SPRINGFIELD, MO—One of the well-known provisions of the Patient Protection and Affordable Care Act (PPACA) is prompting an increasing number of hospitals and health systems to get involved in a new area of care: post-acute services.

The impetus for this migration is the PPACA's 30-day readmission rule, which penalizes hospitals for excessive readmissions.

As a result, a growing number of health systems are getting involved in the operations of inpatient rehabilitation facilities (IRFs), long-term acute care hospitals (LTACHs) and skilled nursing facilities (SNFs).

With health systems venturing into this space, it was only a matter of time before healthcare real estate (HRE) firms, even those long involved in medical office buildings (MOBs) only, would follow. Quite a number already have, according to HRE professionals.

This includes both developers and investors. For example, Indianapolis-based Duke Realty Corp., whose involvement in HRE has typically entailed developing and acquiring MOBs, is in the process of developing a $28 million, 60-bed rehabilitation hospital in Springfield, MO.

In addition, a number of HRE investment firms have diversified their portfolios by acquiring post-acute facilities in recent years, including some of the country's largest healthcare real estate investment trusts (REITs).

“Where money can be made, investors will be sure to follow,” says Richard Rendina of Jupiter, FL-based Rendina Cos., a long-time MOB developer. “I believe the assisted living market is oversaturated... However, as health systems focus on post-acute care to ensure reimbursements and quality outcomes, money is sure to follow in that space as well.”

Because the PPACA penalizes acute care hospitals—in the form of reduced Medicare reimbursements—for above-average levels of readmissions within 30 days of discharge, they are finding that having their discharged patients receive quality post-acute care reduces readmission rates. So they figure, why not be involved in providing that care. To do so, some are entering the space on their own, while others are joining partnerships with experienced post-acute providers.

But questions still abound. For example, will hospitals and health systems continue to make post-acute care a priority? And, is it a sustainable long-term opportunity for HRE developers, lenders and owners?

“We should see some pickup in the post-acute strategies from the systems,” says Mindy Berman, managing director with the national Healthcare Capital Markets of JLL (NYSE: JLL). “But by and large I do not think hospitals are going to jump wholeheartedly into ownership of post-acute facilities or operations, even though there are many systems that already have post-acute strategies.”

Chris Bodnar, co-leader of the national Healthcare Capital Markets Group of Los Angeles-based CBRE Group Inc. (NYSE: CBG), believes such investing by traditional medical office building (MOB) investors will accelerate.

“Many of the new facilities being developed are operator plays: freestanding emergency departments, surgical hospitals, rehab hospitals, long-term acute care facilities, etc. Investors will dig deep into the operational opportunity and determine the risk/reward profile and invest accordingly.”