Reflections and Thoughts On Hall Render’s Healthcare Real Estate Market 2022 Year in Review


Every Monday I check in with Andrew Dick’s weekly LinkedIn post/summary as he does a thorough update on all thing’s healthcare real estate- which is always an incredible read. While I have never met with Andrew or his team, I really appreciate their content, and so when I read their year-end update today, it was thought inspiring and wanted to take some time to respond.  First thing’s first… here’s their update:


And… here are my thoughts… as a healthcare provider turned to Real Estate Advisor who desperately wants to help this broken system from both sides of the coin. clinician and real estate.

I moved into a career in real estate in 2020 as a healthcare provider who had “had enough” and joined the Great Resignation. The writing was on the wall that no number of hours worked would result in sustainable living and after 12 years of 50–60-hour work weeks, multiple back surgeries in part as a result of transferring heavier and more dependent patients, spending 7 years trying to get a cash-pay PT practice up and running that wasn’t profitable, and so I gave up, and dove into real estate.

While I work predominantly in residential real estate and dabble in multi-family submarkets, my eyes have been on healthcare real estate this last year and a half, trying to wrap my head around how I can help solve some serious problems that I am passionate about.

Personally, and professionally, I see the staffing shortages mentioned in this article as a massive concern / issue moving forwards both as a public health issue AND as a real estate investment issue.

My Lens as a Healthcare Provider:

From working full time in the field from 2008-2020 as a physical therapist, what seems most concerning to me is continued staffing shortages, driven by generally lower wages with limited pay increases despite inflation, difficulty finding housing, burnout and moral injury amongst providers. Much of what I write here is from an allied health professional’s point of view but I think it’s safe to say many in other areas of healthcare would join in my understanding.

The average hourly wage to work in a Skilled Nursing Facility as a PT or OT in Southern California market in 2008 was $43-45.00/hour. At that time RUG levels drove the reimbursement model and while that’s changed some in recent years with the advent of PDPM and PGPM. the average hourly wage in the same setting (as well as home health and acute care) in 2022 is pretty much the same- $43-$45.00/hour or about $7560.00/month.  I went to school and got a doctorate-level education and graduated after committing 7-8 years of my life to higher education along with the costs necessary to do so. Yet, I would get paid the same now in 2022 as I did in 2008 -despite the value I bring as a seasoned clinician, and yes, despite inflation.


My Lens as a Real Estate Advisor:

Now, as a realtor who now helps investors in the residential market, it’s a double edge to see (and promote) the projected rent increases, improved cap rates, and upward values of homes (albeit slowed some recently but in general the trend is upwards), but also know it’s creating insane gentrification and imbalances in the coastal community that I’ve lived in for 18 years. For renters like me, the median rent in the San Diego market for a 2-3 bedroom apartment or SFR hovers around $3500-$4000/ month (for fun check out HUD’s website for Section 8 Housing fair market rent reimbursements where it’s not uncommon to see voucher programs for a 3 bedroom north of $4000.00 a month).

In rough numbers, with today’s PT or OT, or comparable health professional’s wages, if one were to purchase a home at the same monthly cost as renting, that would equate to roughly a 500k purchase price (a far cry below median price in the San Diego market, but let’s just say you found something), at today’s interest rates, on an FHA loan with 3.5% down.

Here’s the problem, on a PT or OT’s full time income, one’s frontend debt-to-income ratio with housing costs alone, comes in around 45%.  This of course is frontend DTI -before other debts, taxes, groceries, gas, medical expenses, etc. and isn’t counting a likely second income into the equation, but the bottom line is, that for many health professionals, it’s simply not possible to qualify. And, because many healthcare professionals have to earn more to cover student loans etc, they often are disqualified from downpayment assistance programs that allow them to enter into their local housing market. This ultimately places many healthcare workers on the renting ‘hamster wheel’, looking for avenues out of their situation to earn more, save more for a down payment without it being taxed, reduce debt or a combination of these. Cue working for a 3rd party healthcare staffing company or taking travel contracts as a very common and viable option.

To put more pressure on the situation, during the pandemic, many renters were displaced due to landlords selling, pushing them into a competitive rental market, even if they’d secured housing in the communities they’d been working in long ago. To qualify, for a rental at today’s prices, a family would need to demonstrate 2.5-3x income for the rent- approximately 12K per month for a 2–3-bedroom property, which means that second earners income better be good, and pray that your spouse/roommate/other income earner wasn’t laid off or sick during the pandemic.

Reliance on Staffing & Travel Companies

As discussed in Hall Render’s article:

letter to Congress earlier this year from American Hospital Association highlights the financial struggles many hospitals faced in 2022—largely as a result of continuing workforce challenges (including increased reliance on contract and travel staffing labor and the excessive costs associated therewith). In that letter, the AHA asserted those workforce challenges “are a national emergency that demand immediate attention from all levels of government and workable solutions.” 

