Hospitals must balance continued outpatient expansion with necessary inpatient modernization, report says.
A new real estate study confirms the trend hospitals are taking toward outpatient care.
Occupancy in outpatient healthcare real estate remains extremely strong, exceeding 92% in many major markets, according to information gleaned by Colliers from the 2026 Revista Medical Real Estate Investment Forum held earlier this month in Palos Verdes, California. Colliers specializes in commercial real estate, and Revista focuses on data in medical real estate.
Flexible ambulatory strategy is critical as health systems are prioritizing adaptable building design to support multispecialty consolidation, while balancing continued outpatient expansion with necessary inpatient modernization, the report said.
WHY THIS MATTERS
Hospitals are increasingly focusing on care outside the four walls of a hospital.
A recent example is the Bradford Regional Medical Center in Pennsylvania, which submitted a formal closure notice to the state of Pennsylvania for its inpatient, emergency and long-term care services by the middle of this year, according to the Olean Times Herald. The campus is transitioning to an outpatient and ambulatory care model.
Following the release of its earnings report on Friday, Ascension President and CEO Eduardo Conrado issued a statement on the direction of care for the nonprofit Catholic health system that pointed in the direction of outpatient services.
“Care should be delivered where it makes the most sense for the patient, not by default and not only inside hospital walls,” Conrado said in the statement. “We are moving care into community clinics, ambulatory surgery centers, virtual care, and care delivered at home. Our Community Health Ministries help bring primary care and essential services directly into neighborhoods where access is limited.”
The Centers for Medicare and Medicaid Services in November made a site-neutral policy decision that incentivizes outpatient care and could save the agency and patients billions over a decade.
Along with increasing Medicare hospital outpatient and ambulatory surgical center payment by 2.6% in 2026, CMS eliminated the inpatient-only list for services that formerly mandated that certain surgeries only be performed in an acute-care setting.
The rule means Medicare will reimburse at the same rate whether a service is performed in a hospital or an ambulatory surgery center or physician’s office, with the latter two being the lower-cost alternatives.
The agency is phasing out the inpatient-only list over a three-year period, beginning with the removal of 285 mostly musculoskeletal procedures for 2026.
The American Hospital Association voiced objection to the rule as making it harder for hospitals to financially survive.
“Combined with its continued inadequate market-basket updates, the agency is exacerbating the challenging financial pressures under which hospitals are operating to serve their patients and communities,” said Ashley Thompson, AHA senior vice president of public policy analysis and development.
THE LARGER TREND
Other findings from the report show:
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Outpatient development starts are increasing after a multiyear slowdown.
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Behavioral health and inpatient rehab is a growing sector, driven by demographic demand and improved reimbursement dynamics.
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Investor appetite for medical offices is strengthening with nearly 100 new buyers entering the market in 2025.
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Financing conditions are improving.
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Payer‑mix sensitivity and regulatory uncertainty are becoming increasingly important underwriting considerations.
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Outpatient growth remains a strategic priority, but inpatient replacement and modernization still command major investment.
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Practice acquisition remains important, especially to stabilize markets post‑merger and align physicians with clinical protocols.
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