Cirrus Blog

Are You Overpaying for Your Clinic’s Operating Costs?

Visibility and Audit Rights

Before you sign your veterinary office lease, it’s important to ensure that you have the “right to review and/or audit statements and invoices for all operating costs” negotiated into the agreement. This will ensure that you have the ability to take prudent steps to protect your clinic from unreasonable or hidden charges set forth by the landlord. If you have the right to see exactly what is being charged, it is less likely that you will be billed for something completely unreasonable.

In a Net lease, operating costs are expenses associated with the landlord’s day-to-day maintenance and operation of the property. Your landlord should keep track of all operating costs, and at the end of the fiscal year, provide you with a detailed statement of the actual expenses. As a tenant of a commercial property, you should insist on having the reasonable right to verify, audit, and where applicable, contest any charges that have been passed on by your landlord. Veterinarians who have not secured such provisions in their office lease may find that they are vulnerable and exposed to unscrupulous landlords.

Exclusions

It is customary for a tenant to cover their proportionate share of charges relating to the maintenance of the building, common areas, insurance, and various taxes; however, some landlords take advantage of their tenant’s lack of knowledge as to what are reasonable pass through costs.

What charges are unreasonable for the landlord to pass along to a veterinary tenant?

Structural building repairs or capital improvements
Real estate broker commissions
Professional or legal fees not relating to your premises
Interest on debt costs
Landlord’s personal income taxes
Marketing association fees that are not driving traffic to the building or helping your veterinary business

Retroactive […]

Are You Overpaying for Your Practice’s Operating Costs?

Visibility and Audit Rights

Before you sign your dental office lease, it’s important to ensure that you have the “right to review and/or audit statements and invoices for all operating costs” negotiated into the agreement. This will ensure that you have the ability to take prudent steps to protect your practice from unreasonable or hidden charges set forth by the landlord. If you have the right to see exactly what is being charged, it is less likely that you will be billed for something completely unreasonable.

In a Net lease, operating costs are expenses associated with the landlord’s day-to-day maintenance and operation of the property. Your landlord should keep track of all operating costs, and at the end of the fiscal year, provide you with a detailed statement of the actual expenses. As a tenant of a commercial property, you should insist on having the reasonable right to verify, audit, and where applicable, contest any charges that have been passed on by your landlord. Dentists who have not secured such provisions in their office lease may find that they are vulnerable and exposed to unscrupulous landlords.

Exclusions

It is customary for a tenant to cover their proportionate share of charges relating to the maintenance of the building, common areas, insurance, and various taxes; however, some landlords take advantage of their tenant’s lack of knowledge as to what are reasonable pass through costs.

What charges are unreasonable for the landlord to pass along to a dental tenant?

Retroactive Billing

It’s not uncommon for a dentist to receive notice from their landlord communicating that they were not billed correctly for a certain expense, dating back several years. Without proper preventive language negotiated into your dental office, situations like this can result in many unforeseeable future […]

Are You Overpaying for Your Clinic’s Operating Costs?

It’s important to understand whether you as the tenant, or your landlord, is responsible for paying for various veterinary clinic operating costs when it comes to the maintenance of the property. Your veterinary office lease plays a key role in dictating the obligations of both parties, and clarifying common grey areas.

What Are Operating Costs?

Operating costs are the expenses related to the operation of a commercial property. Some landlords have been known to take certain liberties in the operation of their buildings. They do so by charging expenses to their tenants, who may only be tenuously linked to the management and maintenance of the property in question. These particular landlords may pass these costs on to their tenants by including them in the “additional rent” or operating cost provisions of their standard form lease with little, if any, explanation.

What operating costs are included in your clinic’s rent, and what is being charged separately? 

There are a number of factors regarding the landlord’s maintenance responsibilities and costs, they can vary depending on whether you’re presented with a Net Lease, Gross Lease, or Modified Gross Lease.

Type of Leases

Net Veterinary Office Lease

In addition to base rent, a Net Lease requires a tenant to pay for its proportionate share of all property expenses such as insurance, maintenance, utilities, repairs, and taxes. Typically, the landlord is not responsible for any expenses (with some exclusions) under the lease.

Fully Gross Veterinary Office Lease

This type of lease is similar to many residential rentals. In a Fully Gross lease, the tenant is only required to pay a flat rental rate, while the landlord covers all additional property expenses.

Modified Gross Veterinary Office Lease

During the first year (base year), a Modified Gross Lease requires the tenant to pay a flat rental rate. However, […]

Selling a Family Practice in Ontario

When contemplating selling a FHO practice, there are many things to take into consideration. Here are some of the key questions and issues you’ll want to consider:

What is Your Practice Worth?

