In today's healthcare delivery system, not many independent physician groups can expect to remain independent, as most will be snatched up by larger systems for myriad reasons that make sense under the Patient Protection and Affordable Care Act.

That doesn't seem to be the case, however, for an exceptionally strong group in the mid-Hudson Valley region of New York, about 60 miles outside of Manhattan. Since its founding 17 years ago, Crystal Run Healthcare has built itself into one of the leading independent, multi-specialty physician practices in the country.

As such, and in order to continue growing, Crystal Run in recent months sold six medical office buildings (MOBs) that it owned to one of the country's largest healthcare real estate investment trusts (REITs), Newport Beach, CA-based Griffin-American Healthcare REIT II.

The sale price for the 360,000 square foot portfolio was $141 million, or about $392 per square foot. While Griffin-American acquired most of the buildings in the third quarter (Q3), the last tranche was finalized shortly before the end of the year. The buildings are in the New York cities of Middleton and Rock Hill, the home base of Crystal Run and its 300-plus providers.

“As (one healthcare real estate consultant) always tells me, a provider's market share in its respective area is the key to its success over the long term,” says Danny Prosky, president and chief operating officer of Griffin-American, interviewed following the acquisition. “And (Crystal Run) owns the market there.”

“We are definitely investing in the strength of the tenant, but we also like the real estate as well, as the portfolio includes newer Class A MOBs,” he adds. “They're very nice buildings in good locations.”

At a time when not many health systems are selling, otherwise known as monetizing, as many MOBs as they once did, the sale made sense for Crystal Run for a number of reasons, according to Laca Wong-Hammond, a senior VP for healthcare real estate in the New York office of Raymond James. Ms. Wong-Hammond represented Crystal Run in the transaction and led the marketing of the portfolio along with the firm's Peter H. Delaney, a VP.

As far as Ms. Wong-Hammond is concerned, the seller, Crystal Run, and its founder, Dr. Hal Teitelbaum, the CEO who has a degree in law as well as an MBA, are “very impressive leaders that continuously innovate and are always looking ahead.”

“As the group peered into their future, it became clear additional capital was needed to fully realize the company's ambitious, long-term strategy,” says Ms. Wong-Hammond. “We undertook a strategic options assessment with Crystal Run to determine the course of action that would best meet their needs for growth. During the course of this consultative phase, we came to understand Crystal Run's primary objectives, which were to enhance their ACO infrastructure, originally launched in 2011; unlock capital for opportunistic expansion including for facilities and operations; and further enhance the company's ability to provide quality and cost-efficient medicine in a new accountable care environment.”

NOTE: In part II of this story, key officials involved in the deal describe how it came together and talk further about its ramifications.