It looks like Pete Stark is at it again. In a newly drafted house bill, Pete Stark (D-CA) has inserted language to eliminate the Stark Law hospital ownership exception. This new bill applies to all physician-owned hospitals, instead of just specialty hospitals.
Summary of Section 651 of the initial draft of the Children’s Health
Insurance Program (SCHIP):
Sec. 651. Limitation on exception to the prohibition on certain physician referrals to hospitals. Eliminates the whole hospital exception so that physicians cannot self refer to hospitals in which they have ownership. Applies to all hospitals - not just specialty hospitals. Grandfathers hospitals that were in operation with Medicare provider agreements as of the date of introduction of the bill. Requires grandfathered hospitals to meet standards within 18 months of enactment that include: preventing growth, requiring disclosure of ownership, limiting physician ownership to an aggregate of no more than 40% of the facility and no more than 2% individually, and disclosing to patients if they fail to have 24 hour physician coverage.
I watched a segment on 60 Minutes last night which said physicians in Cuba make about $20 a month. Sounds like Pete Stark’s dream scenario.
Medical secretary not performing well? You can fire. Don’t like your medical billing company? You can switch with relative ease. Medical office space not working out? You’re pretty much stuck.
Here’s a list of some of the steps you should take before you sign your next medical office lease:
(1) Hire a tenant representative. They know the available space and market rents all at no cost to you (as they are paid by the landlord if a deal is made). Just be sure they have experience leasing medical office space and have no problems working with an attorney.
(2) Hire an attorney. While your tenant rep will help you find a space and let you know how much to pay for it, your attorney will handle the language and negotiation of the medical office lease. What may seem like a good deal in terms of rent could be a disastrous deal down the road if you don’t have an attorney review the medical office lease. All too often I see people focus solely on rent when negotiating a medical office lease to their ultimate disadvantage. Other terms like options, exclusivity, length of lease, common area maintenence charges, personal guarantees and responsibility for repairs must be negotiated.
(3) Make sure the medical office fits your practice. I recently toured a building touted as “medical office space” that had a waiting room the size of a broom closet. Thus, make sure your potential medical office space not only lays out the way you want, but will be able to function as such. Apparently, the medical office space developer thought physicians have only one patient waiting at a time.
(4) Know that the landlord wants you more than you want the medical office. As a physician or other health care professional, you are at the top of any commercial real estate landlord’s wish list. Of course, they won’t let you know that but just keep that in mind when it’s time to negotiate the terms of your medical office space.
Leasing your medical office space is such a huge practice decision that I intend to expand this blog post into a more formal presentation in the near future.
