006 Healthcare Uncertainty Bad for Real Estate

Uncertainty in Policy is Destabilizing for Real Estate

Uncertainty in healthcare policy and the direction it is headed is not good for planning developments, like hospitals, for example, because not knowing how patients are going to be reimbursed for their medical expenses creates doubts as to how development investments will be returned.  The healthcare industry does have some immunity to shifting policy changes because it takes a long term perspective, and because demographic trends that point to a large aging baby-boom population will have some flattening effect on the impact of policy changes.

That said, while it is true that as the population ages we are going to see greater spending in healthcare related real estate, demographics are not a panacea for overriding unpredictability in healthcare.  Insurance is how most people plan to pay for their healthcare, and the ACA  provided a road-map that defined how people were going to be able to finance their healthcare expenditures.  With that being rolled back, once again there is considerable uncertainty across the industry.  Which is the anomaly: the Affordable Care Act, or what is the current plan being debated in Washington the anomaly?

Opportunities may arise from identifying those properties that are now seemingly distressed healthcare assets, and acquiring them with the view that in five years time, with the next administration, something that looks more like the ACA will again be the government’s mandate.