Legal requirements to open a private practice in Australia

Establishing a successful private medical practice requires not only clinical but also business acumen. Before opening a private practice for business, a psychiatrist needs to establish a number of clinical and financial elements of good practice to ensure it operates lawfully and ethically.

This page discusses the fundamental legal requirements of a private psychiatry practice in Australia and New Zealand. The document is not comprehensive and psychiatrists will need to seek advice from their accountant, lawyer and Medical Defence Organisation (MDO)

Medical registration

A psychiatry practice in Australia should employ psychiatrists who have medical registration in Australia and are listed on the Australian Health Practitioner Regulatory Agency register of health practitioners.

Medical practitioners can be registered for up to 12 months and the annual registration renewal date is 30 September. Failure to re-register by this date, or within the one month late period, results in the removal of the health practitioner’s name from the national register and the lapse of their registration.

Patients are not eligible for Medicare rebates when their medical practitioner has been removed from the National Register. In these circumstances the Commonwealth Department of Human Services will recover any monies that were paid to a patient directly from the patient’s medical practitioner.

Registered medical practitioners must notify the Medical Board of Australia (MBA) of any change of address or principal place of practice within 30 days of the change.

For more information about medical registration in Australia refer to the Medical Board of Australia.

Medicare recognition as a specialist or consultant psychiatrist

Consultant psychiatrists must apply to Medicare for recognition as a consultant psychiatrist to be able to provide practice services that attract Medicare Benefits at the consultant psychiatrist rates.

Refer to the Australian Department of Human Services for “Application for recognition as a Specialist or Consultant Physician” form.

Medicare Provider Number(s)

A Medicare Provider Number uniquely identifies a medical practitioner and the location from where they provide services. Medical practitioners must have a Provider Number for each place from which they provide a service. Provider Numbers are issued by Services Australia.

For Medicare purposes a valid account/receipt must contain, among other things, the medical practitioner’s name and either the:

address of the place at which the service was provided, or
Provider Number for the place from which the service was provided.

Medical practitioners working in a private capacity should not commence billing patients until they have been advised of their Medicare Provider Number.

Refer to Services Australia for the following:

Prescriber number

All medical practitioners registered in Australian are eligible prescribers for the Pharmaceutical Benefits Scheme (PBS). Eligible prescribers must have a valid Prescriber Number, and quote this on prescriptions, for a pharmacist to be able to provide the prescribed medication at a subsidised price to patients through the PBS.

Unlike Medicare Provider Numbers, a Prescriber Number may be used for all locations where services are provided.

The form for a prescriber number can be accessed through Services Australia.

Personalised prescription pads/paper

Personalised prescription pads, and paper for medical computer systems for prescribing medicines listed in the PBS, can be obtained from Services Australia.

Stationery for medical practitioners

Medication storage

Legal requirements exist for the prescribing, storage, transportation and disposal of medications, which may vary between jurisdictions. Psychiatrists should check the relevant legislation in their state/territory for compliance requirements.

RANZCP Australian and New Zealand legislation pertaining to drugs and medicines. [MS Word; 22 KB]

Practice/business legal structure

Several business legal structure options exist for a private medical practice including:

Sole trader (self-employed)
Group practice: partnerships and associates
Company (incorporated practice)
Associateship

As the choice of business structure has legal and tax implications, psychiatrists should consult both an accountant and a lawyer who have an understanding of the medical practice business. The practice structure may also affect the type of insurance needed in relation to the activities of both professional and non-professional staff.

Many business structures involve a contractual relationship (e.g. group practice, rooms sublet, or subcontract work from other psychiatrists). A psychiatrist should ensure that, in all contractual arrangements they enter into, the contractual responsibilities for all parties are clearly stated (e.g. communication pathways, dispute resolution, financial responsibilities).

Australian Business Number

Businesses with an annual turnover in excess of $75,000 must register for Goods and Services Tax (GST) and have an Australian Business Number (ABN). An ABN is a unique 11 digit identification number for dealing with Australian government departments and agencies. The Australian Taxation Office (ATO) operates the Australian Business Register (ABR), which is responsible for processing ABN applications, which is free of charge.

Visit the ABR website to register for GST and to apply for an ABN.

Further information is also available at 'Registering for GST' on the ATO website.

Business name registration

A business name, also known as a Business Trading Name, is simply the name or title under which a person, or other legal entity, trades. When a business name is registered, it becomes linked to the owner’s ABN. Multiple business names can be linked to the same ABN.

A practice’s business legal structure and the choice of business name may affect business name registration. When an individual chooses to set up their business as a sole trader, a partnership or a trust, and not as a company, they need to register their business name with the Australian Securities and Investments Commission (ASIC), which manages all business name registrations. ASIC registration is unnecessary, however, if the business name is an individual’s, or a business partner’s first name and surname.

When a business’ legal structure is that of a company, the company name needs to be registered at the same time the company is registered with ASIC. Companies have different legal, financial and record keeping responsibilities compared to other business structures. ASIC automatically gives a unique Australian Company Number to Australian companies at the time they are registered.

For more information about how to register a business name visit:

Professional indemnity insurance

In accordance with the Health Practitioner Regulation National Law (2009), as a condition of medical registration, all medical practitioners registered in Australia must have professional indemnity insurance for each context in which they practice medicine.

Medical practitioners in private practice must have run-off cover included in their insurance. In 2004, the Commonwealth Government-guaranteed Run-off Cover Scheme (ROCS) came into effect. The ROCS ensures medical practitioners have access to indemnity cover on their retirement without any need to pay further premiums.

Information on ROCS can be found at Services Australia
Also see: Professional indemnity insurance arrangements

Practice/other insurance

Appropriate insurance cover should be considered for insurable events that pose a risk of financial loss, which may occur while running a private medical practice. Private practice psychiatrists are advised to discuss with their MDO the various types of insurance applicable to private practice to decide/determine the level of cover they need and/or is available to them.

Contact

For enquiries about this page, contact policy@ranzcp.org.

Disclaimer

This information is intended to provide general guide to practitioners, and should not be relied on as a substitute for proper assessment with respect to the merits of each case and the needs of the patient. The RANZCP endeavours to ensure that information is accurate and current at the time of preparation, but takes no responsibility for matters arising from changed circumstances or information or material that may have become subsequently available.