Evaluating Real Estate Options When Adding a Physician

Posted on May 10, 2012 by MREA

Most physicians who are given the opportunity to join a private practice expect to eventually become partners. Typically, after a few years as an employee, physicians are provided partnership role by way of purchase opportunity. The purchase would be based upon the value of the equipment, furnishings, accounts receivable and goodwill. Most practices tend to lease their medical office space, so no value is attributable to bricks and mortar. However, some practices own the real estate and issues arise as to whether incoming physicians will be provided ownership in the real estate.

The majority of medical practices are still structured as professional corporations. Typically, if the real estate is not leased, it will not be owned by the practice corporation itself for both liability and tax reasons. Rather, the facility or condominium will be owned by a separate entity. This entity is commonly structured as either a partnership or limited liability company, or if a single doctor is involved, the real estate could be owned jointly with the doctor’s spouse. Thus, a physician may become a partner of the medical practice entity without becoming a partner of the real estate entity.

In the past, most physicians showed little interest in becoming a partner in the real estate entity, not having a true understanding of commercial real estate as an investment. Additionally, they may not have been able to produce the financial requirement for buy-in to the entity or felt the location was not suitable. Whatever the reason, it was more likely than not that an incoming physician did not consider the investment. Today, with greater access to information and investment opportunities, physicians are very interested in real estate.

Prior to being added to a practice group, it is important to know the culture and seek like strategies for ancillary or investment opportunities. As per example, most senior physicians within the practice group may not share access to real estate ownership. Because real estate development, purchase and management is a significant investment of money (and time), it is understandable that incoming physicians would not be allowed access. Because of this, the senior physicians maintain that they will hold on to it as an investment for, or throughout, retirement. We are seeing some leeway here, though.

As an incoming physician, it would be important to take a good look at the real estate piece, no matter the situation of lease or purchase. If it is a lease, there will exist a written lease between two entities. The lease should not be above fair market value rental rate and in place for a reasonable period of time, both to be discussed further. If the rent is too high, perhaps to provide tax benefits to the owners of the real estate, there will be less capital to improve the practice. If the term is too short, you will face renegotiation of the rent too often, which will tends to create more advantage for owners that lease space. If the term is too long, the rent will likely step up each year to become a larger proportionate share of liabilities for the practice group.

In the situation of ownership, if the real estate is owned by one or more senior physicians, the practice will likely seek to relocate if they decide to sell the real estate. In order to avoid this situation, in addition to a long-term lease or a short-term lease with options to renew, the real estate owner(s) could give the non-owner practice partners an option to buy the real estate at an appraised value upon retirement or death, or a right of first refusal.
Now let’s assume that all parties wish to have an incoming physician buy in to the real estate entity. This may either occur at the time as the purchase into the practice entity or at the point the doctor has completed his or her buy-in. If the latter option is pursued, presumably, they will be more able to afford the buy-in to the real estate. In any event, the main issues will become the buy-in price and manner of payment.

The price can be determined in a few ways. One is simply by mutual agreement of all parties. Another method is simply using the original cost of the real estate if it was recently purchased, or the original cost plus annual CPI (Consumer Price Index) increases. The most common method, however, is by means of an an appraiser or broker opinion of value through appraisal or our brokerage entity. The fees could be as low as $500.

Once the price is determined, the manner of payment needs to be approached. One option is to simply pay each owner his or her share up front. If that is not possible, a promissory note could exist in favor of each real estate partner with payments made over time with interest.

A common method exists for partners to refinance the mortgage to as close to 100 percent financing as possible. The new partner would simply sign the new mortgage and be equally responsible for the debt without having to pay any out-of-pocket buy-in. The existing partners are able to pull out the cash equity at that time to realize a return on their investment. When interest rates are declining, refinancing is more likely to occur. A caveat is, if interest rates increase, the existing partners may not be willing to choose the method of refinancing due to larger interest payments, and, presumably, lesser real estate value.

