The aging U.S. population is driving demand for outpatient healthcare services facilities, reinforcing the stability of medical office assets
CHICAGO, Feb. 8, 2023 – Although they comprise only 30% of the U.S. population, the 55+ populace is the biggest consumer of U.S. healthcare services, and the 80+ cohort is forecasted to balloon nearly 50% in the next 10 years. The growth of the elder population in the U.S., longer life expectancies and better healthcare delivery are all fueling demand for outpatient healthcare services and facilities, reinforcing medical office as one of the most stable asset classes.
According to the Centers for Medicare and Medicaid Services, healthcare as a share of U.S. GDP was 19.7% in 2020, and, along with healthcare expenditures, it is predicted to account for 30% of GDP by 2030. Outpatient demand for ages 55+ alone is forecast to grow 16.9% by 2025, a rate that is 4.3% higher than the general population.
“If we consider that the older population will potentially grow from 46 million residents in 2020 to 80 million in 2050, we can anticipate that the demand for healthcare services and facilities will grow steadily and significantly,” said Jay Johnson, U.S. Practice Leader, Healthcare Markets, JLL. “We expect the elder population to drive significant outpatient demand over the next 10 years, which, in turn, is a fundamental driver for healthcare-related real estate despite the potential offsetting effects of telehealth and home care.”
Outpatient services typically include any service, procedure or treatment that doesn’t require hospital admittance, and this would include x-rays or other imaging, minor surgeries, bloodwork, routine visits in a medical office setting with a healthcare provider, counseling services and more.
JLL’s most recent Healthcare and Medical Office Perspective details how outpatient sites dominate healthcare services delivery compared to hospital admissions, and, according to Kaufman Hall, outpatient revenue rose 8% in 2022, while inpatient revenue was flat when compared to 2021.
Additionally, up to a third of hospital revenue is activity shifting to ambulatory surgery centers, office-based labs and other ambulatory sites, while inpatient discharges continue to decline due to regulatory changes, competition among healthcare systems in high-growth markets and technological innovation fueling a shift to outpatient settings.
“More sophisticated procedures can be done in outpatient settings than possible a decade ago.” Added Amber Schiada, Head of Americas Work Dynamics and Industry Research, JLL. “Innovation in care combined with reimbursement pressures are driving a sustained shift to outpatient facilities, and consumer preferences for outpatient care have increased as well, as outpatient facilities are often more accessible or conveniently located. Furthermore, experience shows that outpatient locations are less expensive to build and operate, produce better-quality medical outcomes and yield higher rates of patient satisfaction.”
Medical offices and clinics are expected to receive the biggest share of growth. Advisory Board estimates the medical office segment will welcome more than 585 million patient visits in 2025 and more than 635 million visits by 2030.
“Hospital outpatient, ambulatory surgery, laboratory services, physical therapy, emergency medicine and oncology centers will all benefit from outpatient growth, as do patients who seek more convenient and accessible care,” said Alison Flynn Gaffney, President, Healthcare Division, JLL. “Reimbursement policies will continue to support this shift, and specialized care options will further drive competition within the industry.”
Additionally, JLL Research anticipates outpatient volume to accelerate across all markets led by Sun Belt markets. JLL identified Austin, Phoenix, Raleigh, Las Vegas and Jacksonville as the top five growth markets based on anticipated outpatient volume between 2020 and 2025 and outpatient growth. This is consistent with the trend of the U.S. aging population migrating to Sun Belt markets. Austin, Raleigh, Dallas, Las Vegas, and Atlanta are the top five growth markets for those ages 55 and up.
Sun Belt markets also lead when it comes to medical office construction and, like many regions, has seen the continued transition to outpatient facilities.
“The aging population, along with the pandemic, have accelerated the migration from acute care facilities to more local outpatient clinics,” said Dan Squiers, Senior Vice President and National Healthcare Lead, JLL Project & Development Services. “We have seen health systems merge or consolidate because of the pandemic. Labor shortages, supply chain disruptions, rising pricing and increased demand are just some of the major challenges facing health care systems in the region.”
JLL Healthcare provides a full range of real estate and facilities solutions for hospitals, physicians and other care providers as well as real estate investors that own and operate medical and seniors housing properties. We help our healthcare clients plan, find, finance, buy, lease, sell, construct, optimize, manage and maintain the most-advantageous facilities anywhere in the US for all property types along the continuum of care, serving over 550 million square feet of healthcare property annually. Our professionals have deep technical expertise and market knowledge and are armed with the most innovative, data-driven analytics and business intelligence in the industry. Visit us at us.jll.com/healthcare to learn more.
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