Legal Considerations Before Opening a New Medical Office Location in California
Opening a new medical office location is a major step for any California medical practice. A second or additional location can create new opportunities for growth, patient access, and revenue. At the same time, it can also create new legal, employment, lease, licensing, and operational risks. Before opening a new office, a medical practice should review its structure, contracts, employees, insurance, and compliance obligations. Here, our California business lawyer for medical practices highlights key legal considerations before opening a new medical office location.
Review the Medical Office Lease Before Signing
A new location usually starts with a commercial lease. Medical office leases should be reviewed carefully before they are signed. The lease should address permitted use, build-out obligations, tenant improvements, parking, signage, assignment rights, maintenance responsibilities, option to extend lease or early termination, and responsibility for compliance with applicable laws.
Medical practices should also consider whether the space is suitable for healthcare use. The lease should allow the specific services the practice intends to provide. A general office lease may not be enough if the practice needs exam rooms, specialized equipment, medical waste handling, imaging equipment, or other healthcare-specific uses. A California business attorney can help review the lease before the practice commits to the new location.
Confirm the Entity Structure Supports the New Location
Before opening another office, a California medical practice should confirm that its current business structure supports the expansion. Many physician practices operate as professional medical corporations. If the same entity will operate the new location, the practice should review its corporate documents, shareholder agreements, management authority, insurance coverage, and financial obligations.
If a separate entity will be used, the practice must consider whether that structure is legally appropriate. California’s corporate practice of medicine doctrine restricts who may own and control a medical practice. Ownership and management structures should be reviewed carefully so that the practice does not create compliance issues while trying to expand. California’s fictitious name permit rules may also apply when physicians or medical corporations practice under a name other than the name on the physician’s license or professional corporation name.
Update Employment Policies for Multiple Locations
Opening a new medical office can change how employees are managed. Medical practices should review employee handbooks, wage and hour practices, meal and rest break policies, timekeeping procedures, supervisor responsibilities, and reporting channels. California employment law is strict, and multi-location operations can create inconsistent practices if policies are not clearly documented.
The practice should also decide whether employees will work at one location or move between offices. If employees travel between locations during the workday, the practice should evaluate wage, mileage, scheduling, and timekeeping issues. Managers at each location should understand the same policies so that employment decisions are applied consistently.
Review Patient Records, Privacy, and Access Procedures
A new location can create patient record and privacy issues. Medical practices should decide how patient records will be accessed, stored, transferred, and protected between offices. If the practice uses an electronic health record system, it should confirm that access permissions, staff roles, and privacy safeguards are properly set up for the additional location.
The practice should also consider how patient communications, appointment scheduling, billing, and medical record requests will be handled. Inconsistent procedures between offices can lead to confusion and risk. Before opening, the practice should have clear internal procedures for records, privacy, and patient access.
Evaluate Insurance, Liability, and Vendor Contracts
A new medical office may require updates to insurance policies and vendor contracts. The practice should review professional liability coverage, general liability insurance, employment practices liability insurance, cyber coverage, workers’ compensation coverage, and property insurance. The practice should confirm that the new location is covered before seeing patients there.
Vendor agreements should also be reviewed. Billing companies, management services organizations, IT providers, cleaning services, medical waste vendors, equipment lessors, and supply companies may all need updated contracts. The practice should understand who is responsible for compliance, confidentiality, data protection, service failures, and termination rights.
Confirm Licenses, Permits, and Public-Facing Information
Depending on the practice and services offered, a new office may require updates to public-facing business information, permits, payer contracts, credentialing, signage, or professional listings. Medical practices should confirm whether any filings or updates are required before opening the new location.
This is especially important if the practice will operate under a trade name, brand name, or professional corporation name. The Medical Board of California explains that a fictitious name permit may be needed when a licensed physician, professional corporation, partnership, or group practice uses a name other than the physician’s licensed name in public communications, advertisements, signs, or announcements.
Contact Our Bay Area Business Lawyer for Medical Practices Today
Lynnette Ariathurai is a California business law attorney with experience advising medical practices, physicians, and healthcare businesses. If you have any questions about opening a new medical office location in California, reviewing a medical office lease, or structuring a medical practice expansion, we can help. Contact us today for a fully confidential consultation. With an office in Fremont, we work with medical practices throughout the San Francisco Bay Area, including Newark, Union City, Hayward, San Leandro, Milpitas, San Jose, Santa Clara, and the East Bay.