Guest Column

Telemedicine leases: So the doctor can always ‘see’ you

November 29, 2013
| By Rob Davies |
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The doctor will see you now — even though he’s in a hospital 200 miles away.

We can thank the rise of telemedicine for this phenomenon, which allows physicians to deliver health care services to patients without being in the same room. While telemedicine has been on the scene for the past four decades, the past several years have seen explosive growth in the practice — and with federal health care reform looming, we only expect this trajectory to continue.

At its most basic level, telemedicine involves two-way communication in real time between a patient and a remote-site physician. The technology can be as straightforward as computer monitors set up to videoconference with one another, or as sophisticated as RP-VITA remote presence robots. These mobile devices stand 5 feet tall, feature a screen that projects the physician’s face and can zip to a patient bedside or ER automatically for a remote consult.

Telemedicine is gaining the most traction in rural or remote settings, which often don’t have ready access to specialty physicians. For example, rather than asking a Baldwin woman with a high-risk pregnancy to make the long trip to Grand Rapids to see her doctor, she can arrange to have an ultrasound in a facility near home and let her physician manage the screening via remote technology.

Of course, new technology brings with it a host of issues that the law has yet to address. While the U.S. House is beginning to consider the Telemedicine for Medicare Act of 2013, health care providers are struggling with unanswered questions over these types of leasing and licensing arrangements.

For physicians not practicing at their own hospital, they will need to lease or license space at the health care facility where they will be “seeing” a telemedicine patient. This may be a one-time temporary agreement or an ongoing arrangement.

In either case, the Stark Law and the federal anti-kickback law and regulations will come into play. Among other compliance issues, these federal laws prohibit physicians from accepting payment — either directly or indirectly — in exchange for a referral. Stark has strong mandates relating to lease and licensing arrangements between hospitals and physicians, requiring the payment of fair market value rent, prohibiting per patient payment relationships, length of term of leasing arrangements and other compliance mandates.

Let’s say, for example, a hospital commits to filling a physician’s schedule for two days a week for telemedicine consults. In this scenario, a number of considerations come to mind:

**How do you come to a fair market value conclusion? Often, it is necessary to hire an appraiser to complete an appraisal of these arrangements, which is a costly undertaking with regard to a very short term and low cost leasing arrangement.

**If a physician is unable to fill his schedule, can the lease be amended? Under Stark regulations, leases must be set in advance using specific time periods and establishing costs. Failure to do so could generate large penalties. In the case of a telemedicine lease at a rural hospital, though, the demand may fluctuate and require more flexibility.

**How are personnel issues handled? Say a technician who has been hired to run a piece of equipment gets fired. Is the physician required to send someone to the remote site on his dime? Does the remote hospital have to provide a fill-in? What happens under the lease if scheduled days are missed because of staffing turnover or a federal holiday?

**Who pays for technology costs? Sometimes it may be as simple as providing an Internet connection, while at other times it may require more sophisticated equipment. The state of Michigan is giving grants to some rural hospitals to assist in the cost of buying the specialty equipment needed for telemedicine visits to help defray overhead expenses. However, there’s no guarantee that all health care facilities will have access to the necessary equipment at the appropriate time.

There are a number of other issues involved as well, from credentialing to billing. But the benefits of telemedicine — expanding access to care, improving quality and managing difficult patient populations — ensure that the practice is around to stay. Now we just need to be sure that the proper lease and license documents are in place so that the doctor can be seen — and paid.

Rob M. Davies is a partner at Warner Norcross & Judd LLP. He concentrates his practice in real estate law and commercial finance law with an emphasis on leases, development, acquisitions, sales and loan documentation. He can be reached at

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