The health care real estate industry experienced breakthroughs and challenges in 2024. Below are our health care real estate predictions for 2025.
2025 Predictions
- The election of President Trump will surely shake things up for health care providers in the new year. We expect a more favorable environment for M&A activity and possible deregulation that may open doors to new types of arrangements and financing structures.
- We expect legislators in several Certificate of Need (“CON”) states to push for CON reform. As we have noted in previous briefings, there has been a strong push across the county to roll back or modify CON requirements to allow for new ambulatory surgery centers (“ASCs”), rural hospitals and behavioral hospitals without CON approval. We anticipate that this momentum will spread to additional states in 2025.
- Joint ventures between general acute care hospitals and specialty providers will continue to be a popular trend in the new year. We expect several new ASC, cancer center and specialty hospital joint ventures to be announced in 2025. Many of these joint ventures will involve new facilities that will benefit the construction and development community.
- Speaking of specialty hospitals, we expect continued strong demand for new children’s hospitals, behavioral hospitals and inpatient rehabilitation hospitals across the country. Analyses from 2024 point to current shortages in many markets for these services.
- We expect that capital markets will continue loosening, but the availability of capital may diverge based on a provider’s creditworthiness. Those hospitals and health systems with investment-grade credit will be in the driver’s seat in terms of securing attractive financing for new projects. They will be able to access attractive bond financing, credit tenant lease (“CTL”) financing or traditional mortgage debt. Health providers with lower credit ratings will have fewer options. We expect those providers to seek out more traditional financing solutions for new projects by using high-yield bonds, mortgage debt or developer-led solutions.
- We predict that nonprofit hospitals and health systems will pursue fundraising efforts to supplement or cover the cost of new building projects. In particular, the trend of nonprofit providers pursuing donations from wealthy benefactors to cover the cost of new ambulatory and oncology-related building projects is one we predict to continue.
- Larger health systems will continue to acquire and assemble large swaths of land for future hospital projects. There has been an uptick in land banking by large health systems as they undertake long-term planning exercises that involve the construction of new hospital campuses. As hot markets get oversaturated, the ability to secure sufficient amounts of land at a reasonable price will become more difficult.
- Adaptive reuse of old hospitals and health care facilities will continue in 2025. We expect to see vacant hospital and skilled nursing campuses to be repurposed into affordable housing, particularly in urban areas.
If you have questions or would like more information about our health care real estate legal and advisory services, 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.
