You’ve probably heard the saying, “Knowledge is power,” attributed to Sir Francis Bacon. This proclamation proves true in many aspects of life, including commercial real estate. If you’re searching for any type of commercial real estate to lease, it’s vital to conduct thorough research in order to arm yourself with the knowledge needed to properly vet your options and negotiate a lease that meets all your needs. Medical office space merits special consideration due to the need to accommodate patients and comply with regulations specific to the healthcare industry.

Before you commit to a medical office space, you must ensure that the lease addresses various critical factors, including but not limited to the following.

1. Americans with Disabilities Act (ADA) compliance.

Your office as a healthcare provider qualifies as a place of public accommodation under the ADA. Subsequently, before you commit to a lease, make sure the property complies with the regulation’s accessibility requirements, or that you can reasonably modify the space to achieve compliance.

Examples of accommodations made for accessibility include doorway width, height-adjustable examination tables, and lift equipment, according to a report titled “Do’s and Don’ts of Medical and Health Care Facility Leasing,” excerpted from the American Health Lawyers Association’s “The Medical & Healthcare Facility Lease: Legal and Business Handbook” and published online by the healthcare improvement partner KFMC.   

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2. Anti-Kickback Statute compliance.

If you lease medical office space in a building owned by a hospital or physicians, you must account for the Anti-Kickback Statute. The statute forbids payment for patient referrals or ordering services paid for by federal healthcare programs, according to the report published by KFMC.

You could raise regulators’ eyebrows if your rent seems excessive or tied to factors like referrals, if you make any extra payments that aren’t based on expenses for valuable services, or if you’re leasing more space than your practice needs. Fortunately, the law includes a safe harbor for medical lease agreements, according to the blog entry “Healthcare Providers: Watch Out for These 9 Medical Lease Mistakes” from Hendershot Cowart P.C. It’s advised that you work with an attorney to verify that your lease is in line with safe harbor requirements.

3. Stark Law compliance.

Also known as the Ethics in Patient Referrals Act, the Stark Law stops physicians from referring Medicare or Medicaid patients to a provider of designated health services with which the physician or their family members have a financial relationship, according to KFMC. So, for instance, this could be a problem if you lease medical office space from a hospital and refer Medicare or Medicaid patients to that same hospital.

However, the Stark Law has a “rental of office space” exception, Hendershot Cowart P.C. explains. You should work with an attorney to confirm that your lease meets the requirements for that exception.

4.  Health Insurance Portability and Accountability Act (HIPAA) compliance.

As a healthcare provider, it’s critical to keep HIPAA compliance and the need to safeguard protected health information (PHI) in mind when negotiating a lease for medical office space. You must ensure the landlord’s security services and access to your space don’t result in the disclosure of PHI, according to the report published by KFMC. For instance, you might ask your landlord to agree to only enter your space when accompanied by a tenant representative.

5. Build-out and restoration costs.

Depending on the state of the office space, it might require construction before you can start utilizing it to provide medical care. If that’s the case, Hendershot Cowart P.C. advises working with the landlord to establish a construction plan before finalizing the lease. You might be able to negotiate a tenant improvement allowance or rent reduction during the construction period.

Similarly, check if the lease specifies that you must restore the space to its original condition before moving out. That could be negotiable as well if you act before signing.

6. Hazardous and medical waste disposal.

Before signing a lease, check the landlord’s requirements for the disposal of hazardous chemicals and medical waste. The landlord might specify that you must discard hazardous materials after regular office hours, or they might forbid disposing of specific materials via the building’s sewer systems, according to KFMC.  

If you’d like to learn more about medical office space leasing and would like assistance finding your ideal property and negotiating a lease, don’t hesitate to reach out to the Avalon Realty Associates team. Our commercial real estate brokers can help you find medical office space for lease in Chicago.

Visit our contact us page, call us at 847-506-1000, or email to learn more.