RSMUS.comOn the surface, healthcare real estate appears to be a prime investment. The market is projected to grow from $1,434 billion in 2024 to $2,270 billion by 2030, driven by an aging population with increasing healthcare needs and technological advances that enable new forms of care.
Real estate owners, investors, and operators are correct to see opportunities in this sector. However, they are mistaken to assume healthcare operates like other types of commercial real estate. Understanding these differences and how they affect the financial model is essential to achieving strong, sustainable returns.
Healthcare revenue is unpredictable
Most commercial real estate relies on the assumption that tenants generate stable revenue and can consistently meet lease obligations, including scheduled rent increase. Healthcare revenue is far more volatile.
Providers depend on Medicare and Medicaid reimbursement cycles and private insurance payments, which can fluctuate significantly month to month and often fall short of expectations. At the same time, providers face unpredictable costs driven by staffing levels, utilization rates and patient volumes.
This volatility makes it difficult for tenants to reliably meet rent obligations, resulting in inconsistent cash flows for property owners. As a result, operators must gain visibility into tenant financial health rather than rely on assumptions of predictable payments.
Tenant stability is not guaranteed
Although the healthcare sector continues to grow, individual operators can be highly unstable. Doctor’s offices, hospitals, assisted living facilities face frequent closures, often due to the financial pressures outlined above. In addition, mergers and acquisitions can suddenly disrupt occupancy, leaving properties vacant.
Because healthcare facilities are highly specialized, replacing a tenant is not always straightforward. Properties may sit empty for extended periods, require significant renovations or demand rent concessions to remain competitive.
Rather than attempting to eliminate this instability, owners should focus on anticipating and managing risk early using financial systems that track both property performance and operator health.
Healthcare ownership adds complexity
Healthcare real estate is structurally more complex than traditional commercial real estate. Many assets involve multiple entities, joint ventures, layered ownership arrangements, and separate management or operating companies. Investor-specific reporting requirements often add another layer of complexity.
Basic accounting systems struggle to manage this level of complexity. Tasks such as consolidations, eliminations, and segmented reporting become time-consuming, manual and prone to error.
To address these challenges, organizations need a robust accounting system that supports multi-entity structures, dimensional reporting and automated consolidations—enabling finance teams to operate efficiently and accurately.
Regulatory requirements are more demanding
The highly regulated nature of healthcare introduces unique requirements on real estate owners. These include maintaining detailed audit trails, completing lender and investor reporting, preparing compliance documentation, and tracking grants or reimbursements when applicable.
These requirements are far less common in other commercial real estate sectors, and they can be difficult to manage using spreadsheets, legacy systems or manual processes. Errors in these environments increase risk and can erode confidence during audits, refinancing or expansion efforts.
To navigate this landscape successfully, financial models must prioritize accuracy, traceability and consistency. Organizations should also ensure that compliance capabilities are embedded from the outset of ownership.
How to succeed in healthcare real estate
While complexity and uncertainty define the healthcare sector, they do not prevent profitability. Operators that understand these dynamics early and build financial models accordingly can achieve strong returns in a rapidly growing market.
A common theme across these challenges is the limitation of basic accounting systems and traditional financial models. These approaches amplify complexity and risk rather than reduce it. In contrast, a modern system designed for healthcare real estate can simplify financial management, improve visibility and build confidence across an entire portfolio.
Sage Intacct demonstrates this capability through advanced, healthcare-specific accounting features. RSM understands that financial technology can either enable or hinder success in this sector. With understanding implementing solutions such as Sage Intacct, we help investors strengthen their financial foundation and support long-term growth.
Contact RSM before your next healthcare real estate investment.
Omar Panjwani
Omar Panjwani is a Director at RSM within the Business Applications practice, where he focuses on delivering modern solutions for organizations across the healthcare, software, and private equity sectors. In this role, he has helped grow the practice from a small group of consultants to a team of more than 40 in just a few years. He has also played a key role in elevating RSM’s profile as a top Sage Intacct partner, including earning recognition as a top‑five partner and Sage Intacct President’s Club member.
