Why You Should Use Third-Party Capital for Real Estate Expansion  

capital markets

Health systems are constantly expanding and improving their services to meet the needs of their communities. Real estate development is a critical aspect of this expansion. However, for many health systems, the question arises of whether to use their own capital or to seek third-party capital for their real estate development projects. Highlighted below are several considerations that address the benefits of using third-party capital. However, at the end of the day, you know your health system best and should always consult your financial team to make the right decision for your health system.  

Reduced Financial Risk 

Real estate development is a capital-intensive venture, and the cost of acquiring land, designing, and constructing buildings, and outfitting them with the necessary equipment and systems can quickly add up. Health systems must use their capital wisely to maintain their financial stability and meet other essential needs, such as clinical care and research. By using third-party capital for real estate development, health systems can reduce their financial risk by leveraging the expertise and resources of external partners. These partners can assume the financial risks associated with the development project, including securing financing and managing construction costs, allowing the health system to focus on its core mission. 

Access to Expertise 

Third-party capital partners have expertise in real estate development that health systems may not possess. These partners have extensive experience in identifying, designing, and building healthcare facilities, including hospitals, clinics, and medical office buildings. They can also provide guidance on the most effective use of the facility to achieve the health system’s strategic objectives. Additionally, they can offer insights into new trends and innovations in healthcare facility design, technology, and operations, which can benefit the health system and its patients. 

Flexible Financing Options 

Third-party capital partners can offer flexible financing options that meet the unique needs of the health system. These options can include sale-leaseback arrangements, build-to-suit leases, and joint ventures. Such financing options can provide the health system with the flexibility to pursue its real estate development goals while minimizing its financial risk. 

Faster Time to Market 

Real estate development projects can be time-consuming, and delays in construction can cause significant disruptions to the health system’s operations. By using third-party capital partners, health systems can accelerate the development process and bring facilities to market more quickly. Third-party partners have established relationships with contractors, architects, and engineers, allowing them to move projects forward efficiently. They can also manage the project’s day-to-day operations, freeing up the health system’s internal resources. 

Improved Patient Experience 

Real estate development is not just about constructing new buildings; it’s also about improving the patient experience. Third-party capital partners can help health systems design facilities that are more patient-centric, providing a more comfortable and efficient care environment. This can result in higher patient satisfaction scores, increased patient loyalty, and improved clinical outcomes. Additionally, modern facilities can attract top clinical talent, which can further enhance the quality of care provided by the health system. 

In conclusion, health systems should consider using third-party capital for real estate expansion to reduce their financial risk, gain access to expertise, benefit from flexible financing options, accelerate time to market, and improve the patient experience. By partnering with an experienced real estate developer such as Boldt, health systems can ensure that their facilities are designed and constructed to meet the needs of their patients and communities, while minimizing the impact on their financial resources. At the end of the day, a successful real estate development project is not just about constructing a new building; it’s about improving the health system’s ability to deliver high-quality care to its patients. 

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Chris White

Business Development Manager

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