The Behavioral Health and Medical Office is benefiting from several significant macroeconomic drivers, such as an aging population, millennials beginning to form families, and an increase in the insured population.
These trends are driving growth in healthcare spending at a rate significantly faster than the broader U.S. economy. The U.S. population is experiencing significant aging of its population as advancements in medical technology and changes in treatment methods enable people to live healthier and longer. This is expected to drive healthcare utilization higher as individuals consume more healthcare as they get older. Between 2016 and 2026, the U.S. population over 65 years of age is projected to increase by more than 37 percent and total over 19 percent of the U.S. population as the baby boomer generation enters retirement. Individuals of this age spend the highest amounts on healthcare, averaging over $5,800 per individual over the age of 65 according to 2014 Consumer Expenditure Survey. This compares to healthcare expenditures of less than $1,600 per year for individuals under the age of 30. The older population group will increasingly require treatment and management of chronic and acute health ailments. Much of this increased care is taking place in lower cost outpatient settings, which we believe will continue to support MOB demand in the long term.
In addition, the large millennial generation is just now starting to reach their thirties and form families, which should result in average healthcare expenditures for this age group doubling. As this large generation utilizes additional healthcare services including mental health, it is expected they will choose more convenient outpatient settings like medication assisted treatment clinics, detox/recovery centers and other behavioral health settings. The number of insured individuals in the U.S. continues to increase, as the population grows and as a result of the impact of U.S. government actions, including the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”).
Since 1999, the number of individuals covered by healthcare insurance in the U.S. has increased over 20 percent.
Although government policies may change under different administrations, the emphasis on providing affordable healthcare insurance for individuals is expected to remain a priority for government officials.
At the same time, technological advances are pushing healthcare into more cost efficient and integrated outpatient settings. As a result, hospitals are reevaluating their business models to capture gains in efficiency. This push is driving medical procedures and other healthcare delivery, which has historically been conducted at a hospital, into outpatient settings via medical offices and behavioral health centers. Similarly, physicians and health systems are grouping together to increase their overhead efficiency and invest in new technology. Healthcare is increasingly being provided in part by nurses, physician assistants, and allied health providers – a key reason that healthcare is expected to be the fastest growing employment sector of this decade.
Capitalizing on a strategic pivot in the Behavioral Health Commercial Real Estate Sector.
Changes in human behavior have ben significantly altered since the onset of the COVID-19 pandemic.
Fear of the unknown — unemployment, lack of social interaction, stock market volatility — these exacerbate depression and anxiety, as well as substance abuse.
The onset of these abrupt changes and changes to the Affordable Care Act, have created higher demand of Psych Centers.
Simultaneously, commercial real estate values have declined.
Cap rates and net asset values for commercial real estate have widened as a result, creating a unique opportunity.
Well-financed and high-growth market that has gone virtually unnoticed by real estate investors.
