UK Healthcare Assets: Safe Haven as US Reforms Rattle Investors

Regulatory Divergence: US Corporate Practice of Medicine Reforms vs UK Healthcare Investment Stability

As US healthcare investors face mounting regulatory headwinds, UK healthcare assets are emerging as a compelling safe haven for high-net-worth individuals seeking stable, long-term returns. Recent developments in the United States have created significant barriers for healthcare investors through an increasingly complex patchwork of state-level restrictions on corporate ownership of medical practices.

State legislative measures are being proposed or passed nationwide aimed at curbing corporate ownership or control of medical, dental, and veterinary practices, with particular emphasis on private equity firms and real estate investment trusts in healthcare [1]. Specifically, states like North Carolina have implemented legislation such as SB570, which expands and codifies the Corporate Practice of Medicine (CPOM) doctrine, while other states have introduced pre-merger notification laws specifically targeting healthcare transactions [1]. This rapidly evolving regulatory environment creates substantial uncertainty for investors in healthcare REITs and private equity with national strategies.

These state-level regulations directly impact physicians’ ability to obtain funding and operational support from private investors, creating a fragmented regulatory landscape that varies significantly across state lines [1]. For investors with national portfolios, this patchwork approach necessitates complex compliance strategies and introduces substantial regulatory risk. The regulatory uncertainty is further compounded by the fact that these laws often contain ambiguous language regarding what constitutes “ownership” or “control,” creating additional compliance challenges for healthcare investors [1].

In stark contrast, the UK offers a more stable and predictable regulatory environment for healthcare real estate investment. The National Health Service (NHS) provides a government-backed tenant base with long-term leases, creating a foundation of stability that US healthcare investments increasingly lack. Recent examples of this stability include the UK government’s £750 million Estates Safety Fund, which is being distributed to NHS trusts across the country for vital building maintenance and safety improvements [17]. For instance, York and Scarborough Teaching Hospitals NHS Foundation Trust recently received £6.5 million from this fund to improve hospital infrastructure, enhance patient safety, and support upgrades to ensure high-quality healthcare delivery [17].

“It is not mere coincidence that, over the past decade, the percentage of primary care physicians employed by a hospital-based health system or corporate entity has increased from 36 percent to 74 percent.” — Health Affairs [10]

This dramatic shift in physician employment models reflects the growing challenges of independent practice in an increasingly complex regulatory environment. The trend has significant implications for healthcare delivery models and, consequently, for real estate investment strategies in the sector [10].

Yield Comparison: UK Healthcare Property Returns vs US Healthcare REIT Performance

The financial performance gap between UK healthcare property investments and US healthcare REITs continues to widen as regulatory pressures mount across the Atlantic. While US healthcare REITs like Medical Properties Trust (MPW) have announced ambitious revenue targets—including a $1 billion annualised cash rent target by 2026 [2]—their actual performance remains volatile.

Despite these ambitious goals, MPW reported a GAAP net loss of $0.20 per share in Q1 2025, affected by debt refinancing transactions and higher stock compensation expenses [3]. This volatility stands in sharp contrast to UK healthcare properties, which typically offer more stable returns backed by long-term NHS leases with inflation-linked rent reviews.

Recent data demonstrates this stability in UK healthcare property yields. For instance, Impact Healthcare REIT reported a 1.5% like-for-like increase in portfolio valuation to £660.8 million as of March 31, 2024 [19]. The company’s portfolio demonstrates the resilience and attractive yields available in the UK healthcare property sector, particularly for assets with NHS-backed tenancies. This performance illustrates the consistent returns that sophisticated investors can achieve through strategic allocation to UK healthcare assets.

For high-net-worth investors prioritising wealth preservation and predictable income streams, this performance differential cannot be overlooked. UK healthcare assets provide a compelling alternative with their combination of yield stability and built-in inflation protection—particularly valuable attributes in today’s uncertain economic climate.

The private credit market is also emerging as a preferred asset class for ultra-high-net-worth investors, offering yields of 8% to 20% and providing diversification in a low-interest-rate environment [12]. This trend toward alternative investments reflects the broader search for stable returns in volatile markets—a search that increasingly leads sophisticated investors to consider UK healthcare assets.

Market Structural Shifts: Consolidation Trends in US vs UK Healthcare Property Ownership

The structural differences between US and UK healthcare delivery systems create fundamentally different risk profiles for property investors. In the United States, we’re witnessing a dramatic shift away from physician-owned private practices toward hospital and private equity ownership. The share of physicians working in private practices in 2024 was just 42.2%, a decline of 18 percentage points from 60.1% in 2012 [4].

This significant decline is attributed to several factors: inadequate payment rates, costly resources required to operate practices, and increasing regulatory and administrative requirements [4]. The American Medical Association has led a multi-year effort calling for Medicare physician payment reform to address these challenges [4]. Meanwhile, the percentage of physicians identifying their practices as private equity-owned has risen to 6.5%, higher than in previous years [4].

This consolidation trend introduces additional complexity and potential volatility for healthcare property investors in the US market. As ownership structures shift from individual practitioners to corporate entities, lease negotiations become more complex, and the risk profile changes. Corporate owners may have different facility requirements, financial considerations, and long-term strategic plans compared to individual practitioners, potentially affecting lease stability and renewal prospects.

The UK system offers a stark contrast with its NHS-backed tenancies providing greater stability. Rather than navigating a fragmented landscape of private practices with varying financial strengths, UK healthcare property investors benefit from the institutional backing of the NHS, creating a more predictable and secure tenant base. The demand for modern healthcare facilities in the UK is substantial and growing, driven by an aging population and evolving healthcare delivery models.

This structural advantage translates directly to reduced risk for commercial property investors focused on the healthcare sector, providing greater certainty around occupancy rates and rental income over the long term. The NHS’s commitment to long-term leases, often spanning 15-25 years, provides income security that is increasingly rare in other commercial property sectors.