Your Medical Practice Overhead Includes CAM Overcharges. Here's How to Check.
Medical practice overhead averages 60% of collections, according to MGMA benchmarking data. Staffing takes the largest share. Occupancy costs sit in second place, typically running 6% to 10% of collections for practices in leased medical office buildings.
That occupancy line item is where CAM overcharges hide.
Most practice managers track supply costs, lab fees, and staffing ratios with precision. The annual CAM reconciliation statement from the landlord gets filed with far less scrutiny. It arrives as a lump-sum adjustment, often with a check due within 30 days, and the line-item detail is dense enough to discourage close review.
The result: practices routinely overpay $5,000 to $15,000 per year in CAM charges that their lease does not authorize. Over a standard 7-year medical office lease, that range compounds to $35,000 to $105,000 in excess occupancy costs that flow straight through to practice overhead. The margin erosion is real, but it is not shown to clients on the P&L because the overcharge is buried inside what looks like a fixed cost.
I built CAMAudit to surface exactly this kind of problem. The tool runs a forensic comparison of your CAM reconciliation against your lease terms and flags every line item that exceeds what your lease allows. Below is a breakdown of where CAM hides in medical practice overhead, the three most common errors in medical leases, and a 15-minute check you can run right now.
Practice Overhead Rate: The percentage of a medical practice's gross collections consumed by operating expenses. MGMA benchmarks place the median overhead rate at approximately 60%, with occupancy costs (base rent, NNN charges, and CAM) typically comprising 6% to 10% of that total. When CAM overcharges inflate the occupancy component, the overhead rate climbs without any corresponding increase in revenue or service capacity.
Where CAM Hides in Your Practice Overhead
On most medical practice P&L reports, the occupancy cost line is a single number. It combines base rent, NNN charges (property taxes, insurance, and CAM), and sometimes utilities into one monthly figure. The practice management software records it as "rent" or "occupancy," and the office manager reconciles it against the bank statement.
That bundling is the problem.
Base rent is a fixed number in your lease. You can verify it in seconds. Property tax and insurance pass-throughs are usually verifiable against county records and the building's insurance declaration page. But CAM is a variable charge, recalculated annually by the landlord's property management company, and the reconciliation statement that determines your annual true-up is where billing errors accumulate.
Here is how the components typically break down for a medical practice in a MOB:
| Component | Typical Range ($/SF/year) | Verifiability |
|---|---|---|
| Base rent | $22-$38/SF | Fixed in lease, easy to verify |
| Property tax pass-through | $3-$8/SF | County records available |
| Insurance pass-through | $1-$3/SF | Declaration page available |
| CAM charges | $8-$18/SF | Requires line-item audit |
For a 3,000 SF medical suite paying $14/SF in CAM, the annual CAM bill is $42,000. A 10% overcharge is $4,200 per year. Over a 5-year lookback period, that is $21,000 in recoverable charges.
The per-square-foot costs for CAM in a medical office building run higher than standard office or retail because the shared building services include medical-grade HVAC maintenance, biohazard disposal infrastructure, specialized elevator systems, and clinical utility connections. Higher costs create more surface area for billing errors.
Where to look on your P&L: If your practice management system shows a single "occupancy" or "rent" line, break it apart. Pull your lease abstract and separate base rent from NNN. Then pull your most recent CAM reconciliation and compare the line items against your lease's operating expense definitions. That is where the overcharges live.
The Three CAM Errors Most Common in Medical Leases
After testing reconciliation samples from published audit cases through CAMAudit, three overcharge patterns appear with disproportionate frequency in medical office leases.
1. HVAC Capital Improvements Charged as Maintenance
Medical office buildings rely on HVAC systems that meet clinical-grade specifications: tighter humidity tolerances, higher air-change rates, and specialized filtration for procedure rooms and labs. These systems cost more to maintain, and they cost significantly more to replace.
