition and grab more market share during an era when patients strongly prefer to receive care in convenient, close-to-home locations.

To do so, the theory went, most systems would turn to third-party firms and capital sources to fund their ambulatory expansions.

However, this notion has been turned on its head a bit, as

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