Should a partner leave or retire from the medical practice, will they become obligated to sell his or her interest in the real estate and should the remaining partners be obligated to purchase his or her interest? If so, at what price? Thus, it is important to have the document treated carefully or via retainership of legal counsel.

Often times the inclusion of a physician to a practice group involves several items, including real estate, that should be addressed with business intelligence. MREA is capable of assisting in your next physician addition, partner acquisition or real estate transition. Contact your local representative for assistance.

Precision Guidance in Healthcare Real Estate

Posted on February 14, 2012 by MREA

Why We Perform Our Own Market Research

Posted on January 17, 2012 by MREA

In light of recent articles regarding the largest commercial real estate brokerage firm in the world NOT providing data to the largest online commercial real estate data provider, we thought we would make our viewers aware of the positive and negative of seeking commercial real estate information online.

Having spent considerable time with a few of the largest commercial real estate platforms in the country, I can attest that commercial real estate dealings are kept sacred, some having bound agreements as to non-disclosure among all parties involved, and rightfully so. These are business engagements that involve competitive people, seeking a competitive advantage in their respective competitive markets. Mirroring the administrative behaviors of everyday business affairs within other industries, commercial real estate is, and should be treated, no different.

Which brings me back to the first line of this article to which I may provide an analogous, hypothetical point. In general, should businesses voluntarily engage in providing market data to third parties so that they can republish, or repurpose the data to fit their own needs? Further, should we provide privileged information from a competitive business landscape to online platforms that are controlled by competitive businesspersons that sell this data to our competitors, and worse yet, may sell this to a purchasing entity to be taken private or sent overseas? Well, it appears that the largest commercial real estate firm in the world thinks not.

So, given the fact that not all commercial real estate listings, transactional activity or data is secured by online platforms, and, in all actuality, less than 50% is captured, it is certainly questionable as to why users seek such data or trends to influence their financial decisions. Given the certainty now, that some, or most, commercial real estate transactional activity goes unreported, or underreported, to online platforms, why are individuals, owners, investors, businesses or hospital systems relying on this information for a perceived advantage in real estate negotiations. It just proves wasteful, ill-informed and, dare I say, lazy. Given the fact that state politicians and regulatory authorities largely determine how much information a business should share to the public, it is in our belief that the commercial real estate industry should rely on such data, as well as their own best efforts to influence decision-making in the sector. This promotes competition where, eventually, the creme rises to the top.

As for commercial real estate listing or transactional reporting right now, most will say that ‘it is the best we got”, to which I disagree. This suggests that anything is better than nothing and proves why it is imperative to seek qualified professionals that specialize, who become proficient within a certain sector, or area, of their market. The greater the specialization within a segment, the more efficient the data. The businesses that capture this data then hold the advantage to whom it should be shared, which will lead to a competitive advantage for themselves and their clients. See, the industry does not need underutilized, poorly informed, general salespeople seeking to sidle up to every potential transaction by distributing data that appears convincing in the hopes that an unjustified reward will find its way in their direction. Rather, we need, and deserve, active, intelligent leaders who comprehend that a high level of command, or mastery, within any endeavor, is the greatest path to long-term financial reward.

Comprehension of a Medical Lease Contract

Posted on October 13, 2011 by MREA

Statement: After auditing countless medical leases through our firm, its CPA and attorney partners, we want to make fully aware the consequences of any real estate agreement that is executed (signed).

On behalf of the associates of this firm, the declaration above is about as harsh and opinionated that we, as advisors, can be without crossing the line whereby disassociating ourselves in our mission to coordinate the healthcare real estate markets; physician, hospital, investor, owners.

But, speaking from the perspective of a landlord (lessor), the largest impediment that a landlord sees is the lack of commitment and foresight from the lessee’s principal founders with regards to their own organization’s goals and objectives. The landlord has to take into account that the necessary financial due diligence has been performed and the organization is prepared for the legal ramifications if ANY PART of the contract is broken. Thus, it is essential when provided any document that requires signature that it is taken to someone else for further review. Take it to your spouse, your associates, your financial partners, your attorney, your accountant, your shareholders. If your firm is fortunate enough to have real estate representation that will not charge you an arm or leg, take it to your broker.

