Office Space and Equipment Leases with Referral Sources
Office Space
When a Tenet entity proposes to enter into a lease for space or equipment with a referral source, the leased premises or equipment shall not exceed that which is reasonable and necessary for the legitimate business purposes of the lease.
Important things to consider:
- Is there a demonstrated community need for the service?
- Does this make clinical, operational, and business sense without factoring potential referrals?
- Does this arrangement achieve a reasonable business purpose?
- For space leases refer to the annual MOB FMV report and or property Ad Hoc FMV report
- For other lease types refer to the independent FMV report
- Lease agreements should define the amount of space being used, the schedule of use and who will maintain responsibility of taxes, utilities and maintenance arrangements. Terms of the lease should follow instructions outlined in policy L-4.
- For space leases that are being renewed, the renewal process should begin at least 120 days prior to the expiration of the lease and be initiated by the Lease Administrator contacting the Lessee to determine interest in renewal.
- The Facility prepares the eCATS package and obtains Legal review and approval.
- If not included in the contract request, document the CEO’s statement of the reason for the arrangement, support for commercial reasonableness, and attestation regarding emails related to the arrangement.
- The package must be approved in eCATS by the CEO and CFO.
- The lessee cannot occupy the space until all approvals have been obtained and the parties have signed the lease agreement.
- Just because something is FMV does not mean it is commercially reasonable.
- Tenet does not lease equipment to third parties on a part-time basis.
- Licensed hospital space should not generally be leased out.
- If there is a reasonable alternative for leasing equipment from a referral source, you should lease from a non-referral source.
- Selection of space and or rent is never determined in a matter that takes into account the volume or value of any actual or expected referrals of a lessee or lessor.
Tenet uses a Lease Administrator CBRE who, together with the Tenet Real Estate Department, is responsible for managing all medical office building leases for all facilities.
This applies not only to Tenet owned and leased space in hospitals and MOBs, but all those buildings where a Tenet facility holds a master lease on space and then subleases the space to physicians.