Glossary

Health-System Affiliation (MOB Tenancy)

Also known as: health system credit tenancy

The degree to which a medical office building's tenancy is tied to a hospital or health system -- whether through direct health-system leases, employed-physician group leases, or independent physician practices with informal referral relationships -- a key determinant of MOB credit quality and lease durability.

A MOB leased directly to an investment-grade health system carries materially different credit risk than one leased to independent physician practices, since health-system leases benefit from the system's institutional credit and its own strategic incentive to maintain the space (particularly if the building supports an affiliated service line), while independent physician group leases are only as strong as the practice's own economics and are more exposed to physician retirement, practice consolidation, or acquisition by a competing health system that could relocate the practice. The trend of health systems directly employing physicians (rather than physicians operating independent practices) has generally strengthened MOB credit quality over time by converting fragmented small-tenant risk into consolidated health-system lease exposure, though it also concentrates rollover and renewal risk in a single large tenant relationship.