A Legal Guide To Running A Medical Practice

Running a medical practice may seem similar to starting any other business, such as licensing, registration, business structure and liabilities. 

However, a medical practice also means you’ll need to consider additional matters like stricter privacy obligations and policies. 

Once you’ve managed to sort everything out though, you can end up with a stable business that provides a much needed service. 

If you have been thinking about starting your own medical practice, let’s take a look at some of the legal considerations you will need to address. 

How To Run A Medical Practice

There’s a lot that goes into running a medical practice. For starters, you need properly trained and qualified staff in multiple areas, a range of different types of equipment and a fully functioning system that is able to take in patients as well as plan for emergencies or unexpected circumstances. 

In addition to all this, there is a high standard of practice, care and security for all medical clinics. 

You also need to consider the basic obligations of an employer, such as Work Health and Safety laws. 

Best Legal Structure For A Medical Practice

There is no one legal structure that works for every medical practice.  As a matter of fact, not all medical practices are the same, and neither will their business structure.

The structure you choose will depend on the future goals, how big you want your business to be, the resources you wish to use, the level of risk involved in your business activities and the amount you wish to invest into your venture. 

Common legal structures to consider include: 

• Sole trader
• Partnership
• Company 
• Trust 

A sole trader or partnership is a simple business structure, so it doesn’t cost too much to set up and it’s not too complex, either. If you want to keep your medical practice small and local, this may be the best option for you. 

However, this also means you have unlimited liability. If the business runs into trouble, your personal assets could be at risk. Here, you want to think about the risks involved with running a medical practice and whether they are worth opting for a simpler structure. 

Alternatively, if you don’t want to be personally liable for the business’ owings, you can opt for a company structure. This gives you limited liability and ensures that the business’ liabilities do not extend to you personally. 

However, this also means that it will be more expensive and complex to set up. If your business is engaging in high-risk, international or complex activities, this may be the better structure for you. 

Register Your Medical Practice

Like a standard business, you will need to register your medical practice as a business. You will need to register the business name, apply for the relevant taxes and obtain an Australian Business Number (ABN). 

If you register a company, you will also need an Australian Company Number (ACN). 

What Licences Do I Need For My Medical Practice?

All medical practitioners should be registered with the Medical Board of Australia as well as Medicare. Practice accreditation is also needed from the Royal Australian College of General Practitioners (RACGP). Any other staff need to be trained and qualified in their fields. 

The process of getting a medical practice registered will depend on the state, as well as local zoning regulations. For example, in NSW, there is a specific process for obtaining a licence for a private health practice. 

It’s important to check the ones for your state and local area, then follow through on the process as required. 

What Documents You Need For Your Medical Practice

Like any business, a medical practice requires a number of legal documents to hold it together. Legal documents will often limit liability, outline key responsibilities and provide key protections for your business. 

We’ve listed a few common ones below. 

Employment Contracts

To run a medical centre, you will likely be hiring a few staff. This can be medical practitioners, receptionists, pathologists, IT Personal, cleaners, nurses and any other staff your practice will need. 

No matter the type of employee, it’s important to have an Employment Contract in place with each of them. Employment contracts cover important matters such as the duties of each party, rights, obligations, entitlements, pay, leave and termination. 

If your employee is under a specific award, it’s important that your Employment Contract outlines your obligations to them in compliance with that award. 

It’s important to have all this in a written document that can be reviewed by both parties prior to getting signed. This way, if anything goes wrong, the contract can set out the process for resolving disputes. 

Supply Agreements

Medical practices require a lot of equipment – in order to have your stock constantly replenished, you may decide to have a dedicated supplier that can consistently provide the materials you need with the quality you prefer. 

If you choose to undergo this route, then it’s important to have a formal agreement with your suppliers in order to properly establish what is expected of everyone. 

A Supply Agreement covers details such as:

• The materials that need to be provided
• Date and time of delivery 
• Payment methods 
• Termination and warranties
• Liability

If something should ever go wrong, it’s better to have any potential solution addressed in a legal agreement beforehand to keep you practise running efficiently.  

