Urgent care clinic CAM overcharge guide
Urgent care clinics occupy an unusual position in the commercial leasing landscape. Many are located in retail strip malls — spaces originally designed for general merchandise or food service — and carry the CAM obligations of a retail tenant while operating with the infrastructure requirements of a medical facility. Others lease in medical office buildings, where the CAM structure and cost composition are different but the overcharge patterns are just as predictable.
I built CAMAudit because overcharges in these reconciliations rarely announce themselves. A line item for "HVAC system upgrade" does not explain whether that upgrade was a routine equipment repair or a capital improvement that should be excluded from the current-year CAM pool under your lease. An "after-hours utility surcharge" does not explain whether the methodology used to compute your share matches what your lease allows. The pattern I found when running samples through CAMAudit's detection rules: urgent care tenants are regularly billed for costs that either belong in a different category, are computed on an incorrect base, or are allocated at a share that does not match the lease.
40% of CAM reconciliations contain material errors (Tango Analytics / PredictAP, 2023)
HVAC upgrades for infection control: CapEx or OpEx?
Urgent care clinics require HVAC systems capable of handling higher air change rates, directional airflow for infection control, and often HEPA filtration — standards that a standard retail or office HVAC system does not meet. When a landlord upgrades or replaces HVAC equipment to meet these requirements, the cost classification determines how it flows to you.
If the landlord treats the upgrade as a current-year operating expense, the full cost lands in the CAM pool for the year of installation and is allocated across all tenants, including you.
If the landlord correctly treats it as a capital expenditure, it is either excluded from CAM (if your lease excludes capital items) or amortized over the useful life of the improvement (typically 10 to 20 years for HVAC equipment), with only the annual amortized share flowing to you.
The practical difference: a $120,000 HVAC replacement hitting your CAM pool as a current operating expense means you might absorb $18,000 to $24,000 in a single reconciliation year, depending on your pro-rata share. If the same replacement is amortized over 15 years, your annual share is $1,200 to $1,600.
Where the issue gets complicated: if the HVAC upgrade exists specifically because of your medical use — infection control requirements that no other tenant in the center has — your lease may require that the cost be treated as a tenant-specific improvement rather than a shared building cost. Check your lease for language around improvements required by a specific tenant's use or occupancy type.
Parking lot accessibility compliance
Urgent care clinics generate predictable foot traffic patterns. Patient arrivals skew toward early morning and evening hours. Patients often arrive in distress and may have limited mobility. ADA-compliant accessible parking, van-accessible spaces, and drop-off zone markings are not just useful — they may be legally required based on your clinic's patient volume.
When a landlord makes accessibility improvements to the parking lot — expanded accessible spaces, curb cuts, ramped walkways, tactile warning strips — and includes those costs in CAM, the key question is capital versus operating expense, as with HVAC.
Accessibility improvements that are one-time installations extending the functional life of the parking facility are capital expenditures. They should not appear as current operating expenses in your CAM reconciliation. If your lease excludes capital items from the CAM pool or requires amortization, request the landlord's capital improvement log for the period under audit and verify how parking lot accessibility work was classified.
A secondary issue: if accessibility improvements were made primarily because of your clinic's patient population and are attributable to your specific use, the same tenant-specific improvement argument applies. The costs may belong outside the general CAM pool entirely.
After-hours utility allocation
Urgent care clinics frequently operate outside standard business hours — evenings, weekends, some holidays. Most retail strip mall neighbors do not. This creates a legitimate question about how shared building utility costs — HVAC, lighting, common area power — are allocated when your clinic is one of the few tenants running equipment late into the night.
There are two ways landlords handle after-hours utility allocation:
Direct metering: Your clinic's utility consumption is metered separately and billed directly to you. No ambiguity.
Estimated or formula-based allocation: The landlord estimates your utility share based on square footage, operating hours, or both, and runs that through CAM. This is where overcharges appear.
If your lease specifies a methodology for after-hours utility allocation — hours of operation, estimated consumption per hour, or a specific formula — verify that the landlord is using that methodology. If your lease does not address after-hours utilities specifically, you may be entitled to question whether a formula-based allocation is authorized at all.
For utility overcharge issues, the documentation to request is the utility allocation schedule: how the landlord computed each tenant's share of building utilities, including the formula, the metering data or estimates used, and the base period.
Mixed-use buildings: pro-rata share in medical office
Urgent care clinics that lease in medical office buildings face a distinct pro-rata share environment. Medical office buildings often contain a mix of tenant types — physician practices, imaging centers, specialty clinics, administrative tenants, and sometimes ground-floor retail. The cost composition of the building differs significantly from a retail strip, and the pro-rata share calculation can be more complex.
Pro-rata share errors to watch for in medical office buildings:
Denominator exclusions that benefit the landlord. If the landlord's medical building management company occupies administrative space in the building, that space should typically be included in the denominator. If it is excluded, your share increases.
Tenant mix changes mid-period. If a large tenant vacated during the year and the landlord did not adjust the denominator accordingly (or adjusted it in a way that shifts more cost to remaining tenants), your mid-year share may be overstated.
