Capital is tight, CON regimes are unpredictable, and value-based contracts keep shifting care to ambulatory settings. The imperative is clear: expand access and standardize quality while protecting the balance sheet and preserving clinical control—simultaneously advancing clinical, operational, and financial performance through population health, capital efficiency, and strategic portfolio optimization. Executive question: “How should our health system balance ambulatory expansion with acute care investment?”

Bremner Healthcare Real Estate is healthcare-exclusive since 1989—our market leadership validated by acquisition by Duke Realty. We’re strategists first, translating care models and capital plans into JV structures, governance, and campuses that perform—not just property transactions.

Health systems are turning to real estate joint ventures to expand access, accelerate ambulatory strategies, and protect balance sheets—without compromising clinical control. When designed around population health and value-based outcomes, a JV becomes an operating asset that advances the care model, not just a financing tool. Bremner has been healthcare-exclusive since 1989, with market leadership validated by our acquisition by Duke Realty and programmatic partnerships with national health systems. Our track record includes $3.4B+ on campus developments that tie capital to performance, governance, and compliance—delivering investor-grade execution with mission fidelity.

Strategic JV Objectives

Joint ventures work when strategy, not structure, leads. For health systems, that means using the JV to shape a population health footprint that matches risk-bearing contracts, directs referrals to the right site of care, and closes access gaps in priority ZIP codes. When a system faces capacity strain and leakage, aligning ambulatory, ASC, and diagnostic assets in a targeted JV becomes the mechanism to redeploy capital and standardize care pathways while reserving system control over quality. A healthcare real estate joint venture is a shared-ownership structure between a health system and one or more capital partners to develop, own, and operate care facilities.

Clinical integration is the purposeful alignment of care delivery, data, and incentives across settings to improve outcomes and reduce total cost of care. By embedding clinical integration goals into the JV’s charter—care protocols, IT connectivity, and governance dashboards—you turn a real estate vehicle into a care model accelerator. The result is not just leased space, but a platform that supports risk-adjusted panel growth, reduces avoidable ED use, and improves specialist throughput across markets.

The question is simple: how might your JV’s capital plan change if access, quality, and total cost metrics carried the same weight as IRR?

Capital and Finance Architecture

With objectives defined, the capital architecture should respect health system constraints while expanding strategic reach. Ratings-sensitive structures can keep debt off-balance-sheet, avoid diluting coverage ratios, and still assure mission control through reserved matters. Tax-exempt status, bond covenants, and derivative policies must be preserved, and the JV must be designed so that capital allocation supports the care model, not the other way around.

Ratings agencies evaluate off-balance-sheet vehicles for implied support, step-in obligations, and governance control—so transparency and prudent risk allocation are non-negotiable. Structures that blend member equity, third-party equity, and non-recourse construction financing can stretch scarce capital, while waterfall design aligns returns to performance, not just occupancy. In our experience, pairing a conservative leverage profile with clear capital call rules and pre-baked refinance triggers reduces volatility and protects the system’s credit story.

A practical way to build a ratings-resilient plan is to follow four steps: 1) map credit constraints and covenant headroom, 2) allocate risk and support agreements to avoid implied guarantees, 3) model integrated scenarios for liquidity, service line growth, and payer mix, and 4) codify triggers for refinance, distributions, and capital calls to enforce discipline. When liquidity windows, covenant compliance, and service line growth are modeled together, the capital plan becomes a strategic instrument—not a constraint.

Governance and Control

Effective governance finds the balance between investor discipline and clinical prerogative. A right-sized board with reserved matters—mission-critical approvals like budgets, capex, service changes, and asset sales—preserves system oversight without paralyzing decision-making. Clinical quality oversight committees should be standing bodies that set metrics, monitor outcomes, and tie facility use to credentialing and pathway adherence.

Tie-break mechanisms matter as much as voting thresholds. Predefined escalation steps—executive review, independent expert opinion, then narrow buy-sell triggers—keep the JV moving when priorities diverge. When operational lag becomes a problem, a governance reset that narrows reserved matters and strengthens clinical oversight often restores velocity and, in turn, financial performance.

Transparency in decision rights, agenda setting, and reporting reduces friction and protects value; ambiguity invites stalemate. When problem clarity meets decisive governance, the solution—streamlined approvals and clinical guardrails—produces the outcome of faster site activations and consistent quality.