Typically, the mistakes that we see from physicians (especially independents) is that of discounting the lease instrument and the level of sophistication and comprehension necessary to interpret this contractually-binding obligation effectively. As an example, if there are 10 items that are conveniently written to control one party of a transaction, does the other party know all 10, or just 5, or 2? Remember, it is already popular culture that a physician is not a savvy businessperson, which does not speak of their collaborative efforts. All kidding aside, it is of paramount importance to fully comprehending any contract or, at the least, obtain verbal or written interpretation through fiduciary relationships.

Now, for the really bad news.

The field of experts that truly understand medical contracts and can convey its purpose, as well as its fine print requirements to your organization, are few. Because most healthcare real estate real estate experts understand this, they will typically work for a 5 to 10 percentage premium over the traditional brokerage firm’s marketed commission or consulting fee. You may be fortunate to locate a highly skilled healthcare unit, but beware the temptation to accept their services for both sides of any transaction for reasons that I do not need to explain further.

To summarize, our readers should be acutely aware of the needs of their organization first, prior to contracting with any commercial or medical real estate agreement. They should also make sure they have brokerage or counsel that can perform the necessary tasks associated with YOUR transaction, which should be compensated by their firm. Until then, we can keep combing over the mistakes, some of which will cost our clients bankruptcy, until lessens are learned.

This article was written by Robert S. “Bob” Lowery, Managing Partner with MREA | Medical Real Estate Advisors.

Evaluating Real Estate Financing Options for Physicians

Posted on October 3, 2011 by MREA

We are evaluating more medical office building loans today than ever before, which may shed light on the need for the health care sector. The finance options and potential deal structures vary greatly based on such factors as loan amount, owner occupied or investment, strength of owner, cash flow, liquidity, etc. In addition, the type of structure, and the property it sits, dictates available options as well.

Other than in 2009, our findings in loan to value restrictions range widely for medical professionals, from 50% to 120%. For example, conventional loans (bank loans not backed by the government) are normally capped at 75% on a rate and term refinances and 65% loan to value on cash out refinances. With the backing of government programs such as the SBA, 90% financing is available on refinances. It is no doubt that we all have to become experienced in working with SBA loans as well as the USDA B & I loan program.

We are becoming more aware that several lenders are back in lending business and will bring finance level above that of a traditional real estate/purchase prices. These programs are only available to medical practitioners.

As for physician loans, the debt service coverage ratio (DSCR) restrictions are typically set at 1.2 for doctors. To explain what this means, for every $1.20 of net income (income after all expenses, taxes, insurance, miscellaneous fees) that the property and/or practice produces, the mortgage payment may not exceed $1.00. So, after all expenses and the mortgage has been paid, the owner will need to net $.20 over the mortgage amount to qualify.

Many exceptions can be made with this rule for medical professionals. For example, projection loans are common within this sector, which can offset any negative trends or lack of current cash-flow. Also note that SBA 7a loans will allow projections as well as DSCR as low as .8 for every $1.00, a riskier loan (through the government).

The market value of a medical office building is very important and will be evaluated and compared to similar properties in the area and sector. Age, appearance, location, accessibility, and local market conditions, as well as other factors are considered.

As for physician creditworthiness, everything about the borrower will be scrutinized. 680 credit score is normally the minimum for the best physician loan programs. Exceptions can be made on this as well with some conventional lenders considering scores as low as 640. SBA loans can go below 600 as well. The overall strength of the borrower, cash flow, liquidity, and LTV can offset concerns on low credit scores.

As stated before, we have never been so diligent in working with financing for this sector’s need. Please contact us for direction. We are also open to other financing alternatives, with necessary history for our clients, and loan packages that will be highly scrutinized.

