Growing Demand for Healthcare Services Drives Medical Office Market
- Increased demand for healthcare services is positively impacting medical real estate markets.
- The Columbia, SC medical office market experienced declining vacancy and rising rental rates in 2015.
- Physician practices and hospitals are facing new challenges as a result of mandates enforced by the Affordable Care Act (ACA)consequently motivating mergers and acquisitions.
- Healthcare employment is on the rise, reaching new record-high levels.
Demand for Healthcare Services and Real Estate Grows
Demand for healthcare services has been increasing over recent years as the population ages and the Affordable Care Act provides healthcare access to more people. An aging population coupled with a declining uninsured rate contribute to greater demand for healthcare services and consequently climbing healthcare expenditures. Healthcare spending in the U.S. is escalating and topped $3 trillion in 2014, more than doubling since 2000.
As of 2010, the U.S. Census Bureau predicted that 16.9% of the population in the Columbia, SC metropolitan statistical area (MSA) was over the age of 60. According to ESRI Demographics, in 2015, the 60-year-old and over cohort grew to 19.3% and is expected to account for 21.7% of the MSA’s total population in 2020. Meanwhile, the 20-to-59-year-old age cohort is declining as a percent of total population.
The ACA has enabled greater health insurance coverage and is contributing to declining uninsured rates throughout the nation. The Center for Disease Control (CDC) recently reported the uninsured rate in the United States is below 10%, a new record low. The uninsured rate was down to 9.0% at mid-year 2015 from 11.5% the previous year with approximately 7.5 million fewer uninsured individuals than 2014. According to the Henry J. Kaiser Family Foundation, the uninsured rate in South Carolina was down to 13.0% in 2014 from 16.0% in 2013. Despite the uncertainty of the future of the ACA, the uninsured rate is expected to decline further.
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