Tuesday, March 30, 2010

Health reform may spur building boom

With 32 million uninsured Americans projected to get health coverage because of the reform package that narrowly passed Congress, some analysts see a growth spurt on the horizon for new medical offices to house doctors' offices, outpatient clinics and diagnostic centers.
"Long-range, it's definitely going to spur the need for more medical office buildings," said Douglas Whitman, chief operating officer with Healthcare Realty Trust Inc., a Nashville-based operation that owns medical properties. "Short-term, doctors don't grow on trees. So, it's going to take a little while."

Commercial real estate investment firm Marcus & Millichap of Walnut Creek, Calif., forecast in a recent brief that health-care reform would create demand for an additional 60 million square feet of medical office space in the U.S. between now and 2019.

If it materializes, that would help reverse a construction slowdown caused by recession and uncertainty over the shape of new federal health policy.

Although reform is now a reality, physicians have just started to analyze its effects, and skeptics say it will take a while longer to sort out real estate needs. Also, many changes including expansion of coverage and insurance rules won't start until 2014.

"We're a little leery about what health-care reform will mean to us," said Dr. Eddie D. Hamilton, a pediatrician who owns or co-owns five medical office buildings in the Nashville area. "While we're pleased more of our patients will have insurance, for providers it doesn't always translate to being adequately reimbursed."

Rob Mains, an analyst with Morgan Keegan & Co., expects more demand for preventive care, which could drive demand for leased space at outpatient imaging centers and surgery centers as lower-cost alternatives to providing services in a hospital setting.

C.J. Follini, managing principal of Noyack Medical Partners of New York City, expects health-care delivery to shift closer to where patients live, perhaps with more doctors and specialty clinics setting up shop in regional shopping centers.

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