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15 Critical Details When Leasing Space for an ASC

Leasing tenant space for an ambulatory surgical center presents a number of unique concerns that should be evaluated and negotiated by the ASC tenant and landlord, as well as their advisors, prior to entering into a lease agreement. The following are fifteen items that should be taken into consideration.

August 8, 2023

1. In states that require a Certificate of Need (CON) to establish an ASC, there is often a requirement that a lease be drawn prior to the CON being accepted. With the length of time to attain CON approval taking months or even years, it is necessary to include contingencies in the lease dictating start dates or potential termination based on CON approval. Similar contingencies should be included related to achieving successful licensure.

2. CMS Conditions for Coverage require the ASC to be physically separate from other tenants, especially other medical facilities. The ASC must be a “distinct entity” and must be separated from other facilities by a minimum one hour fire barrier. Under certain circumstances, the ASC must be separated from tenants on floors above and below as well. Access to other tenant spaces for this and other aspects of the construction must be contemplated in the lease.

3. It is common for landlords to require access to tenant spaces for maintenance and repairs among other things. In the case of an ASC, this can produce deleterious effects if not properly controlled. Access to restricted areas should be limited to off hours and provisions should be made to maintain sterile conditions. Patient privacy, including access to patient information, should be respected.

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