REAL ESTATE NEWS

SCOTTSDALE, AZ—The financial pressures facing U.S. healthcare systems are reshaping strategies, operations and real estate decisions, according to industry leaders speaking at the GlobeSt. Healthcare conference. Ross Caulum, regional real estate director at Trinity Health, outlined the economic challenges ahead as hospitals adapt to payer mix changes, shifting patient expectations and increased cost pressures.

Moderated by Murray Wolf, publisher and founding editor at Healthcare Real Estate Insights, the session discussed how declining reimbursements are forcing health systems to rethink their long-term planning. Caulum noted that while commercial insurance remains the most lucrative payer, Medicare and Medicaid reimbursements continue to fall short—representing well below 50% of what commercial payers offer. As a result, hospitals are already bracing for a 6% to 7% reduction in per-visit payments this year alone.

Furthermore, they are preparing for leaner financial years ahead, Caulum said, especially as they anticipate a “reduction in revenue” tied to subsidy structures that remain unchanged after recent political efforts. Healthcare, he emphasized, is “a product you buy that you don’t want to buy—and expect someone else to pay for.” This dynamic continues to complicate how hospitals compete for patients and payers.

Caulum added that competition among health systems, insurers and physician groups historically intensifies whenever one segment gains leverage. Today’s environment is no different, except that the stakes are higher due to demographic shifts, capital constraints and escalating labor shortages.

Recruitment and retention of nurses and physicians remain top concerns for hospital CFOs, overshadowing even real estate costs.

“There has to be alignment to slow the exit,” Caulum said. “You can’t just churn through people.”

Despite healthcare employment growth outpacing other sectors, the demand still far exceeds the available workforce—raising questions about whether technologies like telehealth or AI can help. Caulum’s answer to that was a “maybe.” Telehealth works well for simple ailments, he added, but does not replace the human relationship essential to care delivery.

For Trinity Health, investment continues across the country, with as many as 500 active or potential development projects under evaluation. Yet higher interest rates and tighter capital availability have created new openness to third-party funding—something hospitals historically avoided in favor of cheaper internal capital.

Ultimately, Caulum stressed that the financial sustainability of healthcare systems will depend on adaptability.

“We have to be in a relevant time and place,” he said, “meeting patient needs efficiently and cost-effectively.”

Check back with GlobeSt.com for more from the event.

Source: GlobeSt/ALM