Lean Private Practice Solutions: Medical Office Sharing

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Hi, My name is Dr Mitra Sadhu. I run a lean private practice in Florida.

 

A lean practice is one that is laser-focused on patient wellbeing, while cutting out all the fluff.

 

It comes from lean innovation, that had its beginnings in manufacturing and now has spread to pretty much every industry.

 

Lean is a way of thinking- of aiming to deliver value with minimal waste.

 

It involves looking at every step of every process that goes into delivering value to customers- or in our case, our patients, and making them easier and more efficient.

 

Lean principles are perfect for healthcare, especially in these changing times, especially for private practices.

 

With the cost of doing business and reimbursements going in opposite directions, the private practices of today and tomorrow need to look different from practices of yesterday.

 

And innovation holds the key.

 

Focus on Office Space

 

Medical office space is expensive, whether you lease or buy. So we want to optimize it, as best as possible.

 

When I was starting up my practice a few years back, I wanted to sublet space from an established practice a couple of days a week. It would lower my startup cost and overheads and help me be profitable earlier as I built up my practice from scratch.

 

However, I had no resource for doing so. I cold called a few practices but founds no leads.

 

This is how the idea for Link Medical Spaces was born.

 

Link Medical Spaces

 

Link Medical Spaces is the only online platform of its kind, specific to medical office space, where one can list available space, whether it is a full office suite or only part of it and whether available full-time or part-time.

 

Link Medical Spaces connects owners of medical office space with healthcare professionals who need such space.

 

Listings range from options to sublet part of an office to multi-suite listings in entire medical office buildings- from established buildings to new construction.

 

Listed spaces are available both to physicians as well as other health work professionals.

 

We bring both parties to the table- and then you work together to create the best deal for yourselves.

 

Listing on the space is easy and can be done in minutes. Answer some questions describing the property, add some nice pictures and you’re done.

 

The platform charges a nominal fee for the duration of the listing. This is the only amount you will pay- no hidden fees or commissions of any kind!

 

On the other hand, if you use a realtor to find a renter for your office space, you pay a percentage of the lease amount for the entire duration of the lease.

 

 

Who should sublet medical office space?

 

1) Startup practices

 

As a startup practice, unless you already have a good-sized patient following from the very beginning, it may make sense for you to sublet part of an office suite rather than an entire suite that will most likely not be optimally utilized.

 

You may also not need office space for each day of the work week, as you build up your practice. So, paying for space only when you need it, maybe two to three days of the week, may be ideal. You can spend the other days working on marketing your practice, setting up your systems and processes and all the little things that need attention in a new practice.

 

The beauty is, you can do all of those from home- and then you may be able to claim a home office deduction for using part of your home for business purposes. Of course, be sure to run your individual situation by your accountant.

 

2) Small or part-time practices

 

The same goes for part-time practices. You shouldn’t have to pay rent for the days you are not using your office to see patients.

 

Subletting office space, only as much as you need and only for the days you will use it, is the way to go.

 

3) Satellite locations of established practices

 

Maybe you have a well-established, thriving practice in one area and want to expand to other areas of town.

 

However, you do not have a professional footprint in the new area and you anticipate that it will take time to build up the volume.

 

The best way to start without a big capital commitment is to- you guessed it- subletting space part-time, according to your needs.

 

Owners of Medical Office Space

 

Medical office space often has a premium- much like all things medical- compared to other commercial real estate.

 

Whether you lease or own your medical office space, it is likely expensive- and therefore you would want to optimize it as best as possible.

 

If you have an established practice, it is time to evaluate whether you are using it to its full potential.

 

Maybe you purchased 5000 sq ft of space and use only 4000 sf consistently. You already have enough exam rooms to see your patients comfortably and there are a couple of exam rooms at the end of the hallway that are just lying unused. Maybe piled high with boxes.

 

It’s time to move those boxes to your storage closet, dust off the rooms and get them ready to be utilized well by someone else.

 

What’s in it for you?

 

1) Passive revenue stream. It is space you are paying for and not utilizing. Subletting it to someone else generates an additional revenue stream for as asset you already have.

 

2) Bringing a complimentary service for your patients. If you sublet the space to someone who provides a service that would be valuable to your patients, it’s a win-win-win. For example, if you have a primary care practice and bring in a subspecialist physician or a dietician or therapist or physical therapist- depending on your patient population, your patients would love the convenience.

 

3) Be the change. The face of medicine is changing. These are challenging times for private practices with reimbursements and the cost of doing business going in opposite directions. Opening up your space to someone which will help them lower overhead and may be the reason they succeed is something they will always be grateful to you for.

 

No one on the outside is coming to save medicine. It’s on us.

 

Making it work:

 

Make sure to have a good contract with the help of a healthcare or real estate attorney well-versed in medical office space sharing agreements.

 

Workspace-sharing agreements should follow some common rules:

 

-If you lease the space that you are thinking of subletting part of to others, please make sure your lease agreement allows it.

 

-It should be Fair Market Value (FMV), so there is no doubt that any anti-kickback laws have been violated

 

-Have a clear contract stating exactly which areas are meant for the exclusive use of the lessee and which shared areas they will have access to

 

-The contract should also state whether the lessee has rights of usage of any equipment or supplies or other amenities, such as internet, utilities or janitorial services. It usually makes sense to include these- because you, as the primary user of the space, already have these in place

 

-You can also include staff-sharing arrangement. This is a little more complex, given that the staff member will need to have access to the lessee’s EMR and their patients’ personal health information (PHI). However, language in the contract can certainly be included to work it out.

 

Pricing Your space

 

With Fair Market Value in mind, gather information on comparable medical office space in your area. This information is easily obtained from commercial real estate sites.

 

Take into consideration unique features of your property, such as proximity to a hospital and things that make it attractive and convenient for healthcare professionals as well as patients.

 

Come to a monthly rent amount that is fair to lessees as well priced competitively.

 

Add to this other amenities you pay for, such as utilities, internet access, janitorial services, etc- if you will include them in your contract.

 

This gives you a total number for the month. From this, you come to a daily rate. Then you prorate this number by the number of days you want to sublet your office. Add in a bit to make a profit and you have yourself a deal!

 

The future is already here

 

The face of healthcare delivery is changing and private practitioners need to adapt to stay relevant in these challenging times.

 

As Wayne Gretzky said, “Skate to where the puck is going, not where it has been”.