Real Estate II: Time Share Leasing Arrangements Under the Stark Law

Episode Date: February 9, 2022

In this episode of Stark Integrity, host Bob Wade (“Captain Integrity”) builds on the prior discussion of real estate compliance by focusing on a nuanced and often misunderstood area: time share leasing arrangements under the Stark Law.

These arrangements are common in healthcare, particularly where providers share space or equipment on a part-time basis. However, their flexibility also creates potential compliance risk if not structured correctly.

What Is a Time Share Arrangement?

A time share arrangement typically involves a physician or group using space, equipment, or services on a periodic or scheduled basis, rather than through a traditional full-time lease.

For example:

• A specialist using clinic space two days per week
• A physician accessing equipment during designated time blocks
• Shared office arrangements across multiple providers

While practical, these arrangements must still comply with Stark Law requirements.

Why Time Share Arrangements Are Risky

This episode highlights that time share arrangements can raise concerns because they may resemble per-use or variable payment structures, which are closely scrutinized under Stark.

If payments fluctuate based on usage—especially where referrals are involved—the arrangement may fall outside of a valid exception.

Key Compliance Considerations

Bob outlines the critical elements organizations must evaluate when structuring time share leases:

Fixed, Set Payments

Payments should generally be set in advance and not tied to the volume or value of referrals or services provided.

Fair Market Value

As with all Stark arrangements, payments must reflect fair market value. This includes ensuring that the rate for part-time use aligns with market conditions for comparable arrangements.

Defined Schedule and Terms

Time share arrangements should clearly define:

• When the space or equipment is used
• The duration of the arrangement
• The responsibilities of each party

Vague or informal arrangements increase compliance risk.

Commercial Reasonableness

The arrangement must make sense operationally. Organizations should be able to explain why a shared or time-based arrangement is necessary and appropriate.

Common Pitfalls

This episode highlights several areas where organizations often get into trouble:

• Structuring payments based on percentage of revenue or per-click usage
• Failing to clearly document time allocations or schedules
• Allowing arrangements to continue after agreements expire
• Treating time share arrangements as “less formal” than traditional leases

These issues can quickly turn a practical solution into a compliance concern.

Practical Takeaways

The key takeaway from this episode is that time share arrangements require just as much rigor as traditional leases. Organizations should:

• Ensure payments are fixed and consistent with FMV
• Clearly document all terms, including schedules and responsibilities
• Avoid any structure that could be interpreted as referral-based
• Regularly review arrangements for ongoing compliance

With proper structure and oversight, time share arrangements can be both efficient and compliant.

Final Thoughts

This episode reinforces that flexibility in healthcare operations must be balanced with regulatory discipline. Time share leasing arrangements can offer practical solutions—but only when structured carefully within the Stark Law framework.

For compliance professionals and healthcare leaders, the goal is clear: create arrangements that meet operational needs while maintaining strict adherence to regulatory requirements. When done correctly, even complex shared-use arrangements can stand up to scrutiny.

Click here to listen to this Stark Integrity Podcast Episode:
https://podcasts.apple.com/us/podcast/real-estate-ii-time-share-leasing-arrangements-under/id1588939373?i=1000549733337&l=fr-FR