Attaching a value to your practice can sometimes be a difficult task as you may disagree with the market and its estimated worth. Ultimately, its worth depends on how much a buyer is willing to pay, the income generated by your practice month-to-month, and additional offerings that speak to the buyer in question.

Considerations in Your Medical Office Lease

There is so much at stake in the process of selling a family practice; therefore it is imperative that you consider the current obligations of your office lease, specifically the assignment provisions within it. Prior to completing the sale, it’s important to have your lease properly reviewed to ensure that there are no hidden risks, and that the ‘assignment of the lease’ occurs properly, protecting the interests of both parties along the way.

Communication with Your Colleagues

It is important to communicate with your colleagues to ensure that they are aware of the upcoming changes. This is important so you may gain their support along the way with regards to group obligations. When it comes to the MOHLTC, transitioning a healthcare practice has many steps involved. Make this process easier on yourself and look to the professionals for help.
Click here to download the white paper.
Allow Cirrus Consulting Group to help facilitate the sale and optimization of your practice.
Contact us for a complimentary consultation, or call 1.800.459.3413.

Are You Overpaying for Your Practice’s Operating Costs?

It’s important to understand whether you as the tenant, or your landlord, is responsible for paying for various dental office operating costs when it comes to the maintenance of the property. Your dental office lease plays a key role in dictating the obligations of both parties, and clarifying common grey areas.

What Are Operating Costs?

Operating costs are the expenses related to the operation of a commercial property. Some landlords have been known to take certain liberties in the operation of their buildings. They do so by charging expenses to their tenants, who may only be tenuously linked to the management and maintenance of the property in question. These particular landlords may pass these costs on to their tenants by including them in the “additional rent” or operating cost provisions of their standard form lease with little, if any, explanation.

What operating costs are included in your dental practice’s rent, and what is being charged separately? 

There are a number of factors regarding the landlord’s maintenance responsibilities and costs, they can vary depending on whether you’re presented with a Net Lease, Gross Lease, or Modified Gross Lease.

Type of Leases

Net Dental Office Lease

In addition to base rent, a Net Lease requires a tenant to pay for its proportionate share of all property expenses such as insurance, maintenance, utilities, repairs, and taxes. Typically, the landlord is not responsible for any expenses (with some exclusions) under the lease.

Fully Gross Dental Office Lease

This type of lease is similar to many residential rentals. In a Fully Gross lease, the tenant is only required to pay a flat rental rate, while the landlord covers all additional property expenses.

Modified Gross Dental Office Lease

During the first year (base year), a Modified Gross Lease requires the tenant […]

Preventive Care Bonus Submissions

Physicians may now submit their Preventive Care Bonus targets attained for the 2016-2017 MOHLTC fiscal year. Submissions are open from April 1st to the September 2017 claims submission cut-off date.
How do I calculate my Preventive Care Bonus threshold?
The goal is to calculate how many of your enrolled patients have received their Preventive Care services within the relevant screening intervals. i.e. * 100%

You must then bill the appropriate billing code that corresponds to the percentage threshold reached in your Preventive Care efforts.
Cirrus Tips to Preventive Care Billing:

Make sure to bill your relevant Preventive Care Bonus code(s) and backdate it to March 31, 2017 to reflect your performance in the 2016-2017 fiscal year.
The MOHLTC Preventive Care Target Population/Service Report (Previous & Projected) was issued in late April 2017. This report can be used to assist you in calculating your target thresholds attained.
Another tool in managing and tracking your Preventive Care in the Colorectal, Cervical and Breast Cancer Screening categories is to sign up for the Screening Activity Report (SAR) by clicking here.

In order to ensure that you have been paid your bonus for the previous fiscal year, you may review your monthly Remittance Advice under the “Preventive Care Bonus Accumulations and Payment” section in the months following submission.

For further assistance or clarification on accurately billing for your Preventive Care Bonus, please do not hesitate to contact your Cirrus Consultant at any time.

Henry Schein Associate Spotlight – Jimmie Hammon, ESS

“Cirrus represented the best interests of the doctor throughout the lease negotiation to ensure that her success was our number one goal.”

Jimmie Hammon, ESS | Henry Schein Boston, MA

Helping Doctors Realize Their Dream Dental Practice

My 14 years of experience as an architect, 6 years as a general contractor/developer building dental offices, and 15 years as a dental equipment consultant have given me a tremendous amount of knowledge in helping doctors realize their dream dental practice. From small remodels to new clinics and professional buildings, the Henry Schein “team approach” to solving dental practice design projects brings together our Henry Schein Dental National Design Department, Business Solutions Consultants, Technical Service Representatives, and contractors in order to achieve perfect results.  We are all on their team as partners of their practice.

