One of the defining trends that will drive a major part of the economy over the next decade is the decentralization of the healthcare system.
Home health spending, an excellent measure of this trend, is expected increase at a faster rate through 2027 than all other categories of care, according to a recent analysis from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.
It is expected to reach more than $186 billion in 2027, according to the report. This is miles above any other category of health care service, including hospital inpatient care, physician and professional services, nursing facilities, prescription drugs, retail sales of medical products and literally everything else in the space.
That growth reflects one simple point: that the economics of the traditional hospital model for healthcare has toppled from its own weight.
The pandemic simply accelerated this trend, driving the healthcare decentralization trend into a rapid acceleration, boosting telehealth, home healthcare, and the consolidation of medical offices into larger outpatient care centers offering ambulatory surgery centers, urgent cares and sophisticated diagnostic and treatment facilities.
The trend highlights the massive growth potential of these alternatives, with non-hospital medical properties being perhaps the only under-exploited sub-category.
From thirty-thousand feet, the dominant conceptual regime defining the $8.45 trillion global healthcare industry is a network of functional organs rather than a central all-in-one extremely expensive and occasionally inaccessible dominant facility.
One company is poised to take advantage of this trend by its aggressive movement into a model centered on acquiring and managing medical properties that can form a key piece of this decentralized care system: Supurva Healthcare Group Inc (OTCMKTS:SPRV).
The Evolution of SPRV
The company recently announced that it hired a new management team to embark on a new direction centered on acquiring and managing medical properties.
According to the release, effective February 1, 2021, John D. Murphy Jr. has been formally hired as President and Chief Executive Officer of Supurva Healthcare Group, Inc.
Mr. Murphy brings over thirty years’ experience in the design, development, construction, leasing, management, and acquisition of medical office properties.
In recent years, Mr. Murphy has reportedly guided the disposition and acquisition of medical office properties in New York, Virginia, South Carolina, Tennessee, and Florida with a combined value in excess of $150 million.
Mr. Murphy will evidently oversee the acquisition of medical properties, obtaining the necessary capital to facilitate Supurva’s new strategic initiative and establish the policies and procedures to manage the acquired properties.
What’s more, the company reached a verbal agreement to acquire its first medical office building in Florida in mid-February. Now, as it stands from there forward, Supurva Healthcare Group, Inc. is involved in the acquisition and development of real estate within the medical office building sector.
The Big Picture
We are headed for a demographic sea change. According to the US Census Bureau, for the first time in the history of the US healthcare system, people over 65 years old will outnumber those under 18 years old within the next two decades. The monster generation we call the “baby boomers” is in a transition that will see all of them over 65 ten years from now. By 2030, over 20 percent of the US population will be over 65.
In other words, we are officially a “graying society” in the US. Home health care goes hand in hand with that trend. 70 percent of home health care consumers are 65 and older.
To boost this trend, we are developing tools and technology to make it easier and easier to support health care services outside of specialized facilities. This just opens the door to increase the number of care opportunities that can shift from the hospital and out into decentralized care practices.
Finally, both providers and consumers are starting to prefer non-hospital health care support as an option because it’s less costly. This is self-evident.
Decentralized Healthcare is a structural growth trend driven by the shape of our society on a demographic, political, and technological level.
The S-11 Filing is a Big Catalyst
To further its investment potential in this high-growth space, Supurva Healthcare Group Inc (OTCMKTS:SPRV) recently stated (see the company’s release dated March 30) its intent to confidentially file a draft Registration Statement on Form S-11 with the SEC relating to a proposed public offering of its common stock.
According to the release, the number of shares to be offered and the price range for the proposed offering have not yet been determined. The public offering is expected to take place after the SEC completes its review process, subject to market and other conditions.
Note, an S-11 filing is a filing with the SEC that is used to register securities for real estate investment trusts (REITs). The business of REITs is to acquire, hold, and often manage real estate for the purpose of investment income and capital appreciation.
In this case, it means SPRV appears to be raising capital to rollup a portfolio of real estate dedicated to this decentralized healthcare trend.
The ROI thesis is strong. The company has expertise in the space. And it is moving to become a major player. The market hasn’t noticed this dynamic as we see it, which could be a potentially significant opportunity.