Outpatient Facilities Continue to Grow, Despite CMS Threat

The CBRE Group has released a new report showing the number of outpatient facilities increased from 26,900 in 2005 to 40,400 in 2016. This represents an increase of 51%! As demand for space continues to increase, rent has followed suit, hitting a whopping $22.90 per square foot on average. Additionally, outpatient center employment has doubled in the past 15 years.

Patients are increasingly demanding more affordable, easier to access care. Large corporate players continue to push their patients toward retail settings, where margins are frequently higher. Big employers always seek to drive down their coverage costs.  Employees are encouraged to seek services outside of a hospital setting. This “perfect storm” of compatible interests almost seems like it will never stop driving growth in this sector.

However, a proposal from CMS could throw cold water on this otherwise hot market.  In July last year, CMS said it would save both Medicare and patients money by paying the same rate for services delivered at off-campus outpatient departments and independent doctors’ offices. While the hospital lobby has vowed to fight this change, the current administration has proved both unpredictable and willing to address controversial measures directly. We will continue to monitor this story as it develops in 2019.