If you lease office space, you've probably experienced the anxiety of coming up with the rent every month, regardless of whether you see 100 clients or 20.
Some clinicians offset this major expense by subletting their space when they're not using it - e.g., an evening or two per week, or on weekends. Not only does this help pay the rent; it also provides affordable office space for mental health professionals who want to or need to work part-time.
A sublet arrangement is different from hiring an employee or an independent contractor. The person who uses the part-time space would be considered a subtenant. Thus, the clinician holding the lease would function more as a landlord than as a clinical supervisor or a coworker.
If you are a lease-holder and considering subletting your office space part time, it's important to take into account legal, contractual, ethical and personality factors.
Legal and contractual factors
Make sure that your lease does not prohibit you from subletting. If it does, and you still want to generate extra income, your lease may allow (or at least be silent) on the matter of hiring an employee part-time. This is more complicated and requires additional expense and paperwork, however.
Check with your premises liability and professional liability insurance carriers. Make sure that you are covered for any lawsuits that may be brought against you by the subtenant's clients for trips and falls, as well as for alleged malpractice. Even though the subtenant is not part of your practice, he or she may be perceived as such, just because the services occurred in your office. Many malpractice insurers allow you to add a subtenant to your policy at little or no extra cost.
Decide what is included in your sublet agreement. Will the other clinician have access to to office machines such as fax, computer and copier? How about office supplies such as paper, notepads, postage, testing materials, etc.? Will you provide a sign outside or on the door with the other clinician's name?
If you provide file storage, it should be a locked unit, separate from your own office files. That way, if you or the subtenant ever get audited for taxes, it will be clear that your records (and therefore your practices) are independent of one another.
Formalize the terms of office use and payment. A formal signed contract with your subtenant may seem unnecessary. However, if things don't work out as expected (which is often the case) a contract will save you both a lot of potential problems and conflicts. Include the following, which are all negotiable with your subtenant:
- Payment structure - Will the subtenant pay you by the month? By client hour? Will they have specific reserved times to use your office? Will they pay for this time whether they use it or not (e.g., for client no-shows and cancellations, or by their own choice for vacation or maternity leave)?
- Flat fee payment vs percentage - Some clinicians charge a percentage of what the subtenant collects in fees. Although this makes it easier on the other person's cash flow, we do not recommend it, because in certain circumstances it could be interpreted as fee splitting, which is considered unethical by most mental health professions. A flat fee is simpler and more predictable anyway.
- When will payment be due? If you sublet by the month, treat it as most rental agreements; i.e., collect the subtenant's rent in advance at the beginning of the month. If you have a time-limited lease (e.g., one year) you might want to collect first and last months' rent in advance. If you sublet by the hour, treat it as reserved time for occupancy, similar to a hotel or seat reservation. Getting paid up front is preferable for you.
- Sign a reciprocal HIPAA Business Associates Agreement (BAA), which binds both of you to maintain confidentiality of protected patient information that you may encounter in the course of your mutual business transactions.
- Provisions for damage - Consider collecting a refundable security deposit.
- Provisions for termination and/or change of the agreement - This is especially important if you have a sublease with no specific end date. Build into the agreement that you may increase the other clinician's rent if your own rent increases (or for any other reason). Spell out the terms of how much notice each party must give prior to termination, and what the responsibilities of each will be.
Disclaimer: The above recommendations are not intended as legal or financial advice. Before entering into any sublease agreement, you are advised to check with your own legal and financial consultants.
Check the background of your potential subtenant. Verify the person's professional license and find out if there are any pending complaints. Check with law enforcement agencies to rule out criminal history. This may seem like overkill, but when someone is sharing your office space, your professional reputation is on the line. Better to be cautious.
Decide in advance how to handle referrals that you and the subtenant might make to one another. Put procedures in place that would counter any ethical prohibitions against fee-splitting (see above). If one of you has an existing client that you want to refer to the other for treatment, get the client's signed release to share records. Because you and the subtenant have separate practices, such a referral would not be considered in-house.
Protect your own clients' privacy. Lock up your client records every night, along with appointment books, billing and bookkeeping records, scribbled notes, and any other information that could identify your clients - including stuff in the trash.
Since you and your subtenant will probably not see much of each other, it's a good idea to schedule regular times to talk, either in person at "shift change" or on the phone. This will help avert or minimize potential problems and misunderstandings that could escalate into resentment.
Sharing office space entails relinquishing absolute control over your environment. Imagine coming to work in the morning, and seeing crumbs on the carpet and a half-full cup of cold coffee from the night before, when your colleague was seeing clients in the office. If this scenario makes you cringe, it may be more trouble than it's worth to sublet your office.
Thanks to Dr. Jeff Zimmerman, who contributed to this post.
You may also be interested in this post on adding a clinician to your solo practice.