The overcharge occurs when the landlord replaces an HVAC compressor, rooftop unit, or full system component and bills the entire cost through the CAM pool in a single year as a "maintenance" expense. Under most commercial leases and under GAAP and IRS standards, a full-system replacement that extends the useful life of the equipment is a capital expenditure. Capital expenditures are either excluded from the CAM pool entirely or amortized over the useful life of the improvement.
The difference matters at medical-building scale. A rooftop unit replacement for a 40,000 SF MOB runs $150,000 to $300,000. Charged in full in one year to a practice holding a 7.5% pro-rata share, the tenant absorbs $11,250 to $22,500 in a single reconciliation. Amortized over a 15-year useful life, the annual charge drops to $750 to $1,500.
CAMAudit flags large one-time equipment costs as excluded service charge candidates and identifies whether your lease classifies them as capital.
2. Pro-Rata Share Calculated on Rentable vs. Usable Area
The pro-rata share formula in your lease specifies a numerator (your leased square footage) and a denominator (the building's total leasable area). The overcharge occurs when the landlord's property management system uses a different denominator than what your lease defines.
In medical office buildings, this error is especially common because:
- Anchor tenant exclusions. If a hospital system or large specialty group occupies 40% of the building and has negotiated a separate CAM arrangement, the landlord may exclude that space from the denominator. If your lease does not authorize that exclusion, your share inflates.
- Vacant suite treatment. When suites sit empty during tenant turnover, some landlords remove vacant space from the denominator. A 40,000 SF building with 8,000 SF vacant effectively becomes a 32,000 SF building for denominator purposes, increasing every occupied tenant's share by 25%.
- Common area load factor discrepancies. MOBs often have shared corridors, waiting areas, and common restrooms that increase the rentable area beyond the usable area. Your lease may define your share using usable area, but the reconciliation may calculate it using rentable area.
For a 3,000 SF practice in a 40,000 SF building, the correct pro-rata share is 7.5%. If the denominator shrinks to 32,000 SF due to vacancy exclusions, the share jumps to 9.375%. On a $600,000 annual operating expense pool, that 1.875% difference costs the practice $11,250 per year.
"Practice managers track supply costs to the penny and negotiate group purchasing rates on every consumable. The same discipline applied to the annual CAM reconciliation routinely uncovers overcharges that have been quietly compounding for years." — Angel Campa, Founder of CAMAudit
3. Biohazard and Medical Waste Disposal in the CAM Pool
Medical office buildings generate regulated waste: sharps, biohazard materials, pharmaceutical waste, and pathological waste. Some MOBs maintain centralized waste management infrastructure, including collection rooms, licensed hauling contracts, and compliance tracking, and include those costs in the building's operating expense pool.
The overcharge occurs when your lease does not authorize the inclusion of medical waste disposal in CAM, but the landlord's reconciliation includes it anyway. This is common in buildings where some tenants generate high volumes of regulated waste (surgical centers, labs, imaging facilities) and others generate minimal regulated waste (administrative offices, physical therapy, behavioral health).
A centralized biohazard disposal contract for a mid-size MOB can run $30,000 to $75,000 per year. If your practice generates minimal regulated waste and your lease excludes "tenant-specific operating costs" or "costs attributable to specific tenants," you should not be paying a pro-rata share of the building's biohazard disposal contract.
CAMAudit flags waste management and disposal line items against your lease's operating expense inclusions and exclusion list.
How Advisors Check CAM Through the Partner Workflow
You do not need an auditor to determine whether your CAM reconciliation warrants a closer look. Here is a 15-minute triage you can run with two documents: your lease and your most recent reconciliation statement.
Step 1: Pull your lease's operating expense section. Look for the section that defines what the landlord can include in operating expenses and, critically, the exclusion list. Most medical office leases have 15 to 30 specific exclusions. Flag the exclusions related to capital expenditures, tenant-specific costs, and management fees.
Step 2: Pull your most recent CAM reconciliation. This is the annual statement the landlord sends showing actual operating expenses, your pro-rata share, the estimated payments you already made, and the true-up amount due or owed.
