- JLL issued a Medical Outpatient Building Perspective whitepaper. Key takeaways: (i) outpatient volumes will continue to grow, particularly in off-campus MOBs; (ii) MOB demand has outpaced supply since 2021, causing occupancy to rise; (iii) rising construction costs are leading to less new construction; and (iv) MOB cap rates have risen 100-150 bps since Q4 2022.
- The FTC approved a final rule banning nearly all non-competes. The rule adopts a complete ban on new non-competes with workers at for-profit companies, and it voids existing non-competes for workers other than senior executives. The rule generally does not apply to nonprofit organizations. Many entities have signaled they are preparing legal challenges to the final rule.
- Georgia Gov. Brian Kemp signed a bill to relax the state’s CON law, which includes measures related to equipment acquisition, infrastructure improvements and shortening the time for hospital CON application reviews.
- The Tennessee Senate approved a CON reform bill, which awaits signature by Gov. Bill Lee. The bill removes CON requirements in counties without an acute-care hospital but also implements a 10-mile buffer for competitors wishing to build a new free-standing emergency room. It will also phase out existing restrictions for burn units, neonatal ICUs, imaging facilities, ASCs, LINACs and long-term care hospitals.
- Moody’s released its quarterly report on the health care sector. The report indicated that scrutiny on nonprofit health system mergers and acquisitions is intensifying, which could make M&A a tougher exit strategy for distressed hospitals, while also potentially stunting the rate of growth of larger health systems.
- The Georgia Supreme Court could soon decide a case involving the qualification for property tax exemption of privately owned real estate leased to a hospital authority and used for public purposes. The case at issue involves a residential retirement community operated by a public hospital authority, which leases the property from a private, nonprofit health system owner.
- UNC Chapel Hill finished the construction of a new $420M surgical hospital. The state-of-the-art facility comprises 375,000 sf, including 26 operating rooms and 80 critical care beds, and will open to patients in July.
- The back-to-back recent closures of two medical facilities in the Presidio Heights neighborhood of San Francisco created the opportunity for a developer to convert the facilities into over 1,300 new housing units. The lack of available real estate in exclusive areas such as Presidio Heights can make the high-cost adaptive reuse of medical facilities a more attractive option for developers.
- An article credited the current boom in Florida hospital construction projects to recent CON reforms easing barriers for hospital real estate development in the state.
- VMG published a piece in Becker’s on headwinds and tailwinds for physician practice acquisitions in 2024. The biggest challenges include high interest rates and regulatory oversight of transactions and non-competes. The biggest opportunities (on the buyer side) include reimbursement pressure and persistent inflation (including wage inflation) that can be alleviated by a larger transaction partner, as well as record high PE funds not yet deployed (i.e., “dry powder”) to effectuate such deals.
For more information on real estate matters, please contact:
- Andrew Dick at adick@hallrender.com or (317) 977-1491;
- Joel Swider at jswider@hallrender.com or (317) 429-3638; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