Lease Vs. Buy Vs. Sale Leaseback

Posted on July 17, 2011 by MREA

Even The Match With Tenant Representation

Posted on July 3, 2011 by MREA

A business lease is one of the most important documents a company will sign. They set and forecast the obligations that will govern tenancy for a certain time period.

A poorly negotiated lease may result in inconvenience, financial hardship and a disruption to the business. At worst, you could be held captive by a lease if the ownership was not carefully negotiated regarding every facet of its tenancy, starting with the rate calculation.

When searching for office space, the landlord requests a certain asking price per square foot. After negotiations take place, it is common for a tenant’s psychology to change when the rental rate moves in either direction. For example, if the tenant has been provided a 20% reduction from the asking rate, it changes for the better. But, what is not widely publicized is that knowledgeable landlords will replace reductions with other items throughout the lease, so as to influence to their favor. If they do not, well, the asking price was probably too high in the first place.

Are lease negotiations tilted to favor landlords?

Three years ago, we tracked a landlord hoping to lease a building for $18 per square foot and would have provided a tenant with six months of free rent and a generous allowance, if not turn-key the space. Today, that same landlord wants $24 per square foot with little to no free rent, while offering half of the tenant improvement money. The economics are built-in to favor landlords, especially as ownership becomes a greater luxury.

When does the psychology come into play?

It can be mentally satisfying when anything is purchased at a discount. Getting a deal is one of our greatest pleasures in life. But some landlord markups are done with the sole intention of ending up at the ‘discounted’ rent price. Knowing this, does it still make you feel good?
For instance, the landlord is asking $18 per square foot for a space and settles at $15 per square foot, which was anticipated all along. Or think of it another way: Does it make you feel better to know that most of the landlord spaces that you are interested are working under the same philosophy?

Doing business with honest, reputable professionals who are problem solvers rather than problem makers is definitely worth a premium. But what if your organization chooses to work without this kind of counsel, rather, you may be working with a problem-maker, one who also provides poor property management and packs operating expense pass-throughs?

What is the basis for rent escalations?

While most people understand inflation, they cannot comprehend the annual inflation levels that commercial property owners incorporate into their rental increases. The U.S. inflation for the last 10 years has averaged less than 4 percent compounded, yet commercial owners have increased rents greater than 12 percent compounded per year.

These extravagant inflation averages make sense to landlords because their math has been reverse-engineered. The landlords pay whatever they need to in order to secure the purchase of the property, then they look back into the rental rates required in order to support the purchase price. Supply and demand, positive or negative net absorption, job gains or losses, those notions don’t have one iota of influence over this rent calculation. These landlords are operating in a vacuum, so why should they be concerned about universal issues like employment data?

You certainly do not have the advantage…

The negotiations favor the house or, in this case, the building and its owner. Not unlike Las Vegas, the house wins far more than it loses.

It’s very important for tenants to play the game with all of the advantages available. This is where hiring a tenant representative becomes invaluable. While most of the tenant reps in the Greater Houston area do not have aces up their sleeve, they are able to see the cards being held by the landlord. For consideration, regardless of how much a landlord is asking in rent, it is important to know how long the space in question has been vacant. Additionally, is the building well run, and will the tenant actually enjoy being in the building in several years? Or worse yet, does the landlord in question nickel-and-dime tenants to death in order to work their income statement to their direction, sacrificing the landlord/tenant relationship for a hopeful sale of the property?

The way to combat this growing problem called ‘arbitrary landlord markups’ is to be represented. An office lease is certainly a maze, requiring an expert advocate to protect tenants from being skewered with myriad hidden costs. Tenants are not prepared with the proper questions to ask, and NOT to ask, much less the answers they should be prepared.

Especially now, representation requests for real estate leasing, purchasing and selling is at all-time high; a premium, due to the fanciful mistakes that have been made in years past. If you do not believe it, on your next commute, take a look at all of the real estate signs that litter the roadways. Which one and why is the question you should be asking?

We can help.

