The Spare Consulting Room - Don't Rush into Signing a Contract - Best Practice News Alert 173

CURRENT CIRCULATION: DATE: ISSUE NO:

7797 th 24 July, 2010 173

Welcome to Health & Life’s free email newsletter service. Tell a friend that we would be happy to add their email address to the distribution list. This service is to provide Health and Life’s clients and those who attended our presentations with up to date information on key financial and Practice management issues that may affect your Practice. Please do not use this as a substitute to seeking professional advice.

Writer in charge: Mr David Dahm BA.Acc, FCPA, FTIA, Ffin, FAAPM, GLFG.

The Spare Consulting Room – Don’t Rush into Signing a Contract

STOP PRESS – Fair Work Act – Conflicting Advice/Information ?*@!

Since our last news alert we have been inundated with conflicting advice in relation to the issues raised regarding the Fair Work Act. This is not the first time we have answered your concerns and we are happy to take your call at no obligation however, before taking anyone’s advice as gospel could you please ask the adviser (it does not matter whether they are an accountant, lawyer, employer association or even Fair Work Australia because it is all new and unprecedented law) the following before acting on the information: 1. Can you put your advice in writing and provide the legal source of your comments not just an opinion e.g. “Where in the Law does it state you can have a regular casual?”.

If they can’t do this, disregard the advice – we do as we are pretty conservative by nature. Remember, if you don’t ask the right question in the right way you can still get a wrong answer. For example “You did not ask me that question so that is why I did not answer it”.

2. If the adviser cannot name their legal source, write to Fair Work Australia for a written “definitive” ruling. Don’t rely on telephone advice and again ask for sources. We have tried to resolved issues on a number of occasions with Fair Work Australia and when we have pushed them they have stated their job is “Not to give out legal advice”, “They have not been trained on the latest laws” or they are “new” which has left us a little dumbfounded. When in doubt, follow the black and white letter of the law.

3. Ask your adviser what experience they have and how long they have been working on the job. Many people we have come across have not read 890 pages of the new laws and have either just been trained to answer specific parts of the law or are new to the job. Ask them what industry specific experience they have? We have 19 years of national experience and we have worked with all the new and old Awards.

Remember, most long service leave rules are still governed by local State Acts.

We, like yourselves, can get very frustrated at times with the lack of clarity on key issues.

Note there have been over 40 Award and Industrial changes in the last 6 months. At the end of the day, ignorance of the law is no excuse and relying on telephone advice can have its strengths and pitfalls. Remember the buck always falls on employers and nobody else unless you have the time and money to prove it! Opinion shopping is not a great idea.

In this Edition …..

There are many good practices but what makes a great practice?

Somebody once asked me, “What is the best and most valuable practice to own?”. I said “the one where you can sack yourself”. Ultimately, going to work must be a choice and not a necessity. Owners must work towards this as their ultimate goal. It is achievable if you plan for it. Start counting how many less hours you have to work each week without compromising the sustainability, quantity and quality of the practices services – this is the real litmus test.

Remind staff this is the key goal. In this edition we cover the first important steps towards this road to practice success and solid succession planning.

We cover the hot topic of negotiating leases. Due to the Federal Governments Grant Scheme and policy initiatives to build better infrastructure and workforce capability, there is a need to provide a more comprehensive co-located service to meet future healthcare reforms and patient demand. Interestingly, the deregulation of the pathology sector has only fuelled the viability of smaller practices for the first time. National media reports reveal a new significant source of income to general practices that previously could not accessed. This was st due to pathology collection centre licensing restrictions which have now been lifted from 1 July 2010. st

In our last news alert we reported about the de-regulation of pathology centres from 1 July 2010 which has resulted in record prices being paid for pathology collection centre rents. Last week, The Australian reported a 20% increase or 500 new pathology collection centres as a “land grab”.

See http://www.theaustralian.com.au/business/pathology-plague-sparksoverservicing-and-land-grab-fears/story-e6frg8zx-1225891364558.

From experience, practices are earning between $70,000 up to $200,000 a year in rent depending on the size and nature of the practice plus payment of fit out costs of up to $180,000.

We clarified what is a legal pathology rental in the Medical Observer article “Clarifying Proper Market Value” and advising you how to set a legally correct market value for a pathology lease under the new laws.

