Health start-ups: Using doctors to provide services for your business

So you have a good idea for a new healthcare business and have gone so far as to develop a business plan and test the waters with potential patients and suppliers. But now you need to know a little bit more detail about legal, financial and commercial issues to move the project on – from drawing board to board room as they say.

This is the second article in our series designed to help you understand legal issues for setting up a new healthcare business. The series looks at issues for doctors setting up a business by taking advantage of increasing use of smartphones and apps and using medical skills outside the traditional routes. It will take you through the key things to consider in relation to regulation of medical devices, data protection in cloud computing and protecting your intellectual property, amongst other things.

This article looks at perhaps the most fundamental issue of all – how you use doctors to provide medical services for your business. You can of course employ doctors or use them as independent contractors, and there is nothing new in that. But the so-called ‘gig economy’ is changing the landscape for workers, including those in the healthcare sector, and provides interesting opportunities for businesses and doctors alike. Whichever route you choose, it is vital to be clear about the potential risks.

What is the ‘gig economy’?

A common definition is that it is an environment in which temporary positions are common and businesses contract with independent workers for short-term engagements, often through technology.  Whilst the healthcare sector is familiar with the idea of independent contractors, the concept of workers contracting for short-term, even very short-term, engagements and using technology to do so is relatively new, as it is for every other sector of the economy

Here are three key issues you need to consider when using the services of doctors in your business.

1. Are you employing doctors or are they working for you as independent contractors?

You may see benefits to employing doctors on a full or part time basis – for example certainty, reliability and consistency – though you will of course need to understand the legal implications of doing so.

Alternatively, you may wish to engage with doctors as independent contractors, using their skills for short term engagements or even very short term engagements (such as the length of an appointment with a patient). If so, it is essential that you put in place contracts and processes with the doctors to minimise the risk of inadvertently creating an employment relationship.

The law in this area is complex – just look at the recent employment tribunal ruling against Uber which stated that Uber drivers are not self-employed but rather fall squarely within the statutory definition of “worker” meaning they are entitled to the national minimum wage, paid holiday and whistle-blower protection.

The full implications of the Uber ruling, which we understand is to be appealed, on  gig economy business models are not yet fully known, but the key point to note is that employment status is determined not just by the contract terms you have with doctors but also by what really happens day to day.

Essential elements for an employment contract to exist:

  • personal service – does the individual undertake to provide their own skill and work?
  • mutuality of obligation – does the individual undertake to provide their own skill and work in return for consideration (a wage or other remuneration)?
  • control – is the individual wholly or mainly acting under your direction/control?

There are various other factors to consider but without these three elements it would be difficult for a doctor to assert that he/she was an employee

2. How much control do you need to exercise over doctors you work with as independent contractors?

In short, significantly less than if the doctor was your employee.

An advantage of engaging doctors as independent contractors is that you can expect them to undertake services with a degree of autonomy. This can allow you to transfer risk from your business to the doctors by ensuring they take responsibility for the medical services they provide.

However, in this relationship, you will still need to ensure that they have the requisite qualifications, experience and regulatory registrations, in particular if you plan to use foreign-qualified doctors. You will want to ensure that your contract with the doctors includes obligations on them to maintain these qualifications and registrations and, as with every other contract, you will want to monitor and manage compliance with these obligations – the success and reputation of your business will depend on it.

3. What registrations and indemnity cover does the business need?

The registrations and indemnity cover the business itself needs, as opposed to those that the doctors working for it need, will very much depend on how the business is structured and the respective responsibilities of the business and doctors.

The key question is whether the business itself needs to be registered with the CQC. Broadly speaking, if the business is responsible to patients for provision of healthcare services then it will need to be. But if the business is operating as a platform to simply connect patients and doctors, then the business may not need CQC registration, but the doctors themselves will need to be CQC registered. This is obviously a complex area and one it is essential to get right.

Similarly, the potential indemnity cover that the business needs will depend on whether it is responsible to patients for providing healthcare services or not. Indemnity requirements and costs should be considered early on in the planning process.