How Pocket Listings Are Utilized

Posted on June 27, 2011 by MREA

We realize that everyone is ‘looking for a deal’ in today’s marketplace. For an example, we have access to a list of investors, developers and JV’s that are searching for opportunities in the market. This list has been updated quarterly and has changed only slightly over a 5 year period. So, some qualified investors have remained on the sidelines for 5 years; some longer. While a few purchase opportunities have presented themselves, to which our clients have been rewarded, as you might imagine most deals have not materialized because of a multitude of regulatory issues.

Over the stretch of 2011, the majority of property transactions that have been sold through our Houston office have been issued directly from the bank. The secondary source for transactions have been generated via listings/contracts kept off the open market, otherwise known as pocket listings.

Pocket listings happen to be one of the most highly scrutinized, yet secretive avenues for obtaining deals in the commercial real estate industry. In order to understand pocket listings and how they allow commercial real estate professionals, and their clients, to have the upper hand in the industry, it is important to know what a pocket listing is when compared to a marketed listing.

First, let’s review marketed listings and the internet marketplace. Dot.coms, such as Loopnet and Costar, offer huge databases of all of the properties that are for sale, as well as information regarding these properties. Once the property has been made available for sale, it most often is made public on these various internet channels, available for all commercial real estate professionals to participate in and view information. Once the property has been sold, or disposed, the listing is removed from these networks.

Pocket listings differ in that the commercial real estate broker holds a signed contract or a listing with narrow price negotiation range off of the market. Most of the time, these agreements limit the amount of advertising that can be done on the listing or the type of access that others are given to the listing. This listing type is often utilized by the large brokerage investment firms that control their certain investor market, essentially creating their own in-house auction for the strongest, most qualified buyers to bid.

On the flip side, marketed listings are such that the commercial real estate broker makes the listing available to any and all prospective buyers, per the agreement that they signed with the seller in the first place. Any commercial real estate professional that is interested in showing or buying the property is able to so and is therefore entitled to any commissions that are made off of the final sale of the property.

How did we enter this closed market?

Being in command of our sector type is the best way to get in, as far as pocket listings go. For example, our group will attend networking, trade, bank and large conventions to access individuals who control information. Not only does this allow us to build solid, positive relationships with medical and business professionals, it also put us allows us to be in the know of such opportunities. Prior to the property coming to market, we offer to eliminate the marketing process, whereby providing a ‘qualified buyer’ directly. In addition, we have determined that physician functions, economic planning committees or zoning and planning committees are a great way to obtain information for land / medical development, selling, planning and other things related. By attending these meetings, we put ourselves at the forefront of any marketing process.

Pocket listings have their naysayers, though. Many listing brokers and brokerage houses have labeled them as detrimental to an efficient marketplace. Their reason, as legitimate as it sounds, has serious holes. Their rebuttal is that if every investor was given the opportunity to bid on a property listing, the highest bidder wins. This is far from realistic. For one, they are assuming that their personal marketing campaign will provide the most optimal coverage possible for the property. The response from the pocket listing broker tends to always be that the strongest bidder wins.

Unfortunately, brokers and investors became accustomed to internet solicitations as their main source for information, especially during the mid 2000′s when anyone could qualify for a commercial real estate loan. During this time, investors became more apathetic, never setting foot on the the real estate that they ultimately purchased. Brokers sat idly by their computers for a property, price or deal to flash onto their screen or sought listings to place them on the these vehicles. Those days are long gone and so is the internet marketplace as a source of trustworthy information.

For those that utilize pockets listings, we encourage direct communication with the owner, as this strategy must be disclosed properly. If the owner wants to risk taking his/her property to market in order to obtain multiple offers, qualified or unqualified, or advertise a listing on several marketing channels, then they might want to consider slipping into an exclusive, marketed broker listing format. In essence, it is not the best practice for commercial real estate practitioners to request that listings be pocketed to them.

It takes experience, know-how and above all, HARD WORK!