See https://www.accounting.eknowhow.com/HealthandLife/html/s02_article/article_view.asp?id=1 39&nav_cat_id=127&nav_top_id=55&dsb=360 Rushing to sign up lucrative pathology leases is concerning especially when the pathology lab sends you their “standard terms and leasing documents” that “everyone signs to save you money and time”.

We examine the traps and pitfalls from getting your business model right, common problems when negotiating your leases to not handing over your business to your land lord. We look at the common mistakes, traps and tricks played to “lock your business in” which is not in your patients or your own interests.

Furthermore, we look at alternative uses for your spare consulting room and how your agreements can be better structured, the range of template leasing and subleasing documents we have available so you do not have to re-invent the wheel with advisers and how you can better negotiate with potential tenants.

What many of you may or may not know is for many years Health and Life have been negotiating many of our clients’ leasing arrangements. These range from doctor, specialist and allied health contracts right through to pharmacy and corporate owned pathology labs at a national level.

Due to the repetitive nature of some of the providers we deal with, we have secured better terms at a national level that simplifies and optimises the negotiation process for all parties so you can get to the contract stage far quicker. This may be important if you have a large building project waiting for finance approval which is being held up by lengthy and uncertain lease negotiations.

There is a big difference when somebody says they are interested in leasing and actually signing on the dotted line the exact terms and conditions. Money is one of many important factors to consider.

We have compiled a checklist of things you should think about before you start trying to sublease your premises or committing to any deals.

TABLE OF CONTENTS 1.0 Types, Nature and Structure of Leases and or Subleasing Arrangements 1. Base rent, plus a percentage of turnover approach 2. Flat rent approach It is important to be clear on your: 1.1 Vision – Succession Planning – Does your practice have a future or are you on the Titanic?

1.2 Types of co-located services – Secure “like minded” providers as they are low maintenance!

1.3 How will these services integrate operationally and medico-legally you’re your practice?

1.4 The fee charging mechanism and options – Be flexible and do your homework!

1.5 The tenure of the leasing terms – avoid lock ins!

1.6 What is a reasonable value that can be charged to a tenant?

1.7 No.1 Mistake – Wrong Business Model and Legal Structure 2.0 From Experience – 19 Practice Tips and Tactics for Negotiating a Lease 2.1 Do your home work 2.2 Never be pressured to accept the first offer and get it in writing 2.3 Never permit exclusionary or anti-competitive clauses 2.4 Don’t fall for the company line or company kudos 2.5 Valuations and industry benchmarks; is it a fair price to pay – Who cares?

2.6 Watch out for healthcare reforms that may lock you out 2.7 Government Grants – Are they worth it?

2.8 Watch out for the slipping a “mickey” term 2.9 Malpractice Insurance does not cover you – Read your contracts carefully 2.10 Make sure you include all costs – Don’t believe in myths or old rules 2.11 Assess opportunity cost – What is the lost income for not going ahead with a deal?

2.12 No solicitation clauses – Stop poaching of staff 2.13 Make sure the service complements and integrates with existing services so you can leverage relationships 2.14 Avoid conflicts of interest when referring in house to tenants 2.15 Never use a tenant prepared leasing template 2.16 Seek independent advice from experienced and qualified professionals

2.17 You don’t need everyone to be interested in your practice to get the best deal 2.18 Only accept terms that are in your interest but be reasonable 2.19 Don’t be afraid to spend money to get it right – peace of mind 3.0 Purchasing Leasing and Employment Templates and Getting Help with your Leases 3.1 Service Agreement template 3.2 Employment template 3.3 Head Lease template 3.4 Pharmacy lease template 3.5 Pathology and Radiology lease template 4.0 2010 Seminar Presentations 5.0 Catching Up with David Dahm and the Team – Adelaide, Melbourne and NSW 6.0 Where to from here?

The Spare Consulting Room – Don’t Rush into Signing a Contract The most common mistake with leasing is rushing to sign a contract for the money without checking the terms and conditions and your practice objectives first.

1.0 Types, Nature and Structure of Leases and or Subleasing Arrangements The worst mistake you can make is not be clear what your price or terms and conditions are and then going back on your word when negotiating a lease. You quickly lose peoples confidence and your negotiating power.

