The operators of medical centres, private hospitals and dental clinics are facing an income hit that could put them under financial strain after the introduction of new rules that cap how much rent they can charge pathology providers.
The rules, which took effect on July 1 prevent head tenants – usually doctors – from subleasing space to pathology providers at rents more than 20 per cent above local market rates.
While laboratories take up only small amount of space in a typical medical centre – about 15 to 50 square metres – they have to date paid rents as high as $1500 to $10,000 per square metre compared with between $300 and $450 per square metre paid by the head tenant.
These high rents have brought in an additional income stream for head tenants of the medical centre. But they will now be required to lodge all new leases with Medicare for review, with the impact expected to be a dent in the profitability of clinics that have been charging inflated sub-lease rates.