Vital Signs 2022

Conclusion: Opportunities for Medical Office

In the face of past economic headwinds, the healthcare industry has been noticeably resilient. Through today’s economic turmoil, we can expect rising demand for care nationwide—providing opportunities for investors and occupiers who are able to manage costs and offer services that match patient demographics and diagnosed needs. In 2022, patients returned for further care, and healthcare spending has begun to rise again. Patients will continue to need further care due to deferrals from the pandemic. Diagnoses are expected to be more acute as a result of deferred and delayed care and correspondingly, may require greater treatment and intervention. There are also rays of light when it comes to the future of the healthcare sector’s path out of the dual challenges of labor shortages and rising expenses across the board. Contract labor, such as travel nurses, have been once the source of rising labor costs for health systems as they seek to cover labor shortages. But some health systems have begun to reduce their dependency on contract labor. For example, HCA Healthcare reduced its contract labor spend by 19% in the third quarter, according to The Advisory Board. Other major avenues of cost reduction identified in The Advisory Board’s 2022 survey have included

outsourcing of ancillary personnel (accounting, IT, facility work) and the increasing adoption of automation technologies, such as self-registration kiosks, robotic automated processes and artificial intelligence. The talent pipeline also has begun to grow, with the likelihood of more available caregivers over the coming years. AAMC data has shown that the number of applicants for medical school has grown consistently over the past decade, with 2021 reaching a record 62,553 applicants, a 17.8% increase from the previous year. While applicants fell somewhat in 2022, they remain higher than both 2020 and pre-pandemic metrics. Likewise, applicant numbers for nurse practitioner and physician assistant programs have been growing too. Ultimately, the challenges that the healthcare sector currently faces are opening opportunities for both healthcare providers, who can devise novel strategies to address the immense and growing need for care in the nation and healthcare real estate investors who can navigate the cross currents of the capital markets, limited medical office building stock, and continued evolution in the manner and location of care delivery.

AAMC data has shown that the number of applicants for medical school has grown consistently over the past decade, with 2021 reaching a record 62,553 applicants, a 17.8% increase from the previous year.

13