Step 3: Check the pro-rata share percentage. Divide your leased square footage by the building's total leasable area as defined in your lease. Compare that percentage to the one on the reconciliation. If they do not match, you have found an error.
Step 4: Scan for large one-time line items. Any single expense over $25,000 in a mid-size MOB is worth investigating. HVAC replacements, roof repairs, parking lot resurfacing, elevator modernization, and lobby renovations are common capital expenditures that should be amortized or excluded under most leases.
Step 5: Check the management fee percentage. Find the management fee line on the reconciliation. Divide it by the total operating expenses. Compare that percentage to the management fee cap in your lease. If the reconciliation shows 6% and your lease caps at 5%, the excess is recoverable.
If any of these five checks reveals a discrepancy, the reconciliation warrants a full audit. CAMAudit automates these checks as part of 20 detection rules against your lease and reconciliation data.
What $8,000 in Annual CAM Savings Means for a Medical Practice
An $8,000 annual CAM overcharge recovery is not just $8,000. Translated into practice economics, that number has operational significance.
Collections equivalent. At a 60% overhead rate, a practice must collect $20,000 in gross revenue to generate $8,000 in net operating income. Recovering $8,000 in CAM overcharges delivers the same bottom-line impact as $20,000 in new patient revenue, without adding a single appointment to the schedule.
Patient visits. MGMA data shows the median collections per primary care visit at approximately $150 to $200. Recovering $8,000 in CAM is equivalent to the net margin on 100 to 133 patient visits at a 40% margin. For specialty practices with higher per-visit collections, the visit-equivalent is lower, but the principle holds.
Staff hours. At a fully loaded cost of $25 to $35 per hour for a medical assistant, $8,000 funds 228 to 320 hours of staffing. That is roughly 6 to 8 weeks of full-time medical assistant coverage.
Compounding effect. CAM overcharges repeat annually unless disputed. An $8,000 annual overcharge over a 5-year lookback period is $40,000 in recoverable charges. Over the remaining term of a 10-year lease, it is $80,000 in future savings if corrected now.
The overhead reduction is permanent once the error is corrected. Unlike revenue growth, which requires ongoing operational effort, a CAM correction resets your occupancy cost to the correct amount for the remainder of the lease term.
FAQ
How do I know if my medical practice is overpaying CAM?
Pull your lease's operating expense section and compare it against your most recent CAM reconciliation statement. Check three numbers: your pro-rata share percentage against the lease formula, the management fee percentage against the lease cap, and the total for any single line item over $25,000 that may be a capital expenditure charged as maintenance. If any of those three checks reveals a discrepancy, your practice is likely overpaying. CAMAudit automates this comparison and runs 20 detection rules against your lease and reconciliation.
Are medical office building CAM charges higher than standard office CAM?
Yes. MOB CAM charges typically run $8 to $18 per square foot annually, compared to $4 to $10/SF for standard office buildings. The premium reflects shared building services specific to healthcare: medical-grade HVAC with tighter tolerances, biohazard disposal infrastructure, specialized elevator systems, clinical utility connections, and higher security requirements. Higher costs create a larger pool of expenses to audit, and BOMA benchmarking data shows that larger CAM pools correlate with higher absolute overcharge amounts.
Can I dispute CAM charges if my lease has already been signed?
Yes. Disputing CAM charges is not a lease renegotiation. You are enforcing the terms already in your lease. If the landlord billed you for expenses that your lease excludes, calculated your pro-rata share using a different formula than your lease specifies, or exceeded the management fee cap, those are billing errors against an existing contract. Most medical office leases include an audit rights clause that entitles you to review the landlord's books and records. Your dispute is grounded in your existing lease terms, not a request for new ones.
What is the typical lookback period for medical office CAM disputes?
