PHOENIX—Mergers and acquisitions continue to rise. Out of 189 hospitals 88% are thinking of consolidating or merger activity.
Those stats are according to panelists at RealShare Healthcare Real Estate 2015. Panelist Steve Horn, national director of property management at Catholic Health Initiatives, explained that this year alone, on a national level, his company has reduced costs by consolidation and space reduction by $30 million. Horn spoke on the "Health System Consolidation: Strategies, Solutions and Opportunities" panel on Thursday at the event, which attracted more than 400 attendees.
According to panelist Manfred Steiner, managing director and principal at BGL Healthcare Transaction Advisors, from the advisory side, there won't be any slowdown in the transaction activity anytime soon. "We have seen a lot of interest from the REITs, a trend that we will continue to see."
Steiner noted that the volume of real estate these days is really moving from an in-patient setting to outpatient and that is allowing for more opportunity due to new areas of service lines.
When John Marshall, VP of national healthcare strategy and development at Duke Realty, Healthcare, askedabout physician consolidation, Steiner said it is something that has been going on for the last 10 years. "The groups that are out there still able to stay independent are looking at potentials to align with hospital systems."
Michael Canniff, senior director of real estate at Ascension Health, said that what is important to remember is to have quality aligned regional systems of care.
When talking about what sort of functions Ascension Health is looking to outsource, Canniff said that "Healthcare has always perceived real estate as a fixed cost of doing business and now it is something that can be really truly affected. We needed to bring an outside partner in to understand the realities."
Cleve Haralson, division VP of development and construction at Kindred Healthcare, said that Kindred's most recent acquisitions were in an effort to diversify. Kindred's business model is to joint venture. "That is where our real strength is … it is the meat and potatoes of our business model," Haralson said.
How that plays into real estate opportunities, Haralson said, is that it opens the pipeline. "It creates the opportunity for completely new ground up development."
Haralson pointed out that Kindred Healthcare is really trying to position itself for the growing aging population. "We have worked to create these integrated care markets… When you look at the number of beneficiaries that are on Medicare, the integrated care market is the only way to capture the revenues we need and we can only do that by teaming up."
The 8th annual RealShare National Healthcare Real Estate 2015 event held Thursday at the Westin Kierland Resort & Spa in Scottsdale, AZ, drew more than 400 attendees. Check back with GlobeSt.com in the next day or so for more coverage from the event. The RealShare Conference Series is produced by ALM's Real Estate Media Group, which also publishes Real Estate Forum and GlobeSt.com.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
