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BUSINESS OF
MEDICINE

Capitalizing on Value in
healthcare’s New Reality

By Jon Wiegand
Associate Member, Healthcare Practice Group

Cushman & Wakefield in San Antonio
Email at jwiegand@sacadvisors.com, or office (210) 585-4911,

mobile (210) 241-2036, fax (210) 824-1840.

Healthcare providers are leading dual lives. In one pursuit, years Reduced Reimbursements
of education and training have sharpened the abilities that physicians As if intended to counteract the good news for physicians and
put to use each and every day. Physicians strive to optimize the pa-
tient care mission and simultaneously need to achieve financial re- their owned real estate, we are continually reminded that the future
turns commensurate with years of intense training and delayed of physician reimbursement is murky at best. The Affordable Care
gratification. However, as business owners, physicians are required Act has increased access to care, but has also contributed to substan-
to make significant decisions that fall outside the typical ‘scope of tial headwinds aimed at reducing provider reimbursements. A recent
practice.’ report detailed that the U.S. healthcare system (including govern-
ment and private payers) spent 5.5 percent more on healthcare in
Whether owned or leased, a practice’s real estate will have a sub- 2015 than in 2014. Not only does this represent a net increase in
stantial impact on the physician’s business strategy and personal year-over-year spending, but, astoundingly, it also represents a more
goals. There is currently an incredible window of opportunity for accelerated growth rate than 2014’s 5.3 percent increase.
physicians with owned real estate, enabling them to capture previ-
ously unachievable values for their medical real estate Given the continued increase in overall healthcare spending, re-
imbursement reductions are likely to continue. Furthermore, it is
Europe’s ‘Brexit’ and America’s made-for-TV presidential cam- near impossible to envision a scenario when providers will receive
paign race have dominated recent headlines. Between these and pay raises from CMS and/or private insurers. Therefore, physicians
other volatile events, the broader markets have experienced tremen- must consider other avenues to create value and generate returns to
dous instability. The combination of international chaos and histor- counteract the reduction in medical practice compensation.
ically low yields from traditional
investment avenues has forced capital to
seek returns in real estate.

A Focus on healthcare
Real Estate

In an effort to further safeguard against
future downturns, increasing numbers of
real estate investors are aggressively pursu-
ing healthcare real estate. With interest
rates at all-time lows (as of July, 10-year
U.S. Treasury yields dove to 1.366 per-
cent), both private capital and institutional
funds have targeted healthcare real estate
even more aggressively — moving prices
to historically high levels. This pricing
surge is unmatched in the history of
healthcare real estate and its impact on
your medical assets should be evaluated by
an expert to capitalize on the opportunity.

34 San Antonio Medicine • August 2016