Most commercial leases allow a lookback of 1 to 3 years from the date of the reconciliation statement. The dispute window, meaning the deadline to file a written objection after receiving the reconciliation, is typically 60 to 180 days. Missing the dispute window can waive your right to challenge that year's charges. State statutes of limitations for written contracts provide an outer boundary: 4 years in California and Texas, 5 years in Florida, 6 years in New York. Review your lease's audit rights clause for the specific deadlines that apply.
Should I hire a CPA or use a tool like CAMAudit for a medical office CAM audit?
It depends on the complexity. For an initial triage to determine whether overcharges exist and estimate their magnitude, CAMAudit provides a forensic comparison of your reconciliation against your lease terms in minutes. If the audit reveals substantial overcharges that require a formal dispute, some practices engage a CPA firm to provide an independent verification that the landlord's accounting team will accept. The two approaches complement each other: CAMAudit identifies the errors, and a CPA can provide attestation-level support if the dispute escalates. Many practice managers run CAMAudit first and only engage a CPA if the recoverable amount justifies the additional cost.
Related Resources
- Medical Office CAM Charges Guide
- Medical Practice Overhead CAM
- Medical Office Building Common Area Costs
- Capital Expenditures in CAM Charges
- Pro-Rata Share Calculator
- CAM Overcharge Estimator
Sources
- MGMA DataDive Cost and Revenue, Practice Overhead Benchmarks (2025)
- BOMA International, Experience Exchange Report (2024)
- IREM, Income/Expense Analysis: Office Buildings (2024)
- MGMA Stat, Practice Operating Costs Survey (2025)
This article is for informational purposes only and does not constitute legal, financial, or accounting advice. CAM audit rights and dispute procedures are governed by the specific terms of your lease and applicable state law. Consult a qualified attorney or CPA before filing a formal CAM dispute.
Frequently Asked Questions
How do I know if my medical practice is overpaying CAM?
Pull your lease's operating expense section and compare it against your most recent CAM reconciliation statement. Check three numbers: your pro-rata share percentage against the lease formula, the management fee percentage against the lease cap, and the total for any single line item over $25,000 that may be a capital expenditure charged as maintenance. If any of those three checks reveals a discrepancy, your practice is likely overpaying. CAMAudit automates this comparison and runs 20 detection rules against your lease and reconciliation.
Are medical office building CAM charges higher than standard office CAM?
Yes. MOB CAM charges typically run $8 to $18 per square foot annually, compared to $4 to $10/SF for standard office buildings. The premium reflects shared building services specific to healthcare: medical-grade HVAC with tighter tolerances, biohazard disposal infrastructure, specialized elevator systems, clinical utility connections, and higher security requirements. Higher costs create a larger pool of expenses to audit, and BOMA benchmarking data shows that larger CAM pools correlate with higher absolute overcharge amounts.
Can I dispute CAM charges if my lease has already been signed?
Yes. Disputing CAM charges is not a lease renegotiation. You are enforcing the terms already in your lease. If the landlord billed you for expenses that your lease excludes, calculated your pro-rata share using a different formula than your lease specifies, or exceeded the management fee cap, those are billing errors against an existing contract. Most medical office leases include an audit rights clause that entitles you to review the landlord's books and records.
What is the typical lookback period for medical office CAM disputes?
Most commercial leases allow a lookback of 1 to 3 years from the date of the reconciliation statement. The dispute window is typically 60 to 180 days after receiving the reconciliation. Missing it can waive your right to challenge that year's charges. State statutes of limitations for written contracts provide an outer boundary: 4 years in California and Texas, 5 years in Florida, 6 years in New York.
Should I hire a CPA or use a tool like CAMAudit for a medical office CAM audit?
For an initial triage to determine whether overcharges exist and estimate their magnitude, CAMAudit provides a forensic comparison of your reconciliation against your lease terms in minutes. If the audit reveals substantial overcharges that require a formal dispute, some practices engage a CPA firm for independent verification. The two approaches complement each other: CAMAudit identifies the errors, and a CPA can provide attestation-level support if the dispute escalates.