Practice Leasing: An Alternative Worth Considering

Posted by Raymond Console on March 11, 2015
Practice Leasing / No Comments

As hospitals look to forge alignments with medical staff physicians and many “independent” physicians consider whether they want to become employees of a hospital or health system or remain independent operators of their own practice, a practice lease arrangement may provide a very attractive alternative. Under the typical lease arrangement the institution leases the practice, including the practices operations, premises, physicians and other professional staff.

In this arrangement the institution does not acquire nor does it employ the physicians, but it does gain many, if not all, of the material benefits of a practice  acquisition and physician employment during the term of the lease. The arrangement also gives the physician(s) in the practice the opportunity to evaluate what it might be like to work with the institution in an employment arrangement without selling his/her practice and making the full commitment to employment. If either party prefers not to continue the lease arrangement beyond the lease term, the unwind is typically much easier than a typical employment or acquisition transaction.

The lease arrangement can also be used to successfully navigate through valuation issues that can arise with the acquisition of a practice that has historically generated significant ancillary revenue from services like infusion therapy or imaging services. Cozen O’Connor attorneys have experience establishing lease arrangements and stand ready to assist providers who might  consider this alternative to physician acquisition and employment.

Raymond Console

Raymond is the office managing partner of the firm's Cherry Hill office. He concentrates his practice in the areas of business organization and transactions, acquisitions and mergers, trust and estate planning and administration, tax, and real estate.

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