Health Care Office Suites

Health Care Office SuitesIt is extremely important that any healthcare provider understand how their practice or health care business relates to the location in which they choose to operate.

There are many health care specific concerns that can arise with respect to moving from an established office space or establishing a new location. Such as:

  • Flexibility to bring in other providers/specialties
  • Billing and relocation issues with certain insurance companies/3rd party payors
  • Patient privacy regulations
  • Sale of practice

A lease should be structured so that the physician has the right to sublet or license office space to another healthcare professional. If they are able to find a sub-tenant or physician that can provide a benefit to the existing specialties, physicians might be able to encourage referrals within the practice (however, any structure must be legal and not be based on compensation for referrals).

Certain common clauses in a typical lease could cause serious problems with billing and are of great concern. For example, some shopping centers/buildings have relocation clauses that permit the landlord to move your office to another location which could cause serious problems since certain providers require you to file a significant amount of paperwork in order to change addresses.

It is very important to make sure that a lease or sublet is structured to meet the requirements of the anti-kickback law or does not violate any fee-splitting restrictions. It is often common for subleases among providers to involve a more intimate relationship and billing structure with respect to fees. A rental fee must be flat rate and fair market value between providers. A provider cannot pay rent based on a percentage because if they do, they run the risk of fee-splitting allegations or worse.

There can also be issues with certain lease arrangements that can conflict with patient privacy regulations or prevent one from taking in a partner. Most regular leases have provisions that prohibit assignment of a certain percentage of ownership of a business without the landlord’s consent. The provider should not be restricted with respect to being able to transfer the lease, if they want to take in a partner or sell their business.

All of these situations need to be negotiated and arranged for. It is very important that the provider analyze the liability of the lease, not just in terms of personal liability, but with respect to their practice. A large amount of income is tied up in the assets and equipment of the practice as well as the ability to generate money from the practice. Due to the many potential healthcare specific issues with respect to a lease for medical office space, it is very important that a physician or healthcare provider understand and be aware of how a lease can affect the continued operation of their practice.

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