It is important to appreciate if say you are a general practice that there are two common types of complementary leasing arrangements you can enter into. We have a full range of template leases that can be purchased detailed at the bottom of this edition.

1. Base rent, plus a percentage of turnover approach: Typically utilized by GP’s, specialists and allied health providers. This is a hybrid arrangement however; a base rent or percentage of the turnover can be charged. For example, 40% of gross fees received can be used on a mutually exclusive basis.

This is in exchange for the use of premises including car parking, staff, maintenance including but not limited to gardening, marketing, IT, accreditation and practice goodwill.

2. Flat rent approach: Due to healthcare laws that prohibit a percentage approach such as in pharmacy, radiology and pathology arrangements where the rent cannot be linked to referrals by the referrer this is a more appropriate method.

Once again in exchange for the use of premises including car parking, staff, maintenance including but not limited to gardening marketing, IT, accreditation and practice goodwill.

It is important to be clear on: 1.1 Vision – Succession Planning – Does your practice have a future or are you on the Titanic?

Ask yourself in 5 years what do we want to look like? For example, we want to be an integrated, co-located multidisciplinary practice with complementary services. Clearly the permitted use and or the ability to expand by buying the block next door will determine the size and scale of this vision. Having this clear in your mind and being able to articulate this is excellent when attempting to recruit and retain staff. This is critical for succession planning purposes. Why join the Titanic when it has no future?

Every practice has a lifecycle – birth, growth and maturity. Death is optional and a lack of investment in practice infrastructure can be a symptom of renal failure. So keep asking yourself are we planning for growth or something else???

1.2 Types of co-located services – Secure “like minded” providers as they are low maintenance!

By understanding your vision, it is easy for the practice to come up with a short list of possible tenants. This acute focus enables the practice to quickly determine which key terms and conditions are the “deal makers” or “deal breakers”. Most importantly, you will find there are natural win win synergies and you will find negotiations will move quickly which makes your life easier. Make sure they understand your business model and what value you bring to the relationship. This is better than being a “stand alone” street corner provider.

1.3 How will these services integrate operationally and medico-legally with your practice?

Be careful when you offer staff support as there is a duty of care to ensure your support staff are properly trained in the acute care of the specialist they are supporting. This may be beyond the level your staff may be trained for. For example psychiatric patients with an acute problem, staff must be trained at a higher level duty of care to call triage suicidal patients. Practices must ensure they receive clear written instructions or protocols from providers with training before commencing any support service. Furthermore, legal agreements should indemnify and exempt the practice from any malpractice claims as most insurance policies would not cover these contributory negligence events.

1.4 The fee charging mechanism and options – Be flexible and do your homework!

Once you have evaluated the operational and financial commitment including risks and additional costs such as top up insurance only then can you determine the most appropriate way to recover your costs plus make a fair profit on the service so it is sustainable and the service can be developed. A lot of rental arrangements end up being unnecessarily subsidized by the practice or leaving a bad taste in the other persons mouth by Practices not calculating their numbers correctly and educating potential tenants of this methodology.

Yes, look what your competitors are doing but don’t blindly copy them on price alone.

This is called the “tyre kickers play off”. They play against you so you feel guilty if they think you are overcharging. Their cost and service structure may be significantly different and it’s important all parties are comparing apples with apples. If the other party is not interested then let them go. Don’t allow their egos or ignorance get in the way; there will always another bus to catch – do not lose your nerve. Put an ad out in the local paper this usually calls peoples bluffs.

1.5 The tenure of the leasing terms – Avoid lock ins!

Understand there are circumstances where a higher rent should be charged such as short term arrangements on a monthly basis. Long term arrangements that are between 2 to 5 years should attract a lower rent or charge. Ideally, avoid rents or options greater than 5 years as you may not be happy with the provider but have no option but to be stuck with them. On rare occasions, a longer lease term is warranted; for example when the tenant say a pharmacist has had to invest a lot of capital to get a decent pay back.

1.6 What is a reasonable value that can be charged to a tenant?

We have a lot of clients that go to a lot of trouble and cost to build their new and purpose built practices. In the first 5 years the costs per full time doctor may be 20% to 40% higher than a mature practice that has not spent any money on upgrades.

