Subleasing is one of the most common issues that mp practice solutions manager Andrea Ravas deals with when talking to general practitioners and specialists. Andrea says there is some confusion about responsibilities associated with subleasing one of the biggest problems she encounters is doctors missing out on the full benefits of subleasing.

“The most common mistake made is undercharging,” Andrea says. “The services provided by the leaser are costly, and I’ve even seen some practices that lose money on the deal.”

Subleasing is where an individual doctor or other health provider subleases space from a private practice. The practice may also provide management and reception services such as appointments, recalls and reminders. In some cases, the leasing practice handles all private billing and bulk billing services, debt collections and medical reports on behalf of the leasee.

The objective of subleasing is to attract extra revenue for spare capacity in the practice. It also results in an improved range of patient services.

“There are a lot of advantages to leasing out space if it’s done correctly,” Andrea says. “The extra revenue and expanded services are obvious benefits. However, it’s important to take account of all the hidden costs.”

Like any legal arrangement, it’s important that both parties are very clear on what is to be provided, and what is not. All subleasing agreements need to clearly list the detail of the arrangement.

Andrea says relationships between the parties involved in the sublease can break down if poor contracts omit a list the services to be provided.

“Doctors can get themselves into all sorts of trouble if they get the leasing contract wrong,” Andrea says. “The leaser is generally in a position where they can significantly increase costs to the practice, and so this needs to be managed.”

Some common problems that exasperate leasers are high costs for electricity, office supplies and security. “One practice I’m aware of said they would take care of the security for the leasee,” Andrea says. “Unfortunately, the leasee was prone to not setting the alarm, resulting in several expensive security callouts, all billed to the leasing practice. It ended up being an expensive exercise.”

As with all legal matters, the more experience you have the easier it is to negotiate the potholes. Expert advice can save time and money.

Andrea says, “Subleasing provides a great opportunity to top up practice income and provide additional services to patients. But it can go horribly wrong.

“I’ve managed quite a few subleasing arrangements,” says Andrea, “so by using mp practice solutions you can get it right the first time, utilising information learned from other people’s mistakes, not yours.”

For expert advice on subleasing and other practice management issues, please contact Andrea Ravas at mp practice solutions on 03 9280 8722 or email andrear@mppracticesolutions.com.au