There are plenty of healthcare workers who’d love to stay in their local communities, but can’t or won’t as they desire real estate investment to be their exit strategy from the field. Yet, there’s little chance that they can get their toe in the door without actually working for a cost-increasing, ROI slaughtering, third party staffing company that is so costly to providers but quite frankly one of the only avenues for a healthcare provider to find an extra edge of upward mobility in the field that they were trained in.


This is one of the few ways for a clinician can get a significant pay raise -negotiating it on their next 3-month contract, or by going to some remote place in Timbuktu that can’t get help, or seeking out high-paying strike contracts, then changing to a new venue every 13 weeks on a new contract… rinse and repeat, thus also benefitting from the tax strategies of being a traveler with GSA rates.

Working for a third-party staffing company also means that you reduce your risk for burn out as you know you will be guaranteed at least a little time off every 3 months (this isn’t always guaranteed as a regular full-time worker). It also means that your responsibility load won’t be too much beyond your basic job description and pay grade because you’re going to be leaving in 3 months anyway.

Ironically though, taking travel contracts and working with staffing companies like this can create problems for most travel clinicians who want to invest in real estate because lenders don’t often count the non-taxed stipends and earnings for a QM mortgage, making it tricky to put roots down in one’s community in the SFR market or with traditional financing.

The Great Resignation of Healthcare Workers:

I’m not here to bitch and moan. I have had 2nd and 3rd jobs and hustle like everyone else, and understand that’s life. But .. let’s face it, this is a big big problem for many health care workers and clinicians, including those who are the bedrock of our healthcare system like CNAs or some social workers who would literally make better money working as an Instacart delivery driver or at the local Target (without the liability, risk to their physical and mental health, or increased paperwork demands due at the end of every workday). The mentality of  ‘do the job because you love it’ only goes so far, and unfortunately, picking up and moving to a newer/ cheaper place doesn’t really solve the longer term problem that exists in high cost places such as Southern California. Jump into a group like The Non Clinical PT that has 17k LinedkIn followers or Medical Travelers in Real Estate that just formed last month and has almost 1K active followers in the group to illustrate the burnout and desire of so many providers to get out of the field.

The Big Boom:

Yet, our strained healthcare system has 7 more years to absorb the Boomer push (when all Boomers 65 years and older will be on Medicare)… and more and more healthcare providers are maxed out and understaffed. It makes me wonder how the whole thing doesn’t fully collapse.  I find it interesting though that as an asset class, healthcare continues to be stronger than others (ie hotels as noted in the article), yet this Staffing-Shortage-Elephant-In-The-Room remains.

Is A Triple Bottom Line Possible?

It just seems we should be able to figure out some sort of system where there is a triple bottom line between clinicians, operators, and investors that could solve this. This simplest solution to me would be pay healthcare workers better. Could we skip the staffing companies and middle men and just pay our clinicians their base pay plus a bonus performance pay (not necessarily based on productivity and seeing more patients alone, but for other long-term metrics that we value in our healthcare culture)? Can there be housing stipends or incentives provided for those who stay connected to their local communities? I’m sure there’s other avenues but worth a brainstorm session at least. Could we profit share in the very facilities they are working in? Or are those ideas too close to Anti-Kickback and Stark laws? What’s the line between sustainability here and making ‘too much’ as a clinician?

If You Build It, They May Not Come…

Larger hospital construction projects and other ALF developments continue to move forward, but I worry that healthcare staffing issues are not going away. I don’t believe that ‘if you build it, they will come’ works for healthcare real estate when you have so many providers leaving the industry. It also seems that ROI on tuition and time costs for an incumbent Gen Z-er provider are prohibitive to grow the field from the bottom up with newcomers. Think about the overhead costs today for someone setting out on the path of 7-8 years of not taking a full time job while they dedicate themselves to full-time rigorous grad programs, only to have the outlook of wages look the nearly the same as they did 20 years ago. It just doesn’t make sense.

I believe that there will be a cap on gains made in healthcare real estate markets until this issue is better solved.  I wish I could use math efficiently to illustrate this differently for those who are more analytical and less inclined to read these several paragraphs (any takers?).

Final Thoughts..

I have to wonder what the quality of care looks like for Gen X or Millennial by the time we reach Medicare age? As a provider who is currently navigating the system undergoing treatment between 4th and 5th spinal surgeries, I have to say I am pretty concerned as I am a well-versed consumer in the medical field, and find coordination of care challenging and nearly a full time job in and of itself.

It seems that for healthcare real estate to be a real estate asset class that continues to show financial growth and gains, quality of care has to improve, which for me, means reducing staffing shortages and turnover while improving quality and timely coordination of care amongst providers (i.e., not having to wait 3 months between a test, and a visit, and then another 2-3 months, only to then find out your provider quit and their replacement has rescheduled your appointment).

Real estate and healthcare are undeniably intertwined and perhaps mobilizing better communication between the sectors is a good way to get the ball rolling towards better financial returns in the space.


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