With healthcare transitioning more towards ambulatory care services, this area of real estate has seen rapid growth in recent years. Healthcare providers, such as individual physicians and health systems, are looking for opportunities to break away from the large hospitals and open smaller clinics that are often focused on a specific healthcare need. While buying naturally comes with a sense of stability, as it is a more permanent investment and offers control over the costs, leasing has become more popular over time because it requires less money upfront, shorter periods of time and multiple location options. However, managing healthcare leases can often be more challenging than commercial or corporate ones. Here are some of the reasons why lease management software helps with simplifying healthcare leases.
Healthcare organizations, as opposed to other businesses, are required to comply with more standards than just accounting ones, such as FASB, which mandates accurate lease accounting. They also face audits from regulatory authorities or accreditation bodies. For example, the Stark Law prohibits physicians from referring patients to receive designated health services payable by Medicare or Medicaid from entities with which the physician or immediate family members have a financial relationship. This relates specifically to leases of space in hospitals or hospital-owned medical office buildings. As such, the Stark Law places specific limitations on the manner in which certain healthcare providers may lease space to physician tenants. Complying with this law is therefore crucial. Fortunately, lease administration software can help store all lease-related documentation, making it easy to provide any information during audits to ensure compliance with relevant regulations.
Visibility Into Leases
Having good visibility is essential to properly managing and reporting when it comes to all lease terms. Stakeholders can be kept informed about all details of a lease, making it easy to manage and make decisions. Particularly when it comes to lease-related expenses and obligations, having the right tools enables better financial planning, budgeting and forecasting, which is essential to making decisions about renewals, extensions or terminations.
Critical Dates and Proactive Notifications
Managing multiple leases can be challenging and it’s crucial to stay on top of lease expirations and renewal dates. Lease administration software can send automated reminders and alerts, ensuring that healthcare organizations don’t miss important deadlines and can adequately plan for lease renewals or terminations. Also, automating lease-related tasks and workflows can significantly reduce the workload burden for various stakeholders by notifying them about action items. This allows for better time management when it comes to completing tasks and the ability to focus on other core operations and strategic planning.
Storage of Lease-Related Data
Lease administration software helps healthcare facilities centralize all lease-related information, including lease terms, financial data, critical dates and property details. This central repository enables easy access to lease information, eliminating the need for manual record-keeping which reduces the chances of errors. It is also more efficient as accessing all lease-related information can be completed in a few clicks and certain sections of lease documents can even be bookmarked for quick reference. The information can also be easily shared across the organization and integrated into SharePoint.
In healthcare facilities, effective space utilization is crucial for patient care and operational efficiency, which is why it plays a huge role when planning expansions or relocations. Fortunately, lease administration software is a great tool for comparing existing leases with new opportunities. Being able to look at leases side by side is vital when comparing terms, costs and other details that are essential to making decisions about an existing or a new lease. Also, it helps organizations improve their negotiation abilities by having access to historical lease data and analytics. By tracking past lease agreements, payment history and other relevant data, as well as compare that information with possible new leases, stakeholders gain valuable insights that help them make informed decisions during lease negotiations.
Although different from corporate leases, healthcare leases still require many of the same things. From compliance, lease reporting and management, lease-related data storage and proposal comparison, lease administration and accounting software, like the solution provided by Yardi Corom, can prove to be an effective tool for allowing healthcare organizations to track and make decisions about their leases.
Yardi Corom is a comprehensive and user-friendly accounting, lease and workplace management solution for CRE tenants. Our cloud-based software solution increases efficiency and accuracy across your entire lease portfolio: manage leases and subleases, track key lease data, centralize transactions and become FASB/GASB/IFRS compliant. To learn more, you can visit our website or schedule a meeting with our team.
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