Prepayment Penalties on a Commercial Real Estate Loan

Posted on June 23, 2011 by MREA

A penalty, such as the yellow flag thrown by an official in the National Football League, is a necessary evil but one that every coach comes to expect during the course of a game, year or career. Similar to the coach of a NFL team, penalties should be expected on commercial loans as they assure the lender will achieve the anticipated yield, or performance, when the loan was priced at the onset. The three prepayment options you will find most abundant in the marketplace are:

1. Timed (Set) prepayment schedule: This prepayment option establishes the exact amount of the prepayment for any period during the term of the loan. It is usually offered by commercial banks, but sometimes through insurance and finance companies as well.

The cost of the prepayment can be calculated when the loan is originated and is expressed as a percentage of the outstanding loan balance at the time of prepayment. For example, let’s assume you are interested in a 10-year fixed-rate term loan, the set prepayment schedule might be a sliding scale starting at 5 percent and declining by 1 percent annually, remaining at 1 percent through the final year of the loan term. Using the loan amortization schedule, the outstanding balance at any given point can be calculated along with this respective prepayment penalty.

2. Yield maintenance is another prepayment option that is predominantly used by lenders offering “conduit” loans that are converted into commercial mortgage-backed securities. This prepayment option gained wide acceptance among commercial banks, insurance and finance companies during the boom years.

Yield maintenance applies the theory of maintaining the loan yield upon prepayment by creating a mathematical formula to identify the amount of additional cash that must be added to the loan payoff amount and then invested through securities, to maintain the loan cash flow/yield as if the loan was still outstanding.

This formula is complex and subject to interpretation by different lenders. Loans requiring yield maintenance as a prepayment penalty derive the interest rate, by adding a “spread” to an index that binds with the term of the loan being offered. In a period of low or declining long-term interest rates this prepayment option can be very expensive, because more cash (larger penalty) must be added to the loan balance being prepaid to maintain the loans yield. In a period of rising or high long-term interest rates the yield maintenance calculation may be zero, but there is usually a 1 percent minimum penalty for the prepayment.

3. Defeasance, as a prepayment penalty option, is generally required only by a few conduit lenders. It applies the same concept as yield maintenance but requires the borrower to acquire the securities necessary to maintain the yield on the loan if prepaid.

Defeasance is defined as the substitution of other collateral for the real property collateral securing the loan and providing the same yield. The major difference between defeasance and yield maintenance is that the borrower must defease the loan, and therefore incur the costs of acquiring the substitute collateral. The yield maintenance prepayment option requires the lender or loan servicer to be responsible for acquiring the securities necessary to maintain the loan yield.

The defeasance fee for acquiring the necessary securities is generally the same for any size loan, and is currently a minimum of $50,000 on top of the yield maintenance cost. There is no minimum prepayment penalty for a defeased loan. In theory, during a period of high interest rates the cost to provide substitute collateral to meet the loan yield could be less than the outstanding loan balance, and the defeasance fee could therefore be reduced by the arbitrage that is created.

There is not a buyer that wants to a prepayment penalty tied to his or her loan, but all three prepayment options are generally acceptable, depending on the goals of your investment. If you should require an example of one or all three compared, please contact Robert S. “Bob” Lowery at your earliest convenience.

8 Proven Medical Moving Tips

Posted on April 20, 2011 by MREA

Moving — The word alone conjures up horribly strenuous experiences both personally and professionally. But, given the turbulent commercial real estate market where your landlord yesterday is not your landlord today and given the number of doctors considering ownership, it is a necessary evil.

While moving is certainly a major undertaking, it can by systematic and seem effortless given a proper relocation team. The Robert S. “Bob” Lowery representation group has provided some of the biggest mishaps that physicians make when embarking on a move, and how to avoid them.

1. Schedule proper time to plan and execute the move.

Don’t wait until four months until your lease expires to call any relocation team. Personally, we prefer to have two to three months just to assist in the planning of a move, given it relatively moderate size office space with around $1 mil in equipment.

If the relocation includes design, construction, and/or furniture and equipment purchasing or installation, nine to 12 months is an ideal time frame from site selection to commencement of lease.

