Non-acute care facility ownership: if not you, who?

Physician groups now face a dynamic medical real estate market that can provide an attractive alternative to self-owned and self-financed outpatient facilities and medical office buildings. The ownership and financing options available to physicians and physician groups considering the development of new medical projects have expanded greatly over the past few years and are likely to continue to evolve in the foreseeable future. This changing environment, driven by new sources of institutional capital and the emergence of qualified developers, has led to a more competitive market for physicians and groups seeking real estate capital partners, and physicians are starting to take advantage of it. Physicians and groups have embraced third-party ownership and management of real estate, because it can preserve capital resources and minimizes risk. These groups are using third parties to develop and own new medical real estate projects. This article describes medical real estate project development alternatives, the attributes and concerns of developers, typical transaction terms, and a recommended process for physicians and groups to select the best real estate development partner.