Private Practice and the Legal Side of Medicine
You’ve finished your residency and now you’re thinking about opening a private practice. Knowing the legal and administrative structure of your practice is often as important as the treatment that you give to your patients. You’ve studied it all – organic chemistry, anatomy, histology, pathology… but do you know the laws that govern private practices?
With new healthcare policies and laws coming out every day, it’s hard to keep track of a turbulent legal climate. Are you familiar with the Patient Protection and Affordable Care Act (PPACA)? What about the Health Care Education Affordability Reconciliation Act? Just as in-house legal counsel is common with hospital networks, you too should have an attorney by your side to figure it out.
Here are some of the most common challenges doctors face when they want to open a private practice:
Choosing the right business form is crucial when you first open your practice. Depending on the area of medicine that you practice, certain business structures can provide benefits such as tax advantages and greater liability protection. When it comes to private practices there are two kinds of business structures: incorporated and unincorporated. Even though most doctors opt for an incorporated form – either a corporation or a limited liability company (LLC) – unincorporated business has certain advantages as well. An experienced lawyer will best advise you in this matter.
While you may be familiar with malpractice lawsuits, these aren’t the only liabilities that private practices encounter. State medical liability reforms (MLR) vary considerably from state to state and doctors have the duty to educate themselves about the risks and responsibilities they have to face.
- Confidentiality. Every doctor knows about the policies of the Health Insurance Portability and Accountability Act (HIPAA) and medical ethics, yet as more practices transition from paper to electronic record-keeping systems, data breaches are becoming an increasingly major issue. The traditional physician-patient contract guarantees confidentiality and a security breach, even if it cannot be accounted for, constitutes a violation of the healthcare consumer rights and can in turn lead to a lawsuit.
- Contracts. Doctors have to file a myriad of legal paperwork, including insurance billing, documentation of medical records, patient consent forms (for medical procedures) and state reporting records. Legal consequences may arise if this area isn’t handled properly. Effective organization of paperwork is important in the event of litigation as this way you can establish proof that you have done everything according to the standard of patient care.
- Negligence and Abandonment. It happens to the best of us, including doctors. Once in a while, a misdiagnosis or a treatment error occurs. It is unfortunate but malpractice lawsuits are popular in the practice of medicine so it is vital that you have insurance. A costly lawsuit can bankrupt a practice and even affect your personal finances and assets. In any event that a patient files suit claiming an incident of malfeasance, misfeasance or nonfeasance, you must have an attorney nearby to mount a proper defense.
Insurance doesn’t apply only to malpractice cases. A medical practice must constantly interact with a patient’s insurance and buy insurance for its employees, among other things.
- Patient Providers: Insurance companies process doctor payments under a fee-for-services reimbursement structure or capitation. Fee-for-services payment is directly related to the services that are reimbursed by a patient’s healthcare provider and this often results in disagreements between insurance companies. A lawyer must often step in to negotiate contracts with the patient’s insurance company in order to get the best rate on reimbursements.
- Facility Insurance: The Occupational Safety and Health Administration (OSHA) has a rigid process for protecting medical industry employees from any infectious diseases or illnesses that they may contact from exposure to patients or from contact with toxic materials. The Center for Disease Control and Prevention (CDC) also has a number of standard procedures that must be followed. It’s also possible for a patient accident to occur in your facility as well. Such accidents can lead to future litigation so having health insurance for yourself, your employers and your facility is a must. You need a lawyer to oversee the creation of insurance contracts that cover as many scenarios as possible.
Mergers and Acquisitions
It’s not uncommon for private practices to be acquired or merged with hospitals down-the-line. Physician-hospital arrangements introduce even more complex legal challenges: co-management arrangements, fraud and abuse laws, Anti-Kickback statutes, Stark law, antitrust issues and others. It’s good to have an attorney handy to get clear on the legal complications that may arise from hospital-private practice consolidations in order to avoid any lawsuits, or civil and criminal penalties.
Another case is when private practices merge together in order to avoid hospital employment. This type of merger can lead to better negotiating rates with insurers and suppliers, as well as increased access to funding. In any case, mergers and acquisitions must be supervised by a lawyer to clarify issues such as: management consolidation, who will be responsible for accounting, if there will be any changes in retirement or benefit plans for workers, banking relationships, location issues and individual tax issues.
Get a lawyer
As you can see, the medical industry presents a myriad of legal challenges for doctors that want to open their own private practice. It would make sense to hire an experienced lawyer to help you with these issues. After all, you finished medical school – not law school. Having your own attorney is a must if you want to keep up with the ever-changing legal climate of this industry.