The Ongoing Shift to Outpatient Care: Key Trends and Investor Insights with Amber Walsh of McGuireWoods LLP 5-8-25
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What is driving the shift from inpatient to outpatient care?
Hi, Scott. Thanks for having me on. Today, I am really thinking about, and in particular, because I've read a couple of articles and working on a couple of deals that have me thinking again about the shift to outpatient care from inpatient care. And as you and I both know, this has been a trend that has gone on for decades. There is nothing new with the move to outpatient. other than I am constantly amazed that there are new factors driving the move to outpatient, and there's more and new kind of repercussions and impacts of that move to the outpatient setting. And it really plays into a lot of investors' decision-making and So while there's nothing new about that shift, it almost feels like a permanent reality that's been going on for decades that has become relatively reliable. There's just these other interesting angles to it that I'm really interested in thinking about today.
No, thank you. And talk about some of those other areas, like the impact on health. buildings and outpatient centers and what it means for real estate technology and spreading around of services with anesthesia where there's shortages. Talk about some of the other impacts that there are.
How does the outpatient trend affect real estate and medical office buildings?
Yeah, so I'll start with the building. It's really interesting. I mean, we're sitting here in the from traditional commercial real estate space for the past several years, obviously triggered a lot by COVID. And yet at the same time, while that's the macro trend across commercial real estate, you see the proliferation of medical office buildings and that construction growth continuing to go up. And seeing it more, JLL reports on this, obviously one of the big brokers, reports on this frequently, and you're now even seeing off-campus medical office buildings taking over on on-campus medical office building development. And in large part, it's this response to the increased opportunity for outpatient therapies, the move for so many things, not just traditional ASCs or elective surgery, but we're talking about drug administration in the form of infusion centers. We're talking about mental health, outpatient programs, all sorts of things.
And one of the interesting angles of that, and I'm dealing with this right now in a deal I'm working on, is a health system that is so confident that they're going to be able to fill up this massive MOB that they're building. They don't have the tenants selected yet. They don't know exactly what's going to go in there, but they're so confident there's enough community need on an outpatient basis that they're going ahead and making that MOB investment, which I find really fascinating. It's just one of those aspects that this trend continues to push and impact other industries. Yes. No. Fascinating. And what does that mean for the big box hospital buildings? Those are still very needed still, too. And what does it mean for growth outside the hospital where people seem to be, again, a little bit more careful again about building new things unless they seem to be some of the wealthiest systems? What do you see there?
What impacts do outpatient services have on hospital infrastructure?
Yeah, you do have hospitals repurposing spaces to taking inpatient space and repurposing it to the extent that you can. And there are some states that the flexibility that they gave on hospital licensure and space use that they gave granted during COVID, some states, when they returned to normal in a post-COVID world, kept a little bit more flexibility for that. And it's actually allowed hospitals to repurpose some of their space for outpatient use. And that helps. And it's not perfect. And that's not the case everywhere in all states, but where it's an opportunity, it allows the hospital to keep that space that maybe isn't quite as needed for inpatient and repurpose it for different things.
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Chapters
4 chapters
1
What is driving the shift from inpatient to outpatient care?
0:29–1:59
2
How does the outpatient trend affect real estate and medical office buildings?
1:59–4:14
3
What impacts do outpatient services have on hospital infrastructure?
4:14–5:47
4
How is private equity responding to the outpatient care trend?
5:47–13:24
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