Real estate strategies are getting increased scrutiny, Connect Healthcare panelists say
By John B. Mugford
The Connect Media Healthcare “State of the Market” panel included (from left to right): moderator Peter Becronis of ShareMD Asset Management, Garth Hogan of Newmark Group, James A. Schmid III of Anchor Health Properties, Troy Freeman of Banner Health and Dan Klein of Physicians Realty Trust. (HREI photo)
For many healthcare providers, reimbursement rate adjustments are lagging behind rapidly increasing costs, and that financial squeeze is affecting their real estate strategies.
“The one thing that is pretty universal for health systems is that our cost structure is going up and reimbursements are not keeping pace,” said Troy Freeman, VP of real estate management with Phoenix-based Banner Health, which operates 30 hospitals and more than 500 locations in six states, with Arizona being its core area.
“It puts a lot of pressure on the bottom line,” he added. “And as you think about real estate investments and real estate projects, a couple of things happen, and one is that it changes the decision-making criteria for what gets prioritized and what doesn’t.”
Yet, with a need to continue to expand its outreach and network, especially in the always-growing Greater Phoenix market, Banner has, on occasion and selectively, decided to sell, or monetize, some outpatient facilities to raise capital.
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