Buying or Leasing Physician Offices
Real estate can become a significant factor in successfully completing a physician practice acquisition. These factors typically include
- Practice Locations (short-term & long-term)
- Real Estate Ownership
- Fair Market Value Lease Terms & Purchase Price
Specific real estate matters that may need to be resolved as part of practice acquisitions include:
Real Estate Owned by Physicians
- Who will own the real estate going forward? Will the physician(s) continue to own or be taken-out with a real estate purchase by the hospital, new group of physicians, or a third-party investor?
- What is the negotiated, FMV price of the real estate?
- Is the lease between the physician-owned real estate and the hospital (employer) at fair market value and commercially reasonable?
- What is the appropriate partnership structure going forward for physician-owned real estate?
Real Estate Leased by Physicians
- Is the lease assignable?
- Can the lease be extended and renegotiated to fund expansion or improvements?
- Does the assignable lease restrict any proposed new services?
- If relocating, what are the options to back-fill, buy-out the lease, or sublease?
- If relocating, what are the alternative space options and do they fit the overall hospital strategy? (Strategic location criteria? Patient access? Physician efficiency?)
- Are there required space sharing arrangements that could be a regulatory concern?
This information is provided to offer insight into current issues in healthcare real estate. The above examples are illustrative and should not be seen as representative of a fully comprehensive analysis in any given set of circumstances.
If you would like more information regarding this topic or other information regarding healthcare real estate, please contact the experts listed below at (800) 270-9629.
