Prices are high, interest rates are low and doctors are doubling up in rentals. In a hectic medical real estate market, the right approach can still work out in the end.

We're happy with the price," says John Steinmann, DO, an orthopedic surgeon with Arrowhead Orthopaedics in San Bernardino County, discussing the 5,000 square foot medical condo in Riverside that the group bought recently. "Even though the market is most likely going to continue to go down, we feel like we got a price that is six months ahead of its time."

After about a decade working in a rented medical office in Riverside, the ten practitioners at Arrowhead felt it was time to settle in permanently once their lease was up. So, in a common transaction, the group bought a medical condo on Parkview Hospital's campus to rent to itself through a separate limited liability corporation. "The major criteria for this new location were proximity to referring physicians, proximity to the hospital and proximity to imaging services--and ownership," says Dr. Steinmann, a member of the San Bernardino County Medical Society.

This isn't the group's first brush with owning commercial real estate, however. Many years ago, Arrowhead bought land in Redlands where they built a 50,000 square foot facility. The group's practice in Redlands occupies about 60 percent of the building; they rent the rest of the space out through another LLC. "We've taken the opportunity in our Redlands office to bring in-house all ancillary services that are necessary for our patients, and that's what ground-up construction or owning your own office space can allow," says Dr. Steinmann. "We have constructed space for imaging--for MRIs and CAT scans--for physical therapy, for dedicated hand therapy, for a surgery center, as well as for our office. So, for almost all items, this facility now offers a one-stop location."

That drive for ownership gives Arrowhead advantages in cost control, patient throughput and eventual equity. And they should know--they also rent office space in San Bernardino and Banning. "I think the biggest thing for all of us is the ability to control our immediate destiny, and one of the biggest things with owning is that most of the time, at least when you build a structure like we did--from the ground up--we can design it in a way that fits our practice lifestyle the most," says James Matiko, MD, another Arrowhead orthopedic surgeon and SBCMS member.

With declining reimbursement and an uncertain commercial real estate loan market, that kind of freedom might be harder for physicians to attain nowadays. Rents continue to be high, but so do medical real estate values. The Federal Reserve has lately cut interest rates, but low-rate mortgages are harder to get, and may drift even further out of reach for some doctors. Still, there are a few things physicians can do to weather tough times, borrow intelligently and run property more efficiently.