Risk-Sharing and Returns

Return mechanics should reward what advances the care model. Performance-based promotes tied to access targets, quality outcomes, and payer mix improvements create alignment beyond rent. Floors and caps protect both sides: downside protection for the system on essential service sites and return caps on low-risk, mission-critical assets keep incentives coherent across the portfolio.

FMV rents and compliant distributions are table stakes, but their calibration decides sustainability. Layering in catch-up hurdles and clawbacks for missed operational milestones keeps the JV disciplined. For example, a promote that steps up only when ASC throughput, on-time starts, and complication rates hit thresholds drives behavior that payers and patients value.

The objective is durable alignment: risk is shared where the JV can manage it, protected where the mission demands it, and rewarded where strategy is advanced—not merely where occupancy is maximized.

CON Strategy Alignment

Certificate-of-Need strategy should be hardwired into site sequencing. Locational choices, service mix, and timing must follow local need assessments and political realities, not just demographics. Early stakeholder mapping—competitors, community leaders, and regulators—can reduce objections by aligning planned services with documented gaps and community benefit plans.

In many states, CON review cycles run 60–120 days, and pre-filing engagement often shapes the outcome more than the hearing itself. Bundling complementary services—imaging with ASC, or cardiac diagnostics with rehab—can strengthen need narratives while mitigating opponent arguments about duplication. Where permitted, regional data and managed care letters of support further solidify the case.

A JV that anticipates objections, aligns with community need, and times filings relative to competitor moves is the difference between delay and decisive market entry.

Care Model and Access

Right-sizing the ambulatory and ASC mix is central to value-based care. Outpatient-first settings, co-located specialties, and integrated diagnostics shorten the time from referral to treatment and reduce total episode cost. By designing buildings around care pathways, not departmental silos, the JV becomes an operating asset that supports throughput and quality.

Co-location also enables team-based care and shared analytics. When primary care, behavioral health, and specialty services share data and schedules, no-show rates decline and referrals convert more reliably. Access improvements that target social determinants—transportation links, telehealth rooms, extended hours—translate to better HEDIS performance and contract bonuses.

When a system struggles with inpatient backlogs, deploying a JV ASC program tethered to high-variability surgical lines decompresses beds and lifts margins while improving patient experience.

Development and Phasing

Phasing is strategy in action. Sequence projects to prove demand, stage capital, and de-risk the overall plan. Early-phase ambulatory anchors can establish brand presence, build referral density, and generate cashflow that funds later specialty and surgical components. Guaranteed maximum price contracts and schedule certainty protect budgets while preserving speed-to-market.

Our $100M+ campus development expertise shows that scale does not mean rigidity: phased campuses deliver flexibility to adapt to payer shifts and service innovations. Designing for conversion—shell space, modular ORs, and scalable imaging—lets the JV pivot as volumes and reimbursement change. Clear stage gates tied to pre-leasing, throughput, and payer mix create discipline without sacrificing opportunity.

When development execution aligns with clinical growth signals, the result is a campus that earns its next phase with performance, not promotions.

Partner Selection Criteria

Selecting the right JV partner begins with healthcare exclusivity and a record of alignment with mission-driven systems. Bremner has been healthcare-exclusive since 1989, a focus validated when we were acquired by Duke Realty in recognition of sustained market leadership. That DNA translates into disciplined underwriting, clinical collaboration, and programmatic development at health-system scale.

National health system partnerships inform our playbooks on ambulatory strategy, ASC integration, and capital optimization. We bring unbiased, fiduciary thinking to structures that respect bond covenants, protect tax-exempt status, and maintain clinical control—while still delivering investor-grade execution. The result is a partner that speaks both boardroom and bedside.

To explore partnership criteria and proof points, visit https://bremnerrealestate.com/ and review case outcomes across multiple regions and service lines.

Lease, Ownership, and Tax

Lease and ownership alignment connects real estate to care strategy. Leasebacks should mirror service line priorities and contract incentives, not just fair market rent. Independent FMV appraisals, REIT considerations, and tax structuring must support 501(c)(3) missions while allowing competitive capital to participate without compromising compliance.

ASC 842 requires lessees to recognize most leases on the balance sheet, so term, options, and variable payments should be modeled for rating and consolidation impacts. Ownership splits that consider FMV, commercial reasonableness, and referral independence reduce Stark and AKS risk while preserving alignment with employed and affiliated physicians. When the JV’s lease profile supports flexibility—expansion rights, assignment clarity, TI governance—operations stay nimble as volumes shift.

Clarity on who owns what, who pays for what, and how value is shared is less about forms and more about strategic fit.