In real estate relocation and expansion, we have not determined a month that is better than another. We allow the medical practitioners to provide us with a window. For instance, may there be a slower period for your organization in which it would make sense to devote time and effort to a move?

2. Be involved in the process.

Many physicians will appoint the entire moving project to administration or staff members to be concerned, typically during the 11^th hour, with the execution of the original process undertaken. Keep in mind that it’s your business, not the employees you hire. From a broker perspective we are always searching for decision-makers to control the process. We have seen way to many expansions scrapped because of poor planning from administration.

Administrators may come and go, but the doctor remains a staple. At the very lease, schedule and be present at project-planning meetings, touch base with your administrator or office manager at least once a week (either in person or via email) so you’re up-to-date on moving details, get to know any moving consultants you may hire, and be involved in the process.

3. Pay close attention to the details.

Don’t sweat the small stuff, phooey. The relocation expansion process is where the sum of the parts actually make the whole, rather than the opposite. For instance, it is important to make sure IT and telecommunications systems are installed and tested prior to move-in to ensure claims processing upon your organization having the grand opening.

Notify the community of your address via marketing; postcards, letters, emails and/or phone calls—that includes patients, couriers and other vendors, as well as payers if you bill in-house. Post a sign in your waiting room with your new address and contact information, moving date and the date your office will reopen, and give patients business cards with your new information as soon as it is possible.

We recommend having your administrator confirm with the appropriate vendors, the appropriate licenses and permits you will need to run equipment and store chemicals and/or medications. Depending on the size of the building, the percentage of medical tenants and your lease terms, your building management may monitor the status of licenses and permits, but the responsibility ultimately lies with the docs.

Also, make sure your administrator coordinates the insurance needs for the new location with a preferred insurance broker. Insurance requirements vary based on the value of resident equipment, technology and specialized build-out.

4. Hire a moving company that is experienced in ‘medical office’ moves.

Medical offices have a large amount of data files, handling them during the relocation is important so as not to violate HIPPA regulations. Companies that have moved similar file material and medical equipment successfully reduce the risk to the project and have developed proven systems for ensuring the confidentiality of the data and the re-installation of the equipment. This may sound like a stretch, but at the end of the day, it is comes down to entrusting a relocation team with the most private information.

Hiring a moving company that specializes in moving medical technology and equipment will ensure that it is up-and-running when you re-open. These companies are competitively priced with other movers, and they may be worth their weight when dismantling, boxing and recalibrating sensitive medical equipment during the move. Their proposal should clearly outline their experience. You may contact your references or chose to work with an educated medical real estate broker referral.

5. Understand there are undisclosed costs for a move.

We recommend getting an itemized invoice or statement that tells you exactly what the movers will do for you and how much it will cost. Then you may decide what makes sense for your staff to perfrom versus having the movers perform it.

Ask plenty of questions: Is there cost in changing contracts for in-office clinical or office equipment? Can you get a price break if you move some items yourself? How much does moving insurance cost or is it included—and what does it cover?

It’s also wise to get more than one bid so you can compare apples to apples for moving. Our team will provide your group with three bids that will provide you good sense of what the going rate is and which company is offering the best value for their services.

6. Eliminate or downsize unneeded items before the move.

If you have not used it in 5 or 10 years, be sure to rid yourself of it, because you’ll spend unnecessary time and money figuring out what to do with it on the back end.

Allow your team to consider what should stay or go

7. Have a “go-to” person on staff.

Have one person who is capable of being in charge of all the details for the move, even if several people are providing input. It is intelligent to appoint a backup to the point person so that your staff and the moving company can get answers in a timely manner during the planning and moving process.

8. Have a “backup” for emergencies.

The unimaginable will happen. The phone system will not be ready for your new office. Your point person will be out sick on the day of the move. We will help plan for every possible disaster. Through our experience, we can imagine every unpleasant scenario that can occur. We have seen it. It’s this type of strategic planning that can make the difference.

MREA | Medical Real Estate Advisors

Precision Guidance for Healthcare Real Estate

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