Lillibridge Climbs Mountains

When he’s not ascending Mont Blanc outside Chamonix in France, Lillibridge Healthcare Services president and CEO Todd Lillibridge is scaling the ever-changing summits of healthcare real estate. (It's just as difficult but thankfully requires fewer carabiners.)

Lillibridge, a wholly owned subsidiary of Ventas (since 2010), completed over $1B in acquisitions in 2012 and 2013 (its 21M SF portfolio spans 29 states and over 200 markets). This year, Todd anticipates the most aggressive buyers will be non-traded REITs and developers with institutional partners. One trend: hospitals will continue evaluating deployment of capital into areas such as IT and physician integration. Todd also predicts continued consolidation of providers (there were about 100 M&A deals last year) as health systems try to leverage scale, drive efficiency, and geographically position themselves to capture specific patient populations.

Here’s the firm’s Good Samaritan II, on the campus of Advocate Good Samaritan Hospital in Downers Grove. The future of the standalone hospital is uncertain, especially in competitive markets where dominant players exist with an abundance of clinical resources and access to capital, he says. (Plus, now that Scrubs, ER, and House are off the air, we don't need the point of reference anymore.) For example, the Chicago area’s largest multi-hospital systems have market share in the low to mid-teens. We haven’t seen significant consolidation compared to other Midwest markets like Indianapolis and St. Louis, where three major health systems control over 60% of the market, he adds.

Despite healthcare’s changing landscape and the implications of the Affordable Care Act, Lillibridge’s acquisition strategy hasn’t changed, Todd says. The target: market share leaders seeking to unlock the power of their balance sheets to care. Lillibridge continues to be interested in development, but the level of new construction has diminished since '08. Now providers are gradually moving back into the planning stage with smaller, community-based projects (America can return to a time when everyone knew their friendly, neighborhood foot surgeon) and on-campus disease-center projects (ex. oncology, cardiology, orthopedics).