If you work with overseas suppliers, you may need to ensure that your Supply Agreement is internationally enforceable. Our expert contract lawyers can chat you through your options here. 

Limitation Of Liability

Medical practices have fairly significant legal responsibility towards their patients. 

Even so, medical practices need to limit their liability to some degree, either in the amount of damages that can be paid or the types of incidents they can be liable for (as long as this is considered reasonable under the law). 

Therefore, you may want to consider getting a limitation of liability clause in your agreements with patients. If an incident occurs which causes harm or loss to patients, you want to make sure your business is safe. 

Health Service Provider Terms And Conditions

Most businesses have terms and conditions, either online or for those customers that are visiting in person. Terms and conditions inform visitors of what is expected of them and the rights you hold in managing the business or website. 

Terms and conditions can also aid in limiting your liability, so it’s worth considering getting one. 

As a health service provider, your terms and conditions will likely look a little different to most other businesses,  but that’s okay – terms and conditions are customisable to suit the needs of the business.  

Professional Service Agreement

A Professional Service Agreement is a document that outlines what patients can expect from your establishment. More specifically, it outlines the details around how you will deliver or provide your service, and the terms around it. 

It covers the scope of services, liabilities, warranties, waivers and more. 

The delivery of services for someone in the healthcare industry has a high standard due to the skill  and expertise required of such professionals. A such, having a Healthcare Professional Services Agreement can aid in communicating with patients as well as managing their expectations in order to have a better relationship with them. 

Health Service Provider Privacy Policy

Many medical practices have an online presence for a number of reasons. They may desire to make things such as bookings more accessible to their patients or their medical practice might have a telehealth aspect to it (more on this later). 

Regardless, if your medical practice is online in any way, you will likely need to get a Privacy Policy. This is because the Privacy Act 1988 requires any business that collects personal information, and earns an annual turnover of more than $3 million, to have a Privacy Policy in place. 

However, if your business collects health information, the Act applies to you regardless of your turnover. So, health information privacy is taken very seriously under Australian privacy laws. Accordingly, as a health service provider, your medical practice will need to have a slightly stricter Privacy Policy. 

Our privacy lawyers can draft a Health Service Provider Privacy Policy, tailored to the requirements of your business. 

I’m Running A Telehealth Business – What Do I Need To Know?

A telehealth business provides medical services to patients remotely, either by a phone call or video call. Not all services can be provided remotely, therefore, telehealth services can only be provided under a limited amount of circumstances. For example if a patient needs care that requires checking their blood pressure levels, then they will likely need to come into the clinic.

Despite this, telehealth businesses are still an increasingly popular option for those who don’t live in a location with access to a medical clinic or patients that otherwise cannot travel. If you’re running a telehealth business, then there’s a couple of things you will need.  

Health Information Privacy Obligations 

For a telehealth business, you will likely need a Privacy Policy for your website – remember you will need to gain the explicit consent of your patients before collecting their information.

In addition to this, you will also need to make sure this information is stored securely so only people who are permitted to access the information can view it. It’s important to take reasonable measures to protect the privacy of your patients – consider consulting an IT professional to find the best security measures possible. 

In addition to this, a Data Breach Response Plan can help you prepare for any senior where confidential information is compromised.  

Do I Need A Telehealth Service Agreement?

It’s highly recommended to  have a Telehealth Service Agreement if you are running a telehealth business. Like all service agreements, a Telehealth Service Agreement will let patients know what they can expect, the scope of services, payments and security. 

However, it should also include additional details around the risks involved with online health services and the patient’s rights with respect to the collection of theri health information. 

Running An Online Pharmacy 

Along with providing health services online, running an online pharmacy is also an option. Starting an online pharmacy is subject to a fair amount of rules and regulations, some of which will depend on the state or territory you choose to operate from. A lot of the regulations you will need to follow stem from Therapeutic Goods Act 1989.  