Therefore, the returns on newly established practice are in a “J” curve shape which is to be expected in the earlier years. Only after settling down in year 3 when systems and process have been implemented and refined can significant return occur. Clearly, this can vary depending on the depth and strength of management and their ability to turn it around earlier. The bottom line is, practices should aim for a 20% profit margin as a minimum on the cost of delivering their services. This means if the service cost a $1 then charge $1.20. Having said that, charge whatever the market will pay for first and keep this figure close to your chest. You may find with some tenants you have to rob “peter to pay paul” but try and avoid this.

If you are GP’s and other tenants need timely access to your services, you can charge a premium for example with pathology, radiology and pharmacy services. Just follow normal market principles and put your offer to the highest bidder. A tip is to talk to the most important person in the organization. Just make sure they don’t go broke regardless of their enthusiasm. Make sure the rules of negotiation are never broken and stated up front.

1.7 No.1 Mistake – Wrong Business Model and Legal Structure The No.1 mistake is practices make is not appreciating what has more value, the property or the practice and legally separating the two activities and legal structures so they can be sold independently of each other. The Practice is more important than the purpose built property entity it rents from. This is because without the practice that uses GP’s as the anchor tenant, all the subleasing arrangements would devalue or disappear overnight due to the lack of a GP referral base.

Unfortunately, property developers/banks seduce GP owners into taking out long term leases with third non-medico parties for this reason so they and not the GP’s can enjoy the benefits of a premium rental income stream.

All GP’s or anchor tenants should take out a head lease with the property owner that allows full sub leasing rights. This way both parties benefit. It makes the Practice more financially attractive and viable. This will keep the bank, property owners and the Practice happy. The correct legal structure should be used and it should not be a company. Contact us for a quick chat and no obligation diagrammatical overview on how this can be done.

2.0 From Experience – 19 Practice Tips and Tactics for Negotiating a Lease 2.1 Do your home work – Make sure you are using the correct legal structure. Be organized and clear about what you want.

2.2 Never be pressured to accept the first offer and get it in writing – Put it out to tender and make sure all communication is in writing not just the lease. If it’s not in writing it’s hard to fight in court no matter what a lawyer may say because it’s all based on hearsay. Also never say how much you are prepared to accept; leave it to the highest bidder.

2.3 Never permit exclusionary or anti-competitive clauses – This can be in breach of the Australian Competition Laws and can attract up to a $10m fine.

2.4 Don’t fall for the company line or company kudos – “We can’t do that or it’s illegal”. Go to the top and get it in writing and ask for written sources. There is a difference between company policy and what is illegal. Call their bluff and don’t be star struck because of their size or access to expensive advisers. Don’t be afraid to source good independent advice if you are not sure.

2.5 Valuations and industry benchmarks; is it a fair price to pay – Who cares?

Pharmacists will often use the excuse that industry benchmarks are what is fair.

These benchmarks are produced by their industry and can be biased. This is not relevant. Call their bluff and you will find they can pay more. At the end of the day it is about willing seller and willing buyer don’t let biased valuations or benchmarks get in the way of the real value of the tenancy.

2.6 Watch out for healthcare reforms that may lock you out – Pharmacists can employ nurses so make sure your lease is clear on whether you are ok with this.

Assess the impact on future grants.

2.7 Government Grants – Are they worth it? – Government grants get announced from time to time. Before spending a lot of time on them consider whether your practice is located in a marginal seat. Most of the Government’s Super Clinics were located in marginal seats – let your local MP know and get them on board together with the locals it will help. Also ensure the infrastructure application covers off on building workforce capacity through training healthcare teams and extending services such as after hours.

Some key pointers: •

The Government looks at the commencement date of the application. It should only be based on future projects not past projects;

•

Project plan has to reflect the work that is going be undertaken with the funding (it must not be retrospective);

•

Any risk analysis needs to reflect the actual project and how it will affect the community if the project would not go ahead. Provide data in reference to community needs, growth, how far people need to travel to seek medical attention. Focus on the community needs and training.

•

The latest grants’ closing date is 29/9/10. Allow approximately 6 months for the grants to be finalised and approved.

