How to effectively establish a medical practice

Key takeaways

  • Determining the best structure of a new medical practice and effectively implementing that structure is a significant factor in determining its long-term success.
  • Industry knowledge and expertise in practice establishment and operational requirements allows doctors to focus on their core business of treating patients and practising medicine.
  • A checklist which covers everything that needs to be considered before opening a new general or specialist medical practice.

There are now more general and specialist medical group practices opening than ever before.

The success of each of these is as much about the way it is established and operated from the opening of the practice, as much as it is about patient care and practising medicine.

Throughout our 28 year history, we have worked with many clients in the medical industry. However, over the past decade, this has become a significant and stronger focus for us resulting in our team gaining a wealth of experience and being genuine specialists in this industry.

The barriers to entry for the establishment of new practices have decreased significantly with improved IT platforms, practice management software and consulting providers, coupled with increases in placements at tertiary institutions causing practice numbers to increase significantly.

As just one example the GP headcount in Australia for the 2017-18 period was 36,938 (full service equivalent 25,149), an increase from the figure of 24,308 (FSE 16,449) a decade earlier.

As the population grows, so too do the demands on health professionals. As we face a higher percentage of the population reaching older ages than ever before, these demands will continue to rise to further unprecedented levels.

A general or specialist practice can be a minefield of legal issues if the right structures and a strong understanding of the legal obligations on the medical practice are not in place along with a robust set of documents underpinning the chosen structure.

The last thing a doctor should be worried about when dealing with the health and wellbeing of their patients, is compliance.

While much of it is common sense, in our experience there are often surprising and sometimes significant holes in the knowledge some doctors have about their legal, compliance, reporting and risk obligations.

Some areas to consider are patient records, data retention and breach obligations, employee, independent contractor and super obligations and documents, billing and tax effective structuring, service fees and agreements, premises, fit-out and leasing and so on.

Conversely, a lack of legal knowledge or input from a professional may also mean many doctors do not fully understand their rights as consumers themselves.

Take for example a doctor leasing premises and what rights they have as tenants during negotiations and once a lease is entered into. They should seek advice with such matters, even if they are their own landlord. The ATO will scrutinise lease arrangements if related parties are involved, especially if a self-managed super fund is the owner of a practice's real estate.

We are also in a time where we are facing the 'corporatising of medicine' with large companies running super-sized clinics. While these are seen as a threat by many, they are also recognised as an opportunity for those who are able to offer boutique health services with a more personal touch.

The truth is different sized businesses work for different doctors, employees and patients. Within the medical field, there are plenty of large corporates willing to offer transactional medical services, which are prompt and potentially more cost effective. There are also many smaller practices where the focus is on the individual, patient care and trusted relationships.

Regardless of the size, it is essential that the structures are in place to ensure effective management and compliance and in turn allowing doctors to focus on their core business of caring for patients and practising medicine.

We believe the best way to find out what is needed and what has worked for many others is to speak with people who have the experience. It truly could be the difference between opening your doors and welcoming your first patient by your project deadline or the practice not succeeding.

To help doctors understand their legal and statutory obligations, we have developed a free checklist which covers all the basics of what needs to be considered before opening a new general or specialist medical practice.

The checklist includes:

  • The areas you will need consultants in - accounting, tax, IT, recruitment and the law
  • The structure under which the company should be formed – for example shareholder agreements and service agreements
  • Accounting, tax and real estate
  • Utilities and other suppliers
  • Accounting software
  • Insurance - for what and how much
  • IT systems
  • Staffing requirements.

If you would like to see the full checklist, contact us here for a copy.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.