Not all kinds of goods can be sold in an online pharmacy. You will need to do your due diligence to find out what your restrictions are as well as take care of the relevant licensing and registration requirements.  

It is also still an online business, so running an online pharmacy will require consideration of Website Terms and Conditions, Privacy Policies, cyber security measures and the like. We’ve written a detailed guide on how to run an eCommerce business. 

What Are My Obligations Around Medical Records?

You have a legal obligation to keep all medical records stored safely and securely. According to the My Health Records Rule 2016, you need to take proactive measures and reasonable steps in order to keep all medical records private. Not doing so is a breach of the legislation and it could greatly compromise your medical practice’s integrity, so it’s vital to get this right.  

If you are using a digital system known as Electronic Health Record (EHR) Systems like most practices are, then it’s crucial to document and keep track of all aspects of it. For more information on this, it’s best to consult a legal professional – our lawyers can give you advice on how to comply with your obligations around medical records. 

Who Can Own A Medical Practice In Australia?

A medical practice always needs to be run and controlled by a licensed medical professional. 

Depending on the kind of medical practice and the location, there are exceptions where non-medical professionals invest in one. However, this is subject to the specific clinic, so it’s always safe to do your research here. 

How To Buy A Medical Practice

Purchasing a medical practice is a similar process to buying any other business. However, there’s a number of additional factors to look out for when buying a medical clinic due to the nature of the business. 

The state of a medical clinic when you purchase it can be different to purchasing any other type of business as it’s often difficult to bring back a medical practice that hasn’t been doing well. When buying a medical practice, be sure to look out for this.     

There are two ways to buy a business:

1. Share sale
2. Asset sale

A share sale allows the purchaser to own a majority of shares in the business, whereas an asset sale gives the purchaser all of the business’ assets (this is usually agreed upon during the negotiations). 

Assets that are sold can include the building, an IP, trade secrets, client list, employees and equipment. 

Can I Buy A Franchise?

Yes, it is also possible to buy a medical practice in the same way you would purchase a franchise. This would make you a franchisee (we’ve written more about what you need to consider as a potential franchisee).

A franchise can be seen as f the inbetween of buying a business and starting one from scratch. When purchasing a franchise, you’re buying into a business model that has already seen success, and you will likely have additional support from the main owner of the franchise. 

However, this also means that what you do with that franchise will be subject to the franchisor’s requirements, your Franchise Agreement with them and the Franchising Code of Conduct. 

Franchising can be a complex area to manage – it’s advised to consult a legal professional to understand your obligations and ensure compliance with the relevant laws. 

Protect Your Medical Practice’s IP

Finally, you will need to look into protecting any intellectual property (IP) your business owns. 

Intellectual property includes a business’ intangible assets, such as logos and slogans. Luckily, to manage competition in the market and protect your valuable inside information, the law provides protective measures. 

For example, you can register your logo as a trade mark to prevent others from using it. It certifies that the logo belongs to you, and you can do what you like with it, such as licensing your designs (if you want to licence your IP, you’ll need an IP Licence Agreement). 

It’s worth speaking to an IP lawyer to sort out your IP protection – reach out to our team today. 

Key Takeaways

Running a medical practice is no walk in the park – don’t stress though! With the right legal help, this process can become much more manageable. 

To summarise what we’ve discussed:

• A medical practice needs a business structure – this could be a company, sole trader, partnership or trust  
• You will need to register your medical practice and get an ABN and/or ACN
• It’s important to follow you state and local regulations to obtain the correct licence to run the medical centre
•  All staff must be qualified in their respective fields and have the authority to practise  
• Look into getting you legal documentation sorted, such as Employment Contracts  and Supply Agreements
• Be aware of your privacy obligations, such as keeping medical records private 
• If you’re running a telehealth business or an online pharmacy, make sure you follow online business laws
• A medical practice can be bought outright or even through a franchise
• All medical clinics should look into getting their IP protected 

If you would like a consultation on running a medical practice, you can reach us at 1800 730 617 or [email protected] for a free, no-obligations chat.

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