•

New grants up to $150k, $300k and $500k for existing and current buildings (existing) in a separate program are currently available as well as new buildings. Refer to the link below: http://www.health.gov.au/internet/main/publishing.nsf/Content/Listing+of+Ten ders+and+Grants-1

The tricky part is wearing the interest holding costs for up to 6 months e.g. holding on to a block of land while you wait for government approval. This will have an impact on practice cash flows and as there is no guarantee of the grant being approved, this will test your patience. You can get feedback from the Government in relation to any applications.

2.8 Watch out for the slipping a “mickey” term – Negotiations can be a lengthy th and tiring process and on the 11 hour when you have referred everything off to your lawyers and there’s a deal or modification done without your knowledge in the interest of expediency. Do not allow your advisers to change any terms without your consent no matter how urgent. An example would include providing tenants further options to

renew because this is an industry standard. Most lawyers may see this as a good thing and they are looking out for you but it can work against you. Don’t fall for this line or our corporate lawyers have a better idea than you. Get what you want and no less.

2.9 Malpractice Insurance does not cover you – Read your contracts carefully – Remember if you are providing staff support services to a tenant and they are negligent, many insurers have exemption or exclusion clauses that do not protect the practice from malpractice. Ironically, most believe that the treating provider has this insurance so it’s not an issue. The reality is for this reason you get sued because it’s usually this same insurer who is trying to con-join you in a legal claim to reduce their financial exposure to the owners who may have deeper pockets. We have seen 3 cases this year where major well known insurers have sued practice owners and denied any coverage. Read your insurance contracts carefully as there are a number of onerous conditions such as all doctors have to be with the same insurer. It only takes one new doctor who is not listed to void your policy. Make sure your contracts cover off on this issue.

2.10 Make sure you include all costs – Don’t believe in myths or old rules – There are some common myths that seem to prevail. For example, pathology leases can only include the cost of the room area. This is not correct. It can include common areas including staff and car parking so you can charge for more so long as it is commercially realistic.

2.11 Assess opportunity cost – What is the lost income for not going ahead with a deal? – This is critical if you have the opportunity to generate a $150k revenue stream by doing a deal with a GP versus renting out to an allied health worker at th 1/10 of the value. You need to assess what is your priority. There should be a pecking order.

2.12 No solicitation clauses – Stop poaching of staff – We have noted some diagnostic providers win deals to get closer to your doctors so they can have a coffee chat enticing them to join the practice down the road. Prohibit this behaviour where possible. This is where having group negotiation power is invaluable – contact us for more information.

2.13 Make sure the service complements and integrates with existing services so you can leverage relationships – A classic opportunity is to share back office services such as IT systems, support staff and marketing.

2.14 Avoid conflicts of interest when referring in house to tenants – Conflicts of interest are ok with the patients consent. To avoid it, declare your commercial interest in a referral you have made. You don’t have to state how much rent the tenant pays you just let them know there are commercial arrangements you have with on-site providers. This can be a sign in the waiting room or a consent form when you register new patients. Give the patients the option to opt out and let them know they are free to choose their providers.

2.15 Never use a tenant prepared leasing template – Commonly we see pathology leases where corporates use a “one size fits all approach”. This is legally not possible and we have found unknowingly practices have broken local leasing and retail tenancy act laws to unnecessarily sign terms that are less favourable. Examples include no make good clauses, long options to roll over, claw back clauses that terminate leases if there are insufficient referrals etc. We have lessor friendly leases that can overcome these and many other problems as detailed in this news alert.

Don’t waste time reinventing the wheel. When practices are earning between $70,000 up to $200,000 a year in rent depending on the size and nature of the practice plus fit out costs of up to $180,000, the price for negotiating a well prepared less is minimal.

2.16 Seek independent advice from experienced and qualified professionals – Understand your practice’s succession plan, business model and structure, the leasing laws and Health laws that prohibit arrangements. Understand the real market value of your leasing arrangements. We can negotiate these for you if you get stuck.

Independent advisors need to understand local as well as national laws to be effective in their role.

2.17 You don’t need everyone to be interested in your practice to get the best deal – All you need is a willing seller and two willing buyers. Don’t engage in dutch auctions just ask for the best and final bid. This stops drawn out negotiations. Set the key terms up front and what you want. For example length of term, area, support services etc. We use key terms sheets for client negotiations. These are not fully drawn up leases. They are basic terms used to agree on so a formal lease can be drawn.

