Physicians and other medical office space users do not relocate to new areas as often as general office tenants. But, competition in the healthcare sector is increasing continually and resulting in the relocation of various physician practices to non-hospital areas to seek accessible locations for their patient base easily. The increased number of urgent care clinics and development of small suburban medical office projects support this trend. Furthermore, health care providers struggle to acquire space in smaller community retail centers near hospital campuses.
Even though many principles and clauses required to lease a general office space apply to health-care real estate, there are several issues that are unique to medical users that need to be considered. One of the prime steps that medical office users should take is hiring an experienced and efficient property appraiser. Expert appraisers are aware of available medical buildings suitable for the medical practices and laws related to health care real estate to help you with the lease process as per your specific requirements. They help tenants overcome all issues when leasing a medical office building for their practice.
Here are some prominent issues that physicians face when leasing a medical office space for their health care practice.
Medical service providers use hazardous materials that generate biomedical waste. These medical tenants tend to use X-ray machines, CT scans, and other various machines that generate harmful radiation. So special requirements need to be mentioned in the lease document to ensure compliance for the use of the necessary machinery.
Run medical practice after normal working hours
Healthcare providers often may see patients after normal working hours of a medical office building. In case of urgent care centers, health-care providers operate on a 24 hours basis. It’s necessary to mention all these facilities in the lease. It is also necessary to pay special attention to how the utilities are accounted for after normal working hours to save unnecessary utility expenses.
Compliance with Americans with Disabilities Act (ADA)
Healthcare providers running their medical practices in a medical office building are more likely to receive ADA scrutiny. Certain patients need special access and healthcare facilities more than the general public. As a result, medical health-care providers leasing a healthcare real estate need to pay special attention to the ADA clause mentioned in the lease document.
Landlord inspection and privacy issues
Usually, commercial leases provide landlords the right to enter the leased medical office premises to show premises to future tenants, supervise for compliance with the lease, and allow access to do infrastructure repairs in the lease premises and elsewhere in the building. However, medical service providers running their practice in the premises need to limit the landlord’s access to inspect rooms and other areas during certain working hours of the day as well as deny access to patient records.
Safe harbors which are created under the Federal anti-kickback laws develop special requirements for leases between healthcare tenants and healthcare properties that are physician-owned. Proper documentation and compliance must be addressed in the landlord-tenant lease document.
According to an exclusive-use provision in the lease agreement, the landlord promises not to lease any other area in the medical office building to a party whose intended use would be in direct competition with the healthcare tenant’s use of its space. When leasing a medical office building, it would be wise to ensure exclusivity for your specific healthcare specialty practice. Hiring a proficient commercial property appraisal service can help ensure the presence of right terms and clauses in your lease agreement.
Death and disability clauses
Solo medical practitioners should ensure the mention of a death and disability clause in the lease document offering the ability to cancel the lease (along with penalty) in the event the healthcare practitioner is unable to continue practice due to death or disability. Even though most landlords would resist arguing that tenant’s insurance would cover this, it is always better to have this beneficial clause in the lease. However, in some cases, this provision can be negotiated in the lease agreement successfully.
The cost of hospital expansion for a typical medical service provider often exceeds that which it costs a general office tenant. The extensive plumbing, carpentry, and medical equipment compliance issue generates additional cost as well as specific transaction and lease issues. Medical office users should examine carefully the terms and clauses related to term, contractor and architect, relocation provision, liens, and restoration of premises so that they won’t need to pay extra and unnecessary charges when developing or expanding their medical practice. Guidance of an efficient real estate valuation service can prove worthy.
Knowing these leasing issues, the advice of a knowledgeable real estate appraiser, and careful planning can help healthcare provider ensure the right location and a well-structured real estate transaction and lease agreement to fit all unique needs of the medical service provider.