Medical Office: Considering a Satellite Location?

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Although a satellite office is a great and fairly inexpensive way to extend your reach into other markets, it will require you to divide your time and resources, with no guarantees of return or performance. It is therefore imperative that you take adequate precaution to protect your practice, yourself and your finances.

Weigh the risks. The biggest risk practices face when opening a satellite office is that patients do not materialize as anticipated. Some groups have ultimately closed their new office because of a lack of patient volume. When a practice can establish a master schedule that includes a mix of follow-up patients and new patients that would fill the satellite office days, it can maximize the physician’s time.

Think small and short term. Many experts advise medical professionals to “think small” when it comes to satellite offices – no more than 2,000 square feet (depending on expected patient volume). Start your satellite office with a short-term lease, if possible 1-2 years in length with a renewal options. Look for ways to protect yourself with a termination clause if the office no longer makes economic sense.

Subleasing space from another doctor with a different and/or complementary specialty is a smart way to minimize your rental obligation for a satellite office. This arrangement may allow you to take advantage of shared common areas and support staff. With an existing doctor’s office, you can eliminate or at least reduce the tenant improvement exposure. In a sublease from another physician group or even a timeshare, you can limit the amount of space you need to about 500 square feet, which would include a couple of exam rooms and part of the reception area or even just to ½ day increments.

In comparison, the smallest suite you would lease on your own would be double that amount at about 1,000 square feet. In that scenario, you would pay the full cost of two or three exam rooms, an office, a lab space and a work area.

Most practices will know after a year of operations if they are going to gain traction in a market with their satellite office. At that time you can evaluate a longer-term arrangement.

Diagnosis: It may be beneficial to consult a medical leasing specialist. There are often existing subleases available (at a discount) for medical suites that have been vacated by another group. A good broker will know the market and available ready medical suites where advantageous deals can be achieved minimizing the commitment, expense, risk to the physician, and the practice.