Navigating Hospital in Hospital Leasing Arrangements: LTACH, Skilled Nursing, Rehab, Behavioral Health, and Hospice

Outline

1. What is an HIH?
   1. Overview of common leases of hospital space
   2. Trends—has there been an increase in these types of arrangements?
2. Defining the space
   1. Measurements in typical commercial real estate
   2. Measurements in the HIH sector
   3. Exclusive and non-exclusive use areas
3. Operating expenses
   1. Accounting for operating expenses in a hospital real estate lease
   2. Real estate vs. non-real estate expense
   3. Monitoring operating expenses and compliance concerns
   4. Understanding other non-traditional real estate services that may be included in a lease arrangement
4. Fair market value—real estate
   1. Evaluating an FMV lease rate within the HIH sector
   2. Tenant improvement considerations: who pays for the finish out?
   3. Lease rate considerations: per bed versus per square foot
   4. Management agreements, purchased service agreements, and real estate leases
   5. Options to lease additional space
   6. Leases involving non-clinical space
5. Non-real estate considerations in HIH arrangements
   1. Covenants not to compete (CNCs)
   2. Bed licenses or de-licensure
   3. Certificates of need (CONs)
   4. Trade name and other intangibles

Benefits

The panel will review these and other key issues:

• Recent trends to own and occupy space in an acute care setting; equity joint ventures and pure lease arrangements for hospital space
• Valuation issues when a hospital department is sold or contributed to a joint venture in lieu of cash contribution
• Relevant post-transaction contractual arrangements including management or other administrative services, employee lease agreements, and more