From Sole Practitioner to Medical Centre Owner
As an accountant, you may have GPs and other medical professionals as clients. Some of them, at one point, may look into expanding into a larger practice, or centre. This is what we see oftentimes as we assist with these transitions daily. For this reason, we prepared this article to explore what will be involved for your clients who might be ready to expand and want to learn how to build a successful medical practice.
Generally, sole practitioners decide to make the transition to becoming medical centre owners when they have been operating at full capacity, for some time. Naturally, when a sole practitioner has too many patients, it can make it difficult to run all the other aspects of their business. Sometimes, they have taken on the role of receptionist, admin or finance, and it reaches a tipping point, where they are time poor or not spending time using their strengths. Other times, it is because they are noticing a growing need, through their own client base, for GPs with interests and specialisations different to their own.
You may find your client approaches you about an expansion into a medical practice as they feel they are unable to reach their true potential in their current working arrangement. They might also no longer enjoy their job as much as they used to, so it makes sense for them to start investigating how to open a medical centre, and what is involved.
Naturally, practice owners and medical centre owners are under a lot of pressure to ‘get it right’ from the beginning. However, navigating the legal landscape is difficult in any event. It can be even more difficult when there is a lot at stake in terms of moving to the new role of managing other practitioners and anyone else involved in running the centre.
In this article, we explore some key problems practitioners come up against in this transition and what can be done to resolve them. We also look at their obligations and the foundations for success when transitioning from sole practitioner to medical centre owner.
Growing Pains
In our experience as lawyers for medical practices, and you may have seen this in your accounting business, it is quite common to see new owners wanting to either make decisions by committee or by micromanaging team members.
We see a lot of practices that have a number of partners, and they make decisions by committee. This method can slow decision-making and progress down a lot and hamper growth. One way this can be alleviated is by hiring a practice manager. This is something you, as their accountant, can assist them with - determining if it is an affordable and logical next step in their business. If the practice has grown to the point where a practice manager can be appointed, then there is now someone on the team that is better placed to run the business than the doctor is.
By allowing the practice manager to take control of managing the business, the practitioner frees themselves up to do what they are best at, and what got them into medicine to begin with, focusing on the care of their patients. An alternative that can also be effective is the appointment of a Managing Director. They can help with the delegation of authority and implementing a Delegation of Authority Policy.
A Delegation of Authority Policy is a document outlining the chain of command, commonly for spending funds up to $300 without obtaining permission. A Delegation of Authority Policy can also be in relation to lending, letters that come from regulators as well as hiring. The practice owner would need to be involved in the process of developing these types of policies as they are being put in place. Whereas, for organising an event such as a Christmas party, for example, that authority could be delegated to the practice manager or admin personnel.
Having a Delegation of Authority Policy frees up time, so the owner or owners are not caught between running the business and seeing patients.
Obligations for your people, the practice, and profits
It comes as no surprise that opening a medical centre or expanding from being a sole practitioner comes with more obligations. There will be more people under their wing and therefore a lot more paperwork.
The bigger the medical practice gets, the more documents they are going to need. This means changes will have to be made to the documents your clients need to protect their people, their practice, and their profits.
To build a successful medical practice, legal obligations must be met and people must feel protected.
Some of the contracts and agreements your clients may need to put in place include:
Contractor Agreements;
Service Agreements or Employment Agreements for Doctors;
Service and Licence Agreements (if there’s a rental element involved);
Employment Agreements:
Nurses (Under the Nurses’ Award);
Administration Staff (Under the Health Professionals and Support Services Award);
Doctors (Personalised and Negotiated Contracts);
Confidentiality Agreements;
Privacy Policies, and;
Consent Forms.
It is important to note that it is not only the people that need to be protected. It is equally important to ensure the practice, itself, is protected and maintained. As you will be aware, there is a need for the following, where relevant:
Company Register;
Unit Holders Agreement;
Shareholders Agreement; and/or
Partnership Agreement.
Finally, risk mitigation regarding profits must also be taken into account. These risks can be met with policies and licenses, which can include:
Licence to Occupy (letting rooms or space);
Intellectual Property License;
Advertising Policy;
Social Media Policy;
Insurance Policy Reviews; and
Risk Reviews.
As you can see there are quite a lot of legal considerations for your client to consider. Just as they come to you as the experts for their accounting and taxation needs, it is important for them to seek the advice and support of lawyers with experience in the medical industry. This will help ensure they are protected and the growth of the practice is unhindered.
Foundations for Success
Opening a medical centre can be overwhelming, and it is quite common for new medical practice owners to run into problems.
For example, we worked with a doctor on the Gold Coast who wanted to run an innovative practice, slightly different from a regular GP practice. She felt overwhelmed by the number of compliance requirements to think about when she went out on her own because she was setting up a business different from traditional medical centres.
To overcome this, we worked with her and created a road map detailing what she needed to think about, and when, from a legal perspective. She is now running a successful medical practice and the process to get there was smooth. She is able to lead her team effectively while doing the work she enjoys and is also able to support her local community, which is what was really driving her.
By talking to us early in the journey of your client transitioning from a sole practitioner to a medical practice owner, we can assist your clients to create a customised road map. Our years of experience working with medical professionals means we can present them alternatives or better solutions, to save them money and minimise risk.
To go from a sole practice to a successful medical centre, considerable thought needs to be put into the future of the structure. A well-structured medical practice is the first step to protecting it.
Related article: How we can help you and your clients to grow a thriving medical practice
As legal specialists, having worked with medical practices of all sizes and configurations, we have developed an approach to help practices structure and prepare the documentation needed to protect the practice as an entity.
If you would like to enquire how we might work together to assist your clients, connect with us. We look forward to being able to support your clients, to minimise their risk and mutually assist them through their practice ownership journey.