At the start of 2020 we asked the question, “Is Using a Medical Office Timeshare Right for You?” and the year that followed provided us with additional fodder for that conversation.

Medical office timeshares, where providers enter into a part time lease arrangement, have become increasingly common between hospital systems and physician practices for several reasons. They’re cost-effective, they’re good for service providers spread across a broad geographic market, and they’re well-suited for specialties that involve pre- and post-operative check-ups that can be done outside of hospital setting proper. Nevertheless because it’s the medical field, there are some legal considerations ‒ the Stark Law and Anti-Kickback Statutes that weigh on the compliance and use of these timeshares.

Virtual visits and the rise of telemedicine that occurred during the pandemic may have changed healthcare providers’ leanings toward timeshares, so it be worth checking in again with what your organization needs to know.

Timeshare Components

Even if the space usage and time allocations differ, medical office timeshare arrangements tend to have all or some of the following components:

• Clearly defined common and exclusive space square footage
• Detailed listings of furniture and equipment
• Staffing arrangements and office-related supplies and expenses (internet, etc.)
• Clearly defined time spent in-office tied directly to the fair market value payment
• Fair market premiums that account for key risk factors including utilization, vacancy, and costs of supporting partial lease arrangements.

It’s worth noting that one of the reasons why medical office timesharing may be coming up again has to do with tenant-favorable changes in the market for office commercial real estate.

Addressing Compliance

Working with a financial professional who understands how the Stark Law and Anti-Kickback Statutes affect timeshare arrangements is key. There are specific boxes to check to ensure that spaces are being leased at fair market value and that the lease covers all of the details it needs to cover. A detailed list of these items can be found in our earlier article (which you can read by clicking here).

It’s worth noting that if you run afoul of the Stark Law and the Anti-Kickback Statute, your healthcare group could face denial of payment, refund of payment, imposition of a $15,000 per service civil monetary penalty and imposition of a $100,000 civil monetary penalty for each arrangement considered to be a circumvention scheme. A violation of the Anti-Kickback Statute may come with a $25,000 criminal fine, with possible 5-year prison sentence; $50,000 penalty; fines in excess of three times damages; and the health care system’s exclusion from Medicare and Medicaid.

John Rimar is Managing Director with CBIZ Valuation Group’s Real Estate Practice, and David Werch is a Managing Director with CBIZ Valuation Group’s Tangible Asset Practice. John can be reached at [email protected]. David can be reached at [email protected].