What Is Behavioral Health
By the year 2027, the behavioral health segment of healthcare is projected to grow to $130 billion. That might seem high to someone on the outside looking in. But since its current value is $90.5 billion, that may be an attainable projection.
So what exactly is behavioral health, and why is it such a valued health segment? Behavioral health relates to behaviors that can impact physical wellness. It encompasses health issues such as anxiety, depression, addiction, weight loss, etc. The overarching concept of behavioral health can also include mental health.
The Data
According to the APA, the pandemic resulted in an increased need for anxiety treatments. Depression, sleep-wake, and obsessive-compulsive disorder treatments increased during the pandemic. More psychologists have received referrals, and seven out of ten psychologists with waitlists said their lists had grown longer. According to an APA survey, about 41% of psychologists said they couldn’t keep up with the demand. APA’s article notes the relevance of telehealth and expounds on the need for screening, prevention, and intervention. A GlobeSt.com article explains that behavioral health issues affect one out of every four Americans.
The Market
In another article, GlobeSt.com includes behavioral health as one of the significant trends to watch in 2022. The article infers that this health segment is now gaining more interest than ever before. It also suggests that more investors are interested in working with behavioral health tenants. Additionally, cap rates are beginning to mirror those of other medical facilities.
The recent announcement from CareTrust REIT Inc. is a prime example. In mid-February, executives announced their plan to transition some of their properties into behavioral health centers. According to Behavioral Health Business, an addiction recovery group, Landmark Recovery, will be operating a select few of their properties. CareTrust CEO Dave Sedgwick believes that the behavioral health segment experiences higher rent rates with a stronger lease coverage compared to senior housing.
Medical Properties Trust’s recent sale-leaseback deal is another example of growing interest in this health segment. In this deal, Medical Properties Trust acquired 18 inpatient hospitals within the behavioral health category.
Healthcare Real Estate Logistics
Many states require a Certificate of Need (CON) for specific health specialties to open a new facility. CON requirements regulate the number of new healthcare facilities or services that serve similar needs within one community. Certain services and facilities within the behavioral health sector are governed by CON laws. Gaining the necessary approval can be a lengthy process, and often CON applicants must partner with lawyers to ensure they complete all required steps.
But recently, states like South Carolina are choosing to remove the CON requirement. The removal of the CON requirement may ease the process for more behavioral health entities seeking new locations.
HBRE and Healthcare Real Estate
The increased need for behavioral health may cause a greater demand for more facilities within this segment. As healthcare professionals and investors begin pursuing more opportunities within specific types of healthcare, they should partner with commercial brokers who fully understand the niche healthcare sector.
The HBRE team has worked with healthcare practices ranging across many health specialties. Our team is very familiar with the legislation and building requirements involved in healthcare real estate. Our experience within this sector allows us to adequately guide our clients through facility purchases, lease negotiations, and the sale of healthcare properties. We work with landlords and tenants to create lease terms that work for both parties. And we facilitate communication between both groups to help maintain a healthy landlord-tenant relationship. Health professionals interested in opening new facilities can reach out to HBRE to assist with all commercial real estate needs.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
