The Role of Medical Office Buildings in Cost Reduction

From 2012 to 2022, total healthcare spending in the U.S. rose from approximately $3.1 trillion to about $4.2 trillion, marking an increase of 35% over ten years. This translates to an average annual growth rate of about 3.2% per year during this period.

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Medical Office Buildings (MOBs) are transforming the way healthcare is delivered, offering a more practical and cost-effective care alternative for many treatments. 

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By shifting non-emergency services away from hospitals and into outpatient centers, patients can receive high-quality care at a fraction of the cost. This shift not only saves money for patients but also reduces the overall burden on healthcare systems, making it a win-win for everyone involved.

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What are MOBs?

MOBs are specially designed commercial properties that accommodate medical offices, clinics, labs, and other healthcare-related services. These buildings are typically outfitted with the necessary facilities to support both healthcare providers and their patients. Features often include reception areas, waiting rooms, exam rooms, medical offices, and spaces for minor procedures or lab work. Many MOBs are situated near hospitals or major healthcare centers, offering added convenience for both physicians and patients.

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The Value of Medical Office Buildings

MOBs are becoming an essential part of the healthcare landscape, offering patients more affordable and accessible options for care. Here are some key ways MOBs help reduce healthcare expenses while ensuring quality care:

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• Lower care costs with high-quality providers: MOBs provide a range of services — from imaging and lab work to minor surgeries — at a fraction of the cost compared to hospitals. Many MOBs are affiliated with established health systems, ensuring patients receive quality care from trusted providers. This makes them a cost-effective alternative for non-emergency treatments.
• Increased access to preventative care: Preventative care is vital for catching health issues early and preventing costly treatments later. MOBs offer services like check-ups, screenings, and wellness programs, helping patients stay on top of their health and avoid more expensive treatments in the future.
• Specialized care for chronic conditions: For patients managing chronic conditions, MOBs are an excellent option. Many MOBs specialize in chronic care, allowing patients to get regular, specialized treatment without the need for hospital or emergency room visits, saving them both time and money.
• Convenient locations for easy access: Often located in accessible, community-centered areas (sometimes called "medtail" properties), MOBs reduce the need for long travel to hospitals. This is especially beneficial for those with busy schedules, like parents, as it saves both travel time and expenses.

MOBs offer a practical, affordable approach to healthcare, bringing quality services closer to where people live and work. By reducing costs, increasing access to preventative care, and providing specialized services, MOBs play an important role in keeping healthcare accessible, convenient, and affordable for communities.

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The Growing Demands for MOBs

MOBs are transforming how patients receive care, offering a convenient alternative to traditional hospital settings. Community-based care — health services delivered within local neighborhoods or communities rather than centralized hospitals — focuses on making healthcare more accessible and personalized. With advancements in medical technology and the shift toward community-based care, MOBs are now essential for providing high-quality medical services closer to home. Let’s look at some key factors driving this demand.

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Aging Population and Rising Health Concerns

The aging population is one of the primary drivers of increased demand for MOBs. As people grow older, they require more medical care — from routine check-ups to chronic condition management. Hospitals often struggle to keep up with the high volume of patients, so MOBs are stepping in to provide essential care in a more convenient and accessible way. By offering treatments and consultations in these specialized outpatient centers, MOBs help reduce the need for costly hospital visits and bring quality healthcare closer to where people live.

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Shift in Healthcare Delivery Model

The shift in healthcare delivery is another major factor contributing to the demand for MOBs. Healthcare is moving away from hospitals as the primary site for care, especially for non-emergency situations. Increasingly, care is provided in community-based settings, which is exactly the purpose of MOBs. They allow patients to see their doctors, receive treatment, and return home—all without setting foot in a hospital. This shift enhances healthcare accessibility and streamlines the experience for both patients and providers.

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Advancements in Medical Technology

Advances in medical technology have made it possible for more procedures, which once required hospital stays, to be performed in outpatient facilities like MOBs. This reduces the reliance on hospitals and increases the need for well-equipped MOBs. Patients benefit from advanced care in a more accessible setting, without the hassle or costs associated with hospital visits. This shift is a key reason MOBs are becoming essential to modern healthcare.

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Expansion into Suburban Areas

Another thing that’s fueling the growth of MOBs is their expansion into suburban areas. People are moving out of cities, and they don’t want to drive long distances just to see a doctor. MOBs are being built closer to where people live, making it easier for them to access quality care without having to make a big trip into the city. This trend is helping meet the growing demand for healthcare services in suburban communities.

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Integration of Healthcare Services

MOBs are also becoming one-stop shops for healthcare. Instead of having to go to different places for lab work, consultations, or physical therapy, patients can now get all these services under one roof. This integration makes things a lot easier for patients — they don’t have to run all over town to get the care they need. It’s also more efficient for doctors because it allows for better coordination of care. This convenience and efficiency are big reasons why MOBs are growing in popularity.

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Invest in the Future of Healthcare!

As healthcare demand rises and outpatient care becomes the norm, MOBs stand out as one of the most stable, high-potential investment opportunities. This shift in healthcare delivery makes MOBs a recession-resilient asset class, providing dependable returns in an expanding industry. However, the key to maximizing these returns lies in partnering with an expert who understands the complexities of MOB investments.

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Alliance CGC offers investors a strategic advantage with its deep expertise in the MOB sector, guiding each step to help you fully capitalize on this robust asset class. With a portfolio valued at over $500 million and a track record of delivering a 28% IRR and a 2.5X equity multiple, Alliance CGC is committed to achieving your investment goals. Our personalized approach identifies high-quality, income-generating properties that align with your financial objectives. Partner with Alliance CGC to experience stable, recession-resistant growth in the thriving MOB market.

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