The tremendous growth that the Denver metro area and the Front Range have experienced in recent years have driven increased demand on all types of real estate, including the need for medical office space. Accordingly, there has been an increase in the volume of leasing to medical office users who have come to Denver, not only due to increased demand, but also in search of skilled labor that Denver has been successful in attracting. Indeed, medical office users can now be found with increasing frequency in retail centers and general office developments, as opposed to the more traditional medical office buildings that are specifically designed and operated with medical office users in mind. This article will touch on a few of the most important issues that landlords must be aware of and address when entering into leases with such users, especially if the landlord's property is not specifically designed and operated as an MOB.
The Health Insurance Portability and Accountability Act of 1996 imposes data privacy and security requirements for safeguarding medical information for the benefit of patients. HIPAA applies to certain providers of medical services (known as "covered entities") as well as contractors (known as "business associates") of covered entities that receive "protected health information" or "PHI." The landlord's primary concern is ensuring that it does not run afoul of HIPAA due to a landlord's receipt of PHI stored in
Pharmaceuticals and Controlled Substances
Medical office users also may need to store pharmaceuticals and other controlled substances in the premises. The lease should require strict compliance with all legal requirements (this goes without saying
and should apply to every use of space, but it is worth repeating with respect to unique issues such as this). As with medical waste, there should be a prohibition of disposal of any pharmaceuticals in general trash receptacles and the tenant should be solely responsible for the removal and disposal of such items. Additionally, the landlord should consider including a provision requiring the tenants of the complex that store pharmaceuticals in their premises to pay for increased security costs to the extent the nature of the materials stored in the premises requires additional security services not required by other occupants of the property.
There are various other issues that medical office leases present that both landlords and tenants should be aware of, including:
Landlord's liens. Landlords should
consider taking lien rights in medical equipment as security for future performance. Tenants obviously will want to avoid this and may be unable to provide such lien rights (and should seek an express waiver) if they intend to finance the acquisition of medical equipment with secured debt.
Guarantees. Many medical prac-
tices are professional corporations or professional limited liability companies, which shield the shareholders or members from the debts and liabilities of the practice. The value of a medical practice, unlike other
Please see Thomas, Page 18
Porter Adventist Hospital | Denver, Colorado
Break the Mold | Revolutionize the Experience | Build What Matters
Page 18 -- Health Care Properties Quarterly -- April 2019
Health care design with the caregiver in mind
A n often-overlooked aspect in today's design of health care facilities is the caregiver experience. Industry experts suggest that caregivers must be given adequate physical and emotional support. Recently, I experienced the caretaker role for a family member undergoing hip replacement surgery, observing how caretakers experience a hospital setting. I wanted to share this important perspective in the design and operations of health care facilities from my recent, firsthand experience as a caregiver.
Arrival conveniences. Our experi-
ence began at the surgery entry as we were treated to valet parking. The attendees were cheery on a cold morning and helped our patient into a wheelchair. We entered directly into the surgery waiting area and were greeted by another equally cheery individual aware of our patient's scheduled surgery and ready to help. Our initial encounters were very positive, primarily due to the staff's friendly welcome. While the entry was convenient and valet parking available, the staff made all the difference.
Waiting amenities. After our patient
was taken to pre-op, we began the long wait for surgery and recovery. As we looked for a place to sit, we found limited privacy. Many others were arriving to the equally cheerful greeters, and the waiting room was full of concerned caregivers. In the waiting room, there was a lack of appealing refreshments and electrical outlets for phones. The limited windows looked on to a roof with mechanical equipment and pools of standing water; not an ideal exterior view.
Typically, waiting areas are sized to accommodate the anticipated number of people accompanying the patient with an efficient chair layout. But we should consider that some caregivers may not want to sit with strangers and the number of people accompanying the patient varies with family size and culture. With rising health care construction costs, expansive waiting
room. After another circuitous path between the waiting area and patient room, I discovered our groggy but cheery patient. All had gone well with surgery and now the recovery process would begin. The private patient room was comfortable but small. This hospital had been constructed in the 1960s and expanded over time, but the patient tower had seemingly not been renovated. There was not adequate space for the providers to do their jobs. Furniture had to be moved out of the way so the meals could be served, or therapy conducted. While on the Front Range we are fortunate to have so many new hospitals, other areas of the country are not as fortunate and struggle to provide care within inadequate spaces.
Operational impacts. Contemporary
hip replacement typically includes the patient attempting to walk the day of surgery. The physical therapist arrived, and therapy commenced. Our patient was able to stand and walk into the corridor, which unfortunately occurred at the same time as trash pickup. While our patient was walking the
hallway, she had to navigate around a parked trash container. In addition to an inconvenience, I thought of the germs we were being exposed to. With the high rates of infection in hospitals, it is imperative that operational activities are coordinated the care teams.
As health care designers, we are committed to health and healing, but my recent experience as a caregiver gave me special insight to the stress and challenges associated in caring for a loved one. Seeing the facility through the eyes of a caregiver was a welcome and insightful opportunity. It shed light on several issues, including a lack of adequate respite areas, health providers straining to help patients because of inadequate space, lack of adequate signage and sightlines and acoustics issues all adding to the stress of the caregiver's experience.
I would like to challenge my peers in the health care industry to take the same journey I did experiencing a facility though the eyes of a caregiver to inform and enrich our work and the delivery of thoughtful, 21st century facilities. s
Continued from Page 14 businesses, often is associated with the individual shareholders and members who have patients (i.e., if a partner in the practice leaves and takes her patients with her, it may result in a serious loss to the practice and pose a risk to the landlord's rental stream). Accordingly, landlords should consider requiring personal guarantees from one or
more of the individuals comprising the business that have the patient relationships that generate value for the practice.
Excess power and water. Many
medical office users will use power and water well in excess of a typical office user or retail tenant. Accordingly, if a landlord is leasing space to a medical officer user outside of an MOB (such as in a retail center or general office building), it should
consider requiring such tenant to pay an increased share of power and water costs (or to be separately metered or submetered) to avoid either shifting the burden of the medical office use to other tenants, or (worse) leakage if other tenants are not responsible for excess consumption of other tenants a common area maintenance exclusion in retail centers.
The issues described in this article,
and others that are unique to medical office leasing, will continue to be prevalent as Denver and the Front Range grow. It is important for landlords (both those who are experienced in medical office leasing and those who may just be starting to lease to such tenants) to address these issues in a practical fashion that recognizes the tenants' needs while providing appropriate protections to landlords. s