Healthcare Providers Embrace ‘Timeshares’ As Solution To Three Key Challenges

One of the most significant factors in healthcare operations is real estate—location, location, location. The decisions healthcare providers make about where to establish their practices can have long-lasting positive or negative effects.

At the beginning of each year, many healthcare groups reassess their clinic locations, analyzing costs, service drivers, and demand. While expansion is often a priority, opening a new location comes with considerable risks. Even when the right location is found, staffing remains a major hurdle, particularly in rural or less populated areas.

Timesharing—where different businesses or healthcare providers share the same clinical or office space on a part-time or limited basis—has emerged as an effective solution for many practice groups. It allows them to serve new or niche markets without the burden of a long-term commitment or a dedicated full-time space.

Healthcare providers are increasingly turning to timeshare arrangements for three primary reasons:

• Testing new markets
• Increasing operational efficiency
• Offering non-core specialties

These timeshare agreements benefit both practice groups and patients. However, there are also several regulatory complexities that need to be navigated.

Testing New Markets

Expanding into new markets can be costly and time-consuming. To mitigate the risk, many practice groups experiment with timesharing in suburban or rural areas. This allows them to test the market without committing to permanent staff or space. For example, orthopedic practices may timeshare in towns like Hudson, Wisconsin, or Brainerd, Minnesota, to offer post-surgery care such as physical therapy or follow-up assessments to patients who had surgery at larger ambulatory surgery centers in the Twin Cities metro area.

Increasing Efficiency

When testing a new market, practice groups can deploy staff from other locations one or two days a week. As appointment demand grows, they can reassess whether the location requires more time. For instance, Retina Consultants of Minnesota spent years sharing space in Duluth and St. Cloud before moving to dedicated, long-term leased space to accommodate expanding patient needs. In such cases, longer-term leases are signed when demand warrants it.

Additionally, practice groups can alternate which specialty uses the same space, with landlords typically providing administrative support and a reception area. The physician can reserve specific days of the week to see patients, thus growing their practice with minimal overhead.

Expanding Non-Core Specialties

Healthcare systems often focus on core services and may not have the resources to support certain specialties, like orthopedics or pediatrics. Timesharing provides a way for these systems to add specialized care without the expense of establishing a full-fledged practice. For example, Ridgeview Medical in Waconia, LeSeur, and Arlington, Minnesota, uses timeshare spaces to host specialties like nephrology, oncology, or cardiology for one or two days per week. This allows physicians to access testing equipment and support services without duplicating resources.

Ridgeview CEO Paul Ham notes, “As a healthcare system, Ridgeview manages our real estate to support both partnerships and smart growth. Timesharing enables us to bring specialty care to the communities we serve while focusing on our core services. It enhances space utilization, generates revenue, and provides flexibility to adapt to market changes.”

Similarly, specialty groups may consolidate their core services at fewer locations and use timesharing for smaller satellite offices, enhancing patient access to care. Children’s Minnesota, for instance, offers cancer and blood disorder treatments in St. Cloud and Duluth, ensuring that pediatric patients can receive care close to home, without needing to travel to a different clinic.

The Catch: Navigating Regulations

While healthcare timeshares can be highly beneficial, they are subject to various state and federal regulations. These rules ensure that any lease agreement between two groups is fair and complies with legal standards, including:

• Stark Law: This federal law prohibits physician self-referral, meaning physicians cannot refer patients to medical facilities where they have a financial interest, unless specific exceptions apply.
• Anti-Kickback Statute (AKS): This law makes it illegal to offer, pay, solicit, or receive remuneration to induce or reward referrals for services reimbursed by federal healthcare programs.
• HIPAA Compliance: Sharing space and possibly electronic systems means strict adherence to the Health Insurance Portability and Accountability Act (HIPAA) to ensure patient privacy and data security.
• Fair Market Value (FMV): Lease payments must reflect fair market value to avoid regulatory scrutiny.

The complexity of these regulations emphasizes the importance of having a real estate advisor who is knowledgeable about both healthcare and real estate nuances to navigate these challenges.

Strategic Planning for the Future

Ultimately, healthcare providers aim to deliver care more efficiently and effectively. With thoughtful long-term strategic planning, healthcare groups can optimize their real estate footprint, test new markets, and experiment with new models to adapt to changing needs. Timesharing is an innovative way to achieve these goals while keeping options open and costs manageable.

Source: HREI