How Is The Affordable Care Act Driving Demand For Healthcare?

Healthcare real estate professionals are facing the fundamentally transformative nature of the Affordable Care Act. Experts at Bisnow’s State of San Francisco Healthcare event yesterday spoke at length about the trend and how it is driving up demand for off-site outpatient facilities. 

The ACA increased patient access and altered the healthcare economy. While many more people have access, the flip side is providers are having a difficult time keeping up with demand. UCSF Benioff Children's Hospital VP of operations Kim Scurr (speaking above and below left with Meridian's Mike Conn) said it was important to ensure people who need less than absolutely critical care go to outpatient clinics instead of using the resources of a higher level care facility, such as an ER.

Mike, Meridian's VP of construction and development, said the ACA was driving up demand for smaller outpatient facilities that could handle minor health issues. Builders are competing with Chipotle and other retailers for prime space, he said. Getting around the space crunch means thinking creatively and being willing to knock down existing buildings—and getting parking right will be essential. Perhaps most important, Mike said, the utility requirements of healthcare facilities are substantial and normal retail facilities will need significant upgrading.

Healthright 360 CEO Vitka Eisen (right, with our moderator, Kilroy Realty VP Mike Sanford) said the ACA was largely helpful in her space. Her nonprofit helps those struggling with addiction, and the healthcare law stabilized funding. Whereas treatment financing was usually handled very unevenly at the local level, the post-ACA world is more predictable, she said. Vitka said there is an added compliance burden, and it's driving a lot of consolidation of real estate and staff for nonprofits.