What Moved in Medical CRE: Weekly Recap, September 28 – October 4, 2025

This was a pivotal week in healthcare real estate—less for giant deal announcements and more for structural and policy shifts that will ripple through deals, valuations, and operations in the quarters ahead.

Telehealth Flexibilities Expire — A Turning Point for Clinics & Investors

On October 1, key Medicare telehealth flexibilities expired, bringing an abrupt change to what providers and tenants had come to count on. Many expanded allowances and patients being treated in their homes, urban telehealth, audio-only visits are now off the table or severely restricted again. 

CMS implemented a temporary “claims hold” via its Medicare Administrative Contractors to avoid mass reprocessing while lawmakers debate fixes.   This means even claims submitted may not be paid immediately, introducing cash flow uncertainty. 

Beyond reimbursement, programs like Hospital-at-Home, which allow inpatient-level care in patient homes, are also in jeopardy.   For medical CRE, the implication is stark: assets built or valued assuming telehealth growth may now require rework or renegotiation.

The Government Shutdown Adds Friction to Capital & Operations

With Congress failing to pass a funding deal, a government shutdown began October 1. While Medicare payments to providers continue, nonessential agencies slow, and regulatory approvals, surveying, or grant disbursements may halt or drag. That means anything in your pipeline that relies on certifications, state or federal reviews, or subsidy programs needs extra schedule buffer.

Hospital Sector Shakeups in CT Draw Attention

A spotlight continues to fall on Prospect Medical Holdings’ bankrupt hospital portfolio in Connecticut. This week, Hartford HealthCare formalized a deal to acquire Manchester Memorial and Rockville General for $86 million. The deal comes amid disclosures that one of the Prospect-owned hospitals had received an “Immediate Jeopardy” finding from CMS earlier this year for patient safety, adding regulatory risk to the transaction. 

In parallel, UConn Health approved a $13 million bid to acquire Waterbury Hospital’s real estate and operations as part of Prospect’s bankruptcy process.   Legal and consulting fees in the bankruptcy process are mounting and estimated to exceed $100 million by year-end.

For medical CRE, these transactions are more than local stories. They affect how lenders and investors view hospital-anchored real estate, creditor priority, and how distressed portfolios might be restructured or sold in future cycles.

Transaction Activity & Market Signals

Healthcare real estate advisors announced several outpatient and specialty property sales in late September. Among those reported:

• An outpatient health park in Clifton Park, NY (Class A) was sold. 

• A specialty outpatient portfolio in Kentucky closed. 

• A GI/ASC portfolio in Texas transacted (nearly 28,000 SF). 

These deals reflect continued investor appetite for smaller, specialized outpatient holdings, especially where operators are strong and lease structures are favorable.

On the REIT front, American Healthcare REIT reiterated its positioning and plans, pushing visibility into its portfolio and strategy amid the changing landscape. Meanwhile, Medical Properties Trust remains under scrutiny as its role as landlord in distressed portfolios gains more attention. 

What This Means for Medical CRE Players

Revisit Telehealth in Your Models

Properties underwritten with assumptions of stable telehealth revenue will need stress tests. Assess which parts of your portfolio are exposed (behavioral, diagnostics, follow-up care) and overlay scenario models assuming reduced or delayed reimbursement.

Build Timing Buffers

Shutdowns, delayed reviews, and CMS holdbacks mean closings and TI (tenant improvement) milestones can slip. Add contingency time to your pipeline and budgets.

Watch Distressed Sales as Signals

The Prospect CT portfolio is a case study in how distressed hospital real estate can be absorbed with careful underwriting—or ignored at risk. How this plays out will influence risk premiums in hospital-adjacent and specialty facility investing.

Lean Into Strong Operators & Diversified Use

Outpatient asset sales this week favored specialty, operator-backed deals. The bias is clear: as capital tightens, operators with strong credit, flexible footprints, and diversified services will command the bidding.

Stay Ready to React

If Congress reinstates telehealth flexibilities retroactively or passes a new extension, valuations will adjust quickly. If they don’t, the market will recalibrate. The advantage will go to those watching policy, adjusting fast, and repositioning intelligently.