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Affordable Care Act Opening Up Opportunities for Investors

CHICAGO—John Wilson of HSA PrimeCare tells GlobeSt.com that the company will be looking to acquire properties in both core and secondary cities throughout the Midwest along with new partner USAA Real Co.

By Brian J. Rogal | brianjrogal | | Updated on March 16, 2016

 

CoffeeCreekMedicalOfficeBuilding (2) The Coffee Creek Medical Office Building in Chesterton, IN, one of several buildings just acquired by the partnership between USAA Real Co. and HSA PrimeCare.
CHICAGO—As reported yesterday in GlobeSt.com, Chicago-based HSA PrimeCare has just formed an alliance with USAA Real Estate Co. to acquire and develop healthcare properties in 11 Midwestern states. The partnership joins together the resources of San Antonio-based USAA Real Co and the great reservoir of knowledge that HSA has of the Midwestern healthcare market. And today, John Wilson , president of HSA PrimeCare, tells GlobeSt.com that the company will now dig deep into those markets, even smaller ones, looking for acquisitions and development opportunities.     “You can go into secondary cities if there is a strong hospital system,” he says, one with the strength and depth to drive a lot of demand. In fact, about 80% of HSA’s healthcare-related work is done for major hospitals. Furthermore, cities that host other large institutions such as universities or the state capital are usually quite stable and attractive to investors. He points to Lincoln, NE, as a perfect example of a city where the new partnership can launch projects or buy properties. “This area probably has one of the strongest job markets in the country,” with a jobless rate of just 2.1%, according to the Bureau of Labor Statistics . Ann Arbor, MI, and Columbus, OH, are other cities he thinks highly of, due to the presence of major universities or the state government. Of course, it is also likely that USAA Real Co and HSA will find projects in the Midwest’s core markets. “We have done a lot of work in Chicagoland,” Wilson says, “and we will continue to do that.” Minneapolis, Indianapolis and several other big towns have healthy job markets and major health systems, and are also on their radar. Healthcare is a fruitful sector for investors these days, he adds. “The vast majority of healthcare real estate is still owned by the providers,” and the tremendous cost of many high tech treatments has many seeking to “monetize their properties and reinvest the proceeds into core services.” And the advent of the Affordable Care Act has also put “a lot of pressure on the capital side for the hospitals,” since they have to provide more services and cut costs. Typically, this will mean developing outpatient facilities, which can provide services more efficiently, across a wider geographic area. “We can provide the capital and the structure needed.” W ilson adds that there is currently a lot of consolidation going on in the healthcare industry, and “with the groups getting larger we see the capital needs of these organizations getting larger as well.” Therefore, joining forces with a company like USAA Real Co., which has about $15 billion in assets, gives HSA a great deal of heft in the marketplace. And once USAA Real Co forges other regional partnerships like this one, and covers the nation, HSA will also be able to tap into a true national network. They have already exchanged information on national trends with Brackett Flagship Properties LLC , the southeastern partner for USAA Real Co, and Wilson looks forward to doing so with the other partners as they come aboard. “We are all in this together.”

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