The murder of UnitedHealthcare CEO Brian Thompson is the latest manifestation in a long list of our healthcare system’s dysfunction. The delivery and payor models simply are not working. And it’s clear we can all agree on one thing: United States healthcare must evolve to improve — and the undeniable shift to outpatient care is part of this evolution.
The proof is in the pattern. Even though NexCore is not a healthcare deliverer, we see firsthand and in the headlines that health systems are investing heavily in outpatient facilities. If you’ve been shying away from investing in the healthcare sector because it’s broken — and because you’re apprehensive this brokenness means poor returns — we encourage you to read on as we bust some myths about investing in outpatient healthcare.
Between NexCore’s unique position to provide risk-adjusted returns in this space and your ability to be a part of bettering the healthcare system, this is an excellent opportunity for conscientious investors.
Myth 1: Other asset classes provide better ROI than healthcare
We often hear this from investors who’ve obtained superior, risk-adjusted returns from investment in the multifamily space, for example. If this is the case, why change their play? Why diversify your portfolio with healthcare assets?
Because the financial news over the past 24 months disproves that asset classes such as multifamily are the most reliable. A healthcare asset class like senior living, on the other hand, is thriving according to the data:
- In 2024, senior housing outperformed the broader NCREIF Property Index by 3.1%.
- Occupancy increased for the 12th consecutive quarter.
- Occupied units continue rising at record levels.
- Inventory growth rate remains low (meaning there’s a market for more housing — and investment).
In terms of investing in medical outpatient buildings (MOBs), remember that they provide cost savings for all parties involved. And health systems nationwide are pouring resources into these development projects. Why wouldn’t you invest in such a booming sector? Add to that NexCore Group’s ability to provide risk-adjusted investment solutions in healthcare and it becomes difficult for savvy investors to ignore this asset class.
Myth 2: The healthcare system is marred with regulatory red tape, making investment cumbersome
The assertion that the healthcare industry is full of regulatory hurdles is irrefutable. However, there’s a huge difference between investing in or buying hospitals and skilled nursing centers versus investing in MOBs and senior living communities. There’s less of a need to navigate federal and state reimbursement, for example, because the latter facilities have a lower acuity of care.
Perhaps more importantly, investors do not need a comprehensive understanding of healthcare regulations to invest in the space. That’s why groups like NexCore exist — to set you up for the best return no matter the complexities. That’s what effective risk adjustment accomplishes. It’s critical to decouple investing in healthcare from the bureaucracy of the larger system to see the opportunity this asset class presents.
Myth 3: You shouldn’t invest in the United States’ broken healthcare system
Let’s return to where we started. Yes, the American healthcare system is flawed. But it’s crucial to remember that developing ambulatory care centers is a part of the solution —one you can impact through investment.
First, the shift to outpatient care is well underway and undeniable. Rest assured this kind of care is permanent and growing. The data says so.
Common sense says so, too. Services performed in MOBs are more efficient and less expensive for all parties involved — the patient, health system, and payor. That’s because MOBs have a smaller footprint, less staff, and less emergency medicine (read: higher cost) line items.
Compounding this main benefit (cost savings) of outpatient care are several complementary advantages. To name a few:
- Patients favor the convenience of outpatient care over navigating hospital campuses with little parking and long wait times.
- When done well, MOBs are strategically built in retail hubs, solidifying their convenience and visibility as well as making them attractive to physicians who want more patients.
- Outpatient care allows medical systems to expand their geographic footprint, thus growing their businesses.
We all want the system to improve. Outpatient care is improving the system. Why not invest?
Build better outcomes with NexCore
NexCore Group is one of the leading developers in healthcare real estate. We were the HREI outpatient developer of the year in 2023, and we’re a finalist for additional awards in 2024. Our calling card, though, is our historical presence and excellence in this space. For as long as outpatient care has been on an upward trajectory, we’ve been developing first-in-class outpatient care facilities.
Because of our extensive experience in medical real estate, we have access to a robust pipeline of on and off-market opportunities. This eliminates the need for intermediaries, ensuring your capital is deployed efficiently and effectively.
The last appeal we’ll make for healthcare real estate investment has to do with our mantra: Building Better Outcomes. Join us as a small part of building better outcomes for American healthcare with your critical investment in a solid asset class — myths officially aside.