Legal shortcuts that can put your healthcare practice at risk
Running a healthcare practice means balancing patient care with budgets, staffing and limited time. When a legal issue pops up, the temptation is to deal with it quickly, cheaply and move on.
That might mean downloading a contract template, reusing an agreement from a few years ago or asking Google or an artificial intelligence ("AI") tool for a quick answer. These shortcuts might feel efficient, but practice owners regularly come to us when one of these shortcuts has not held up. A document that looked fine on the day the practice signed it becomes a problem in a dispute with a practitioner, a question from a regulator or a disagreement about what the parties agreed.
The regulatory environment for healthcare practices has also become more demanding. Payroll tax authorities are looking closely at how practices engage independent practitioners. Regulators are increasingly examining how practices handle health information, and many practices are adopting new technology faster than their documentation can keep up.
In most cases, the real issue is not the shortcut itself, but unfortunately, legal shortcuts have a habit of becoming expensive detours. It is a document that does not reflect how the practice actually operates. Below we explore the five most common legal shortcuts that we see practice owners and managers take, along with the signs that your practice may be relying on one.
1. Using a one-size-fits-all template
Most online templates target a general audience. They do not know how your practice engages its practitioners, how fees are collected or who makes which decisions.
For healthcare practices, that gap is important. A generic services agreement may not deal with registration with the Australian Health Practitioner Regulation Agency ("AHPRA"), clinical responsibility, patient records or the way Medicare and private fees move through the clinic. Some templates do not reflect Australian law at all.
The bigger issue is that a template describes a standard business, not yours. When the document says one thing and the practice does another, that gap is commonly where disputes and compliance issues begin.
Signs this may apply to your practice:
- someone downloaded the agreement online and edited it;
- it does not mention healthcare-specific obligations such as registration or patient records;
- no one can say who prepared the original version, or when it was prepared.
2. Reusing an old agreement or borrowing one from another practice
Another common shortcut is to reuse an agreement that worked before, or to adapt one a colleague has shared. It feels safer than a template because another practice has already used it.
The difficulty is that these agreements generally reflect a different structure to your practice and are commonly outdated. Many practices are still relying on agreements drafted several years ago, before payroll tax developments and the Closing Loopholes amendments under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 and Closing Loopholes No. 2 Act 2024 were implemented.
The decision in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 highlighted that payroll tax can apply to payments a practice makes to practitioners, even where their agreements describe them as independent contractors. The Closing Loopholes amendments have also changed how independent contractor relationships are assessed and regulated in Australia. Together, these developments reinforce the importance of agreements that reflect how your practice actually operates. Borrowing an agreement from another practice can leave gaps that increase your exposure to payroll tax and superannuation liabilities.
This may be relevant if:
- your Practitioner Services Agreements are more than a few years old;
- you copied the agreement from another practice or a previous business;
- the way the practice operates has changed since drafting the agreements.
3. Relying on Google or AI for legal answers
Many practice owners now start with a Google search or an AI tool when a legal question comes up. That is understandable, and it can be a useful way to become familiar with a topic.
The limitation is that a search gives a general answer. It does not know your practice structure, your State or Territory, the agreements you already have in place or the obligations that apply to healthcare businesses in Australia. It may also draw on information that is out of date or written for another country.
AI tools can also produce answers, and even full documents, that sound confident but are incomplete or incorrect. Without legal training, it is difficult to tell the difference from a first glance.
General information provided by Google or AI can help you ask better questions. It is not a substitute for advice that takes your circumstances into account.
4. Treating patient consent and privacy documents as a formality
Many practices adapt their patient consent forms and Privacy Policies from a template and then leave them unchanged. Their routine nature makes them easy to overlook.
Health information carries specific obligations under the Privacy Act 1988 (Cth) and, in some States and Territories, health records legislation. Your consent and privacy documents should reflect what information your practice actually collects, how it uses and stores that information and who it shares it with.
This has become more important as practices adopt new technology. If your clinic has introduced AI transcription or scribe tools, online booking platforms or cloud-based records, your documents may no longer describe how it actually handles patient information.
Without reviewing these documents and understanding how information moves through your practice, your data breach response plan may also be outdated. If your practice does not have a plan, developing one is something we recommend you consider promptly.
Your practice may need to review these if:
- no one has updated your consent forms or Privacy Policy since the practice introduced new software;
- the practice uses the same consent form for different types of treatment or services; or
- the practice does not have a current data breach response plan.
5. Signing contracts without a proper review
Healthcare practices sign a range of commercial contracts, from leases and equipment, finance to software, supplier and service agreements. Suppliers often present these as standard terms, and it is tempting to sign them as they are.
The party who prepares standard terms writes them to protect its own interests. They may include automatic renewals, limits on the supplier's liability, personal guarantees or obligations that apply when the contract ends.
One of the most common issues we see is a practice that only discovers what it agreed to when something goes wrong, such as a lease ending, a supplier relationship breaking down or a software provider changing how it stores data.
Common indicators include:
- you or another director have signed a personal guarantee;
- the contract renews automatically or has a long minimum term;
- no one has checked the indemnity and insurance clauses against the practice's own insurance cover; or
- no one has checked what happens to the practice's data or equipment when the contract ends.
6. Why periodic agreement reviews matter
Your agreements shape how your practice is structured and how it operates. Practitioner Services Agreements influence how fees flow and how State Revenue offices are likely to view arrangements with respect to payroll tax. Employment contracts, consent forms and commercial contracts set out your obligations to your team, your patients and the businesses you work with.
Not every task needs a lawyer. Your team can usually manage day-to-day administration in-house, along with using documents prepared for your practice in the way they were intended. However, we recommend seeking legal advice when you engage practitioners or employees on new terms, change patient consent or privacy documents, sign a significant contract or change the structure of the practice.
What seems like a quick and inexpensive solution today can cost your practice much more later. When agreements fall out of date, the documentation and the way the practice actually operates start to tell different stories, and that inconsistency can create regulatory risk. A periodic review, particularly when the practice grows or changes, keeps the two aligned.
If your practice relies on templates, older agreements or documents no one has reviewed recently, contact our team at You Legal, to discuss whether they still reflect your operational structure and current regulatory expectations.
Relying on templates or older agreements?
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