“...despite the fact that real estate comprises as much as 35 percent of the typical health care system’s balance sheet, many health care providers do not consider their real estate holdings as a portfolio of assets and do not manage them to provide strategic advantage.”
Price Waterhouse, LLP

HOSPITALS AND HEALTH SYSTEMS
benefit by:

- Adding cash to the balance sheet, while preserving debt capacity, to improve key financial ratios for rating agency purposes. Analysts assign greater credit to "Cash" than to "Property, Plant and Equipment" combined with debt.

- Improving rates of return by investing in high margin, mission-critical activities rather than low margin real estate.

- Resolving uncomfortable role conflicts that arise when the hospital acts as landlord to doctor tenants, while avoiding potential Stark Law issues.

- Maintaining "operational" control of the facility, such as prohibitions against competing ancillary services.

PHYSICIAN CLINICS
benefit by:

- Eliminating physicians' personal debt guarantees associated with the real estate mortgage.

- Resolving dissonance between physician real estate owners and non-participating clinic physicians.

- Freeing capital trapped in illiquid "bricks and mortar", permitting the doctors to invest in higher margin liquid assets.

- Maintaining control of the property's management and operations.