Challenges for lease managers in the healthcare industry
Managers of healthcare properties, particularly those with large portfolios of leased properties, have the difficult job of providing cost-efficient, consistent, and compliant services in a highly dynamic and demanding environment.
Some of the issues they face include:
Complex and critical services
Unlike standard office spaces, healthcare facilities must conform to strict design and fit-out standards. Factors like temperature and radiation-controlled environments, or secure areas for patient privacy often require significant modifications, especially in buildings not originally designed for healthcare purposes.
This influences the selection of leased properties and the structure of leases, often requiring unique terms, conditions, and clauses. The extra investment involved also underscores the importance of optimising each lease agreement.
Capex complications
Healthcare is an equipment-intensive industry and lease terms can directly impact a healthcare organisation’s decision to purchase equipment for a particular location, especially when considering lifespans and medical insurance rebates.
Medical practices and diagnostic centres must carefully consider leasing terms when planning capex and new equipment purchases to ensure that property and equipment leases are well-aligned. Longer leases are commonplace, and they often come with additional administrative burdens.
Geographic and operational diversity
An expanding portfolio of leased properties can present challenges for unprepared operators in a dynamic market for healthcare services where rapid growth through mergers and acquisitions is the norm.
Ensuring the business can accommodate growth without significant cost blow-outs and disruptions requires skillful property and lease management.
Lack of centralised data
Like many other traditional industries with legacy systems and processes, healthcare property managers often must deal with fragmented property and lease data, making it difficult and time-consuming to locate information when required. Sharing important financial information with other stakeholders is also challenging.
The inefficiencies that come with silos and spreadsheets lead to ineffective collaboration and a range of contract risks. These include missing key dates, defaulting on clauses and being subject to inaccurate CPI adjustments.
Failures in forward planning
Without a clear understanding of current lease terms, upcoming renewals, and the associated costs, healthcare property managers may find themselves unable to plan effectively for the future. This can lead to missed opportunities for renegotiation, cost savings, or adjustments that align better with the business’s strategic direction.
Seven benefits technology brings to healthcare lease management
Innovative healthcare operators are increasingly turning to specialised property and lease management solutions to centralise information, provide alerts on critical dates and improve the way essential information is shared among key healthcare decision-makers.
Dedicated lease management platforms include the following range of benefits:
1. Simplified lease and equipment contract management.
Flexible technology solutions can be configured to accommodate any contract, not just property leases. This includes service, safety, regulatory or any other type of agreement – for a specific location or on a business-wide basis. This is a huge bonus for healthcare providers with large lease portfolios and diverse equipment inventories, making it easier to track and optimise use and reduce costs.
2. Easy maintenance tracking.
Lease management software also enables healthcare organisations to track maintenance schedules and repair histories of leased equipment. This allows them to proactively schedule upkeep and repairs, reducing downtime and prolonging the life of their equipment.
3. Enables informed CAPEX decision-making.
Effective lease management software can aid healthcare organisations in making more informed CAPEX decisions as equipment life cycles come to an end.
4. Enhanced knowledge sharing across teams.
Digital document banks can encrypt and integrate data in dedicated accounts, making it easy to upload and store leases, plans, drawings, permits, images, emails or virtually any relevant digital file. This removes the need to flick through filling cabinets and gives you access to critical documents at your fingertips.
5. Easier finance and accounts reporting.
Unified source data allows for instant reporting on property expenses for any financial period – rent roll reconciliations, annual forecasts, lease commitments, and payments tracking, significantly reducing reporting time.
6. Improved risk management and strategic planning.
The right tools can provide email alerts for critical dates such as lease and contract expiry/option dates, rent reviews, insurances, early terminations, programmed maintenance, mid-term refurbishments, and any other custom lease clauses. Software solutions can bridge the gaps that a lack of visibility creates, providing the control necessary for better immediate and long-term decision-making.
7. Improved compliance.
A good lease management system simplifies compliance, covering both the operational standards mandated by healthcare regulatory bodies and the financial regulations set by IFRS16. The process is supported by centralised access to lease agreements, maintenance records, and essential documents for audits and inspections.
Expert lease management software for healthcare
In a highly regulated and complex industry like healthcare, failing to stay on top of property management can lead to bigger headaches than in many other sectors.
MRI Software truly understands the unique challenges healthcare operators face with lease, facilities, and equipment management.
Our lease management software is more than just a place to store data; it’s an integrated solution designed to make managing information easier and to enhance strategic decision-making capabilities for healthcare property managers and their teams.
The finance capabilities can be used to verify, approve and process all rental invoices, resulting in huge time savings and workflow benefits for healthcare businesses with large and geographically diverse portfolios.
MRI’s lease management solution helped us to identify and reclaim numerous landlord billing errors and overcharges, particularly around CPI reviews.
– Hamish McGowan, National Property Manager, I-MED Radiology Network