We hope everyone enjoyed some time off over the holidays. As we reflect on 2025 and head into the new year, we spent some time mapping out our hospital real estate predictions for 2026. We believe it will be a mixed bag for hospitals and health systems around the country. Most hospital systems will face financial headwinds, which will result in cost-cutting measures. Those headwinds also create opportunities for strategic growth for those with strong balance sheets or in expanding markets. Below is our list of six predictions for 2026.
- Financial pressures will make for a challenging year – We believe 2026 will be a challenging year for hospitals and health systems. The health care spending cuts in the OBBBA are going to significantly impact hospital funding. Heading into 2026, rating agencies are predicting operating margins between 1% and 2% for non-profit hospital systems. We expect to see an aggressive wave of cost-cutting measures by hospital systems that involve reducing their workforce, disposing of non-core assets and eliminating service lines that aren’t profitable.
- Legislative changes will create additional challenges – In addition to health care spending cuts at the federal level, hospitals will likely face additional pressure at the state level to cap or reduce health care costs for consumers. On the other hand, changes in Certificate of Need laws across the country will create opportunities for growth while at the same time removing barriers to entry that have protected certain providers for many years. This creates another headache for hospital executives to navigate in the new year.
- Creative financing solutions will take center stage – Financial pressures won’t stop hospital executives from moving forward with new building projects. Large new hospital campuses will be funded through taxable and tax-exempt financing solutions. Smaller projects, like ambulatory surgery centers, medical outpatient buildings and specialty hospitals, will be funded using developer-led financing solutions, credit-tenant lease financing and non-profit foundation solutions.
- Real estate plays will drive growth – Hospital executives will be focused on using real estate in the following ways: 1) to expand into new markets that are experiencing population growth by snapping up large parcels of land; 2) to create hospital campuses that are experiential by adding retail, hospitality and residential uses to their hospital campuses; and 3) to create revenue in light of financial pressures.
- Philanthropy will be used to fund new development projects – We expect hospital systems to execute on philanthropic campaigns to fund new building projects. With financial headwinds, hospital executives will seek ways to raise funds from wealthy benefactors looking to make an impact on health care in their communities.
- AI technology will drive decision-making – Hospital real estate executives will lean on AI to validate strategic real estate decisions. AI will be a trusted resource for decisions involving site selection, sales data, population growth trends, claims data and space utilization.
For more information, 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.
