Commercial leases are anything but typical for hospitals and health care providers, whether acting as a landlord or a tenant. Negotiations on both sides require the parties to address additional, unique circumstances. This situation is due primarily to federal and state laws governing the medical profession, as well as the nature of the profession itself.
For example, when a hospital and a health care provider enter into a lease, they must ensure that the deal does not violate the federal and state anti-kickback or self-referral statutes. The lease should contain certain safety valve provisions to affirm that (a) no consideration is given and that the lease is not contingent upon or intended to induce the referral of patients by or between the parties in violation of these statutes; (b) the tenant is paying a fair market rental value for the premises and any other services or furniture, fixtures or equipment provided by the landlord, and (c) the lease is not intended to influence the judgment of any person in choosing the provider appropriate for the proper treatment and care of patients. The parties should also certify that they will not violate these laws with respect to their performance under the lease.
Further, hospitals and health care providers should ensure that their leases address compliance with all applicable laws and regulations governing the privacy and security of protected health information, including HIPAA. This comes into play primarily with respect to a landlord’s right of entry into the premises to show and to make repairs to the premises. The landlord will therefore have potential access to protected, patient health information.
Finally, the lease should include an overall savings clause that addresses changes to the law which might make the lease illegal or unenforceable or subject one or both of the parties to the risk of prosecution or civil monetary penalty. The savings clause should address the parties right to amend the lease or to terminate the lease if such an amendment is not possible or the parties cannot reach an agreement within a specific time period.
Due to the nature of the profession, many health care providers want the right to terminate the lease upon their death or total permanent disability. However, if the tenant is a corporation, professional association, limited liability company, or partnership, the landlord may not agree to grant this right or may limit the conditions under which it applies.
Many hospitals own or have the right to lease space in a medical office building located adjacent to or in close proximity to the hospital. Here, the hospital may wish to consider including a provision that requires all physicians having an office within the medical office building or doing business within the particular leased premises to be staff members in good standing at the hospital during the lease term. Further, a hospital may desire to retain the immediate right to terminate the lease should a health care provider, and all of its physician employees, shareholders, partners or associates, fail to obtain and maintain in good standing a license to practice medicine in the State of Florida.
Before issuing or signing a lease, you may want to have a lawyer experienced in reviewing such documents, take a good look at it.
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