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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 a New Zealand Business Number (NZBN).
What Licences Do I Need For My Medical Practice?
All medical practitioners should be registered with the Medical Council of New Zealand as well as the relevant health boards. Practice accreditation is also needed from the Royal New Zealand College of General Practitioners (RNZCGP). Any other staff need to be trained and qualified in their fields.
The process of getting a medical practice registered will depend on the region, as well as local zoning regulations. It’s important to check the ones for your 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 Personnel, 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 your practice 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. As 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 New Zealand’s privacy laws, including the Privacy Act 2020, require any business that collects personal information to have a Privacy Policy in place.
Health information privacy is taken very seriously under New Zealand’s 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 scenario 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 their 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 region you choose to operate from. A lot of the regulations you will need to follow stem from New Zealand’s Medicines Act 1981 and the Misuse of Drugs Act 1975.
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 New Zealand’s Health Information Privacy Code 2020, 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 New Zealand?
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:
- Share sale
- Asset sale
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