The graying population in the United States is ramping up the need for outpatient facilities, according to Todd Lillibridge, president and CEO of Lillibridge Healthcare Services Inc. and executive vice president of medical property operations for Ventas Inc. (NYSE: VTR).
With more Medicare-eligible patients in need of medical care, the demand for outpatient facilities continues to rise, Lillibridge told REIT.com in a video interview at the Akerman U.S. Real Estate Summit this month in Miami. Lillibridge said his firm, which invests in health care real estate, is projecting a 30 percent increase in the growth of outpatient health care services in the next 10 years, and general shifting away from inpatient procedures performed in hospitals.
"There has just been an extraordinary amount of pressure on reducing the amount of inpatient care," he said. "As a result, we see a whole new revenue stream and percentage of revenue around the outpatient more often today than ever before."
With the medical industry still grappling with the uncertainty surrounding the regulatory system for health care, Lillibridge said his company's tenants have been hesitant to make long-term commitments for medical office space. Instead, they're more likely to want one-year or month-to-month leases, as opposed to five- or 10-year deals.
"Uncertainty is probably the biggest thing we deal with and address today in our business," Lillibridge said.
In terms of new development, new projects throughout the health care sector have dropped off significantly since 2008, Lillibridge noted. He said the firm has seen new development tick up in the last 14 months. However, Lillibridge said his firm is taking a cautious approach to its own new starts.
"I think one of the beauties of the medical office and outpatient space is that it has never been a speculative market to begin with," he said. "But I think, even more today, it's really picking the right partners in the right health systems and hospitals. Secondly, making sure you spend the time and the energy sizing the facility."
Lillibridge also emphasized the need for "adequate" levels of pre-leasing for a development project.
Chicago-based Lillibridge Healthcare Services is a wholly owned subsidiary of Ventas.