Dissecting the Legal Side of Medicine: Law and Your Private Practice

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By Paige Zandri
| Legal Basics

Organic chemistry, histology, pathology, gross anatomy -- you’ve studied it all. You’ve survived your residency, and now you’re ready to open your very own private practice. Yet the success of a practice is dependent not only on excellent patient care, but also on the dynamics of your practice’s legal and administrative structure.

With new healthcare policies and laws like the Patient Protection and Affordable Care Act (PPACA) and the Health Care Education Affordability Reconciliation Act constantly emerging, it can be difficult to keep current on the changing legal climate. Hospital networks have in-house counsel, and you should have an attorney on speed dial, too.

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Here are the common legal challenges that doctors are likely to encounter:

Corporate Form

Choosing a business structure is one of the most important decisions for a doctor to make when first opening a practice. Depending on the profile of your practice, certain business structures can provide advantages such as tax benefits or greater liability protection. Business structures for private practices fall into two categories: incorporated or unincorporated. While most doctors elect to file their practice as an incorporated business -- more specifically, as a corporation or a limited liability company (LLC) -- unincorporated structures can have advantages as well. Contact an experienced lawyer in order to determine the most suitable type of entity for you.

Liability

While certainly the most familiar to the general public, malpractice lawsuits are not the only liabilities that medical practices can encounter. State medical legislative activities and reforms differ widely, and doctors must educate themselves about the everyday risks and responsibilities that they face.

  • Confidentiality: Every doctor is familiar with HIPAA policies and medical ethics, yet as more practices switch to electronic record-keeping systems, data breaches present a huge problem. The implied physician-patient contract guarantees confidentiality, and such security breaches are violations of healthcare consumers’ rights, and can potentially result in lawsuits.
  • Contracts: Doctors are required to fill out proper legal paperwork, such as insurance billing, patient consent forms for procedures, documentation of medical records and state reporting records.. Failure to do so can result in legal consequences, as the effective and organized handling of paperwork is vital in the event of litigation in order to establish proof that you have followed the expected standard of patient care.
  • Negligence and Abandonment: No matter how careful you are, doctors occasionally make misdiagnoses and treatment errors. Unfortunately, malpractice lawsuits abound within the practice of medicine, and it is crucial to purchase insurance. Expensive litigation can bankrupt a practice, or worse, affect your personal assets and finances. In the event that a patient files a lawsuit claiming an incident of malfeasance, misfeasance, or nonfeasance, a doctor must reach out to an attorney to defend themselves.

Insurance

Not only do you have to deal with malpractice insurance, medical practices must constantly cope with the insurance issues of their patients, purchase insurance for their employees, and more.

  • Patient Providers: Payment for doctors is traditionally processed through insurance companies under a fee-for-services reimbursement or capitation. Fee-for-services payment is dependent on the services that are reimbursed by a patient’s healthcare provider, and often results in a tug-of-war with insurance companies. A lawyer is often necessary in order to negotiate contracts with patients’ insurance companies in order to get the best reimbursement rates.
  • Facility Insurance: The Occupational Safety and Health Administration (OSHA) has strict procedures for protecting employees within the medical industry from any infectious diseases that they may catch from exposure to patients, or from possible contact with toxic substances. Standard procedures established by the Center for Disease Control and Prevention (CDC) must be strictly followed. Patient accidents can occur within your facility, too; mishaps that happen inside the office can potentially lead to litigation, so purchasing health insurance for you, your employees, and your facility is an absolute necessity. A lawyer is invaluable when it comes to overseeing the creation of insurance contracts that ensure maximum coverage.

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Mergers and Acquisitions

Private practices sometimes merge with hospitals further down-the-line. Physician-hospital relationships present even more complex legal challenges like co-management arrangements, Stark law, Anti-Kickback statutes, fraud and abuse laws, and antitrust issues, to name a few. It is beneficial to consult a lawyer to gain a greater understanding and awareness of the legal complications that come with hospital-private practice consolidations in order to avoid potential litigation, or civil and criminal penalties.

Alternatively, some private practices join forces in order to avoid crossing the line into hospital employment; such mergers can result in benefits such as increased negotiating leverage with insurers and suppliers, and increased access to financial resources. Either way, mergers and acquisitions need to be negotiated and supervised by a lawyer to establish how the management will be consolidated, who will be in charge of accounting, any changes in retirement or benefit plans for employees, banking relationships, location, and individual tax issues.

Lawyer Up

The medical industry presents doctors with numerous legal challenges. You spent hard years working your way through medical school and residency programs, not law school. You read medical magazines to keep up with cutting-edge methodology, not legal documents and newly-passed laws. When opening your private practice, consult a lawyer through Priori Legal to ensure the continued success of your business.

 

Special thanks to Ella Gibson for her research and editorial contributions to this article.

Photo Credit:

DanielCubas via Pixabay

DarkoStojanovic via Pixabay

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