Building-within-a-building configurations. Some medical office campuses have multiple structures with shared infrastructure. If costs for shared amenities are allocated across buildings based on a denominator that is not clearly defined in your lease, the allocation method may not match what you agreed to.
Request the rent roll showing all tenants and square footage for the full audit period, including move-ins and move-outs. Compare the denominator in your reconciliation to what the rent roll supports.
Chain operators vs. independent clinics: lease quality matters
National urgent care chains — GoHealth, CityMD, NextCare, Concentra — negotiate leases with experienced real estate teams and typically have better CAM protections: defined exclusion lists, management fee caps, capital expenditure carve-outs, and explicit audit rights. Independent operators and smaller regional chains often do not have the same leverage in lease negotiations and end up with less protective lease terms.
If you are an independent urgent care operator, the absence of an explicit CAM cap or a defined capital expenditure exclusion does not mean those overcharges are impossible to dispute — it means the dispute is more complex. Many of the most recoverable charges are arithmetic errors (wrong denominator, management fee above the rate that does appear in the lease, duplicate billing) that exist regardless of how favorable or unfavorable the broader lease terms are.
CAMAudit runs the same 14 detection rules regardless of whether you're a chain clinic or an independent operator. The rules that catch math errors — pro-rata share denominator, management fee cap, true-up verification — apply to any lease.
Management fee on ineligible bases
Management fees in medical office and retail leases are typically capped at a percentage of eligible operating expenses — often 3% to 5%. In urgent care leases, overcharges arise from two common patterns:
Fee applied to a broader base than the lease allows. If the lease caps the management fee as a percentage of CAM expenses, but the landlord computes the fee on total building revenues including base rent, the resulting fee is higher than authorized.
Administrative or supervisory fees stacked above the management fee. In medical office buildings, property management structures often include a management fee plus an administrative fee, a bookkeeping fee, or an oversight fee. If the combined total exceeds the lease cap on management fees, the excess is an overcharge.
Pull the management fee computation from your reconciliation support and compare the effective rate to the cap in your lease.
What to audit in an urgent care CAM statement
The review sequence for urgent care tenants:
Step 1: Identify HVAC and mechanical costs. Any line items for HVAC maintenance, replacement, or upgrade. Determine whether the costs are current-period maintenance (operating expense) or equipment replacement (capital expenditure). Check your lease's capital threshold.
Step 2: Review parking lot and accessibility costs. Any one-time improvements to the parking lot. Confirm capital vs. operating classification.
Step 3: Check utility allocation methodology. Request the utility allocation schedule and verify the formula against your lease.
Step 4: Verify the pro-rata denominator. Request the rent roll. Compare total leasable area in the reconciliation to what the rent roll shows.
Step 5: Compute management fee compliance. Locate the cap in your lease and verify the computation from reconciliation support.
Step 6: Identify excluded cost categories. Review your lease's exclusion list against each line item in the CAM pool.
Upload your CAM reconciliation and lease to CAMAudit. The scan runs the full detection rule set and returns findings with lease citations in under 15 minutes.
Questions urgent care operators ask about CAM
Frequently Asked Questions
Our landlord replaced the HVAC last year and the entire cost hit our CAM. Is that allowed?
It depends on your lease's treatment of capital expenditures. Most leases define a dollar threshold above which costs are classified as capital improvements rather than operating expenses. HVAC equipment replacement typically qualifies as a capital expenditure. If your lease excludes capital items from CAM or requires amortization, only the annual amortized share should be in your reconciliation — not the full replacement cost. Request the landlord's invoice and capital improvement log to confirm how the cost was classified.
We operate until 10 PM every day. Can the landlord charge us more for building utilities than other tenants?
Only if your lease includes a methodology authorizing after-hours utility allocation. If your lease specifies a formula — hours-weighted allocation, direct metering, or another approach — verify that the landlord used that methodology. If your lease does not address after-hours utilities specifically, question whether the landlord has authority to use a formula-based allocation at all. Request the utility allocation schedule to see how your share was computed.
We're in a mixed medical office building. How do I check my pro-rata share?
Request the rent roll showing all tenants, their square footage, and the periods they were in occupancy during the audit year. Add up the total leasable area from the rent roll and compare it to the denominator the landlord used in your reconciliation. Your lease's definition of gross leasable area determines what should and should not be included in the denominator. If landlord-occupied space or vacant space is excluded from the denominator when your lease requires it to be included, your share is overstated.
How long do I have to audit a CAM reconciliation from a prior year?
Your audit rights clause specifies the window — typically 12 months from receipt of the annual reconciliation statement, sometimes 18 or 24 months. Some leases allow a three-year lookback on audit requests even when individual reconciliation windows are shorter. Check your lease's audit rights provision for the specific deadline. Missing the window can bar recovery regardless of how significant the overcharge is.
Sources
- Medical Group Management Association (MGMA). Commercial leasing resources for medical practice operators. https://www.mgma.com/
- IREM (Institute of Real Estate Management). Operating expense auditing resources for commercial tenants. https://www.irem.org/
- Tango Analytics. "CAM Reconciliation Errors and Tenant Recovery." https://tangoanalytics.com/
- PredictAP. "State of CAM Reconciliation." https://predictap.com/