Compliance and Regulatory

Compliance is design, not decoration. Structures should be built to satisfy Stark, Anti-Kickback Statute, and 501(c)(3) safe harbors from day one, with independent FMV and commercial reasonableness opinions baked into approvals. OIG and DOJ settlements consistently underscore that documentation and demonstrable independence matter as much as economics.

Audit-ready processes—conflict logs, board minutes, valuation files, and quality committee charters—provide the evidentiary trail regulators expect. Aligning physician ownership to qualify under safe harbors, where applicable, must be paired with meaningful governance separation and data-driven utilization oversight to avoid inducement concerns.

When compliance is an operating system, not a binder, you protect the mission and the margin simultaneously.

Data and Performance KPIs

What would your capital plan look like if an intelligent agent continuously reallocated dollars to the sites that moved the needle on access, quality, and margin? Operational dashboards that track population health access, referral conversion, ASC throughput, and case-mix index should sit beside investor KPIs like IRR, DSCR, and stabilized yield. When both sets of metrics are reviewed jointly, trade-offs become choices, not surprises.

Data must be timely, trusted, and tied to corrective plans. Monthly reviews that trigger specific actions—provider recruiting, block-time resets, or payer renegotiations—turn dashboards into performance. If we trained a model on claims, EHR data, and site-level P&Ls, which assets would it expand, pause, or exit—and why would it disagree with current allocations?

Measurement that drives accountability transforms the JV from a finance vehicle into a performance engine.

Exit and Liquidity Provisions

Health systems value long-term control; investors value clarity on liquidity. Strategic lockups protect mission alignment, while buy-sell mechanics, rights of first refusal, and change-in-control provisions preserve flexibility as markets evolve. Pre-agreed refinance triggers and capital call rules reduce negotiation cycles when conditions shift.

Design exit so that the JV can adapt without drama. Appraisal-based pricing bands, staged sales, and qualified transferee definitions keep value fair and relationships stable. When a portfolio hits performance hurdles, a calibrated reset—minority sell-down or refinance—can right-size risk without disrupting operations.

Liquidity should be a planned event, not a crisis response.

Case Illustrations

Across multiple regions, we’ve structured multi-asset JVs that delivered $3.4B+ on campus developments in phased deployments, tied to access, throughput, and quality metrics. In one market entry, sequencing an ASC and imaging hub before specialty clinics proved demand, won community support, and set up a successful CON filing for an expanded surgical platform. The problem—fragmented ambulatory access—met the solution—an integrated JV campus—and the outcome was a measurable reduction in total cost of care and improved patient satisfaction.

Value-based service line expansions have been particularly powerful when paired with co-management incentives and promote mechanics linked to quality. Programmatic agreements with national partners allow repeatable execution, standard documents, and faster cycle times—turning lessons learned into institutional muscle memory.

When the case for growth is operational, financial, and clinical, capital follows.

FAQs

How do JVs impact our bond rating? Ratings agencies assess governance, implied support, and step-in risk. Structures that are non-recourse, with clear reserved matters and limited support agreements, are generally viewed more favorably, but transparency and ongoing disclosure are crucial.

Can we keep assets off-balance-sheet? Often yes, but consolidation depends on control, economic interest, and ASC 842/ASC 810 analyses. Independent accounting opinions and careful drafting of decision rights, guarantees, and variable interests are essential.

What CON risks should we anticipate? Expect competitor objections, scrutiny of need methodology, and alignment with community benefit. Early engagement, robust demand modeling, and thoughtful sequencing typically mitigate delays.

How are governance and exit rights structured? Balanced boards with reserved matters, clinical oversight committees, and pre-set tie-breakers protect operations. Exit is managed via lockups, buy-sell, ROFR, and refinance triggers that keep value fair and options open.

What returns are market for health system JVs? Return targets vary by risk, but promotes increasingly hinge on operational outcomes as much as occupancy.

Partner with Healthcare Real Estate Strategists

Co-creating the JV term sheet in a focused workshop accelerates decision-making and compresses time to market. Benchmarking against national health system partnerships provides context on governance rights, return hurdles, and clinical integration commitments that work in practice. Leveraging Bremner’s healthcare-exclusive since 1989 platform—validated by our acquisition by Duke Realty—brings fiduciary rigor, development scale, and healthcare-only focus to complex JVs without sacrificing local nuance or mission control.

Contact Bremner for healthcare-focused real estate strategy consultation