The Cost of Caring in Today’s Healthcare Environment

Commentary by: Todd Perman, CCIM, Vice Chairman, Global Healthcare Services

Hospitals and health systems are steadily implementing cost reduction efforts to mitigate the growing costs associated with providing care in today’s healthcare environment. While healthcare spending has continued to grow in recent years, the COVID-19 pandemic intensified the need for providers to reduce costs, as clinical and operational departments were challenged. The American Hospital Association’s October 2021 Cost of Caring report highlights the current trends driving up healthcare services and accordingly, costs. These include: increased use of care as more people have insurance, an aging population needing care, the significant amount of the population diagnosed with chronic conditions, and demand for new technology investments.

In the months ahead, we expect hospitals and health systems to adapt as they always have, by seeking methods to lessen the financial impacts from the pandemic. This will include both traditional methods such as vendor renegotiations and workforce optimization, and creative methods such as asset optimization and ambulatory access. As value-based care becomes more crucial, consolidation within the industry is imminent.

All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of Newmark. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient's choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of Newmark, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains. This document is intended for informational purposes only and none of the content is intended to advise or otherwise recommend a specific strategy. It is not to be relied upon in any way to predict market movement, investment in securities, transactions, investment strategies or any other matter.

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