Cirrus Has the Best Interest for Your Doctors

The teamwork of Dr. Seliger-Schamberg, Cirrus and myself allowed us to evaluate (3) different potential locations for the location of her practice, Zubi Dental. The open communication allowed us to navigate the various dental office lease proposals and the language within it. With Cirrus’ help, we were able to secure the best location, and negotiate the dental office lease with terms that best fit the needs of Dr. Seliger-Schamberg’s business plan, and long term career goals. Cirrus represented the best interests of the doctor throughout the dental office lease negotiation to ensure that her success was our number one goal, and that the lease terms suited the doctor’s needs for the foundation of the business plan.

– Jimmie Hammon, ESS | Henry Schein Boston, MA

Customer Case Study: Dr. Daniel R., DDS | Ortonville, MI

Dr. Daniel R. is a General Dentist running a successful practice out of Ortonville, MI.

As building-owners of 35 years, Dr. R. and his wife were growing weary of the constant demands involved in maintaining a property and being landlords. They also strived to grow the practice and expand, but were limited by the size and number of treatment rooms available in their 2,400 sq. ft. unit. After much deliberation, Dr. R. and his wife made the difficult decision to sell the building and relocate their practice.

The doctor had narrowed down the search to 3 locations in Clarkson, MI. Unsure of how to negotiate the details of their tenancy with the landlord, Dr. R. and his wife attended a seminar in Troy, MI presented by Cirrus Consulting Group on the topic of “Dental Office Lease Negotiations”. The seminar discussed the top $100,000 traps buried in a lease, and the harsh negative impact they can have on a practice’s future.

With this newfound knowledge, the doctor decided against using the services of his long-time corporate attorney for the negotiation, and instead sought out the expertise of Cirrus and their dental office lease negotiators. Dr. R. and his wife chose a location for their practice and were soon presented with the dental office lease for the space by the new landlord. Dr. R. was looking for the new lease to provide him with the following:

Cirrus conducted a thorough review and analysis of the lease, highlighting critical dates, risks and pitfalls. They uncovered a lack of death and disability protection in the lease, a significant issue for Dr. R. as a late-career dentist. The lease also permitted the landlord to move competing dentists into the building, and collect proceeds […]

Personal Guaranty in Your Veterinary Office Lease: Let’s Not Make It Personal

There’s an old business adage that states one should always keep business and personal matters separate. While the intent of this saying is certainly sage business advice, it is often not something that a veterinarian can avoid in the world of commercial office leasing. The majority of our clients who are starting a veterinary clinic, or have been in business for many years and are renewing their veterinary office lease often tell us that their landlords are demanding. Why? They often make them sign a “personal guaranty” or “indemnity agreement”, or else the deal is off!

This article is going to help you understand what a “personal guaranty/indemnity agreement” is as it pertains to your lease, and explain how as a small business owner, you can attempt to limit or avoid it altogether.

What is a “personal guaranty” in the lease, and why does your landlord care?

A personal guaranty, in its basic form, is a contractual agreement in your clinic lease that obligates an individual responsible for paying back a debt, in the event the tenant is in default. In regards to your veterinary clinic, it is a safety net that many landlords demand a tenant sign in order to ensure the financial performance of the lease continues, regardless of what happens with the tenant’s corporation, i.e. bankruptcy or business closure. It is important to note that a “guarantor” is often required to guarantee the obligations of not only the initial lease term, but also any “options to renew” or future extensions of the term.

For a startup veterinarian, landlords often require you to sign a personal guaranty due to the lack of operational experience of owning a clinic or renting commercial property. For an established clinic/hospital […]

Personal Guaranty in Your Dental Office Lease: Let’s Not Make It Personal

There’s an old business adage that states one should always keep business and personal matters separate. While the intent of this saying is certainly sage business advice, it is often not something that a dentist can avoid in the world of commercial office leasing. The majority of our clients who are starting a dental practice, or have been in business for many years and are renewing their dental office lease often tell us that their landlords are demanding. Why? They often make them sign a “personal guaranty” or “indemnity agreement”, or else the deal is off!

This article is going to help you understand what a “personal guaranty/indemnity agreement” is as it pertains to your lease, and explain how as a small business owner, you can attempt to limit or avoid it altogether.

What is a “personal guaranty” in the lease, and why does your landlord care?

A personal guaranty, in its basic form, is a contractual agreement in your office lease that obligates an individual responsible for paying back a debt, in the event the tenant is in default. In regards to your dental office, it is a safety net that many landlords demand a tenant sign in order to ensure the financial performance of the lease continues, regardless of what happens with the tenant’s corporation, i.e. bankruptcy or business closure. It is important to note that a “guarantor” is often required to guarantee the obligations of not only the initial lease term, but also any “options to renew” or future extensions of the term.

For a startup dental practice, landlords often require you to sign a personal guaranty due to the lack of operational experience of owning a practice or renting commercial property. For an established […]