2.18 Only accept terms that are in your interest but be reasonable – We always say leave a little on the table, don’t be greedy. After all, you want to work in harmony with your tenants so don’t leave a bitter taste in their mouth or it may flare up into a major argument. Sometimes the little issues can become a deal breaker if you go in too hard, listen carefully to the other side and work out their limits. Don’t assume they always have deep pockets. Focus on a win win outcome and be fair, transparent and honourable. If you are perceived as a liar even on the smallest of points this can be a deal breaker. So don’t promise what you can’t and always use the excuse I need to consult my adviser as an escape clause if people back you into a corner.

2.19 Don’t be afraid to spend money to get it right – Peace of mind – Pushy tenants or tyre kickers can become quite expensive to deal with. Screen people as early as possible or get somebody to do this for you. We provide this service for clients. The bottom line is, you need to spend money to make money especially where you lack skill, expertise, market intelligence and purchasing power. The real benefits both financial and non financial should outweigh the cost. Speak to your advisers on what they can offer before going it alone and have no regrets. We always say it is better to have 20% of something than 100% of nothing because a deal fell over for all the wrong reasons.

3.0 Purchasing Leasing and Employment Templates and Getting Help with your Leases We anticipated the complexities of existing and new laws affecting leasing arrangements and the necessity to complement practice clinical and business models that are also medicolegally and tax friendly. Our leases have been approved by the Health and Insurance Commission. Over the last 19 years we have developed and nationally tested the following templates that are available for purchase: 3.1 Service Agreement template – For GP’s, Specialists and Allied Health providers based on flat fees and a percentage of gross receipts. Special agreements exist for overseas doctors to minimize flight risk and includes restricted covenants.

Furthermore many agreements we see do not cover the deeming of providers as employee/contractors under the new Fair Work Act, Superannuation Guarantee Act, Payroll Tax and Income Tax Act. We recommend all practices review their existing st agreements under the new laws commencing 1 January 2010. Many agreements have been written for tax purposes which ironically makes them “tax driven” and risky to use as the tax office does not view them as being “commercial” under Part 4A of the Income Tax Act which is a key defence.

If these arrangements are treated as sham, providers will be treated as employees.

Under the Fair Work Act they would be entitled to annual, sick, long service and other leave entitlements. It is a myth that just because you pay a doctor a high percentage you do not have to pay these leave entitlements. It is illegal to contract out of law.

Calling them contractors or independent contractors does not get you out of the loop,

your agreements and administration systems need to be consistent. It is about substance over form. You will have to pay these leave entitlements on top of their percentage retrospectively, unless you have a properly worded service agreement.

Agreements should protect the practice from vicarious liability claims especially preventing insured treating doctors (contractors/employees) from suing the practice.

Most practices are unaware they do not have insurance coverage only the treating doctor has – read the fine print of their insurance contracts! We have recently seen practices get sued and denied coverage from major insurers in relation to their employee/contractor doctors. Insurers do this to reduce the insurance company’s liability by co-joining a practice into a claim. Practices unnecessarily take out additional insurance which can be at a higher premium. Many make the mistake of believing they do have “Practice Insurance” coverage but this usually only covers non-medical staff such as reception and admin staff not employee or contactor doctors. Practices are primarily liable because the tax invoice and letterheads have the ABN of the practice and not the treating doctor and this is why practices get into trouble. No other structure including trusts, company’s or partnerships will protect the practice. In fact, they only make matters worse. A good service agreement can avoid this problem.

Finally, a good service agreement should allow multiple service fees for meeting a certain number of minimum sessions, item number and/or allow the discounting of service fees. Making direct payments to doctors from the practice bank account from monies received via the PIP may deem an employer employee arrangement for tax and Fair Work Act purposes. All agreements we have seen to date (other than our own) do not cover these areas. There are many advisers who do not have experience in these areas and are not aware that many new PIP’s that are fee for service actually identify and by-pass the treating doctor and are paid directly to the practice. Recently registrar doctors in WA have found out these sums can be significant for after hours work, procedural and obstetrics (up to $20,000 per doctor pa.) and are demanding payment. We are aware there is a trend for more of these government “back door” performance based funding payments. Traditional service agreements do not work if you are planning on sharing the PIP with your doctors in order to keep them happy.

All our template agreements cover off on all of the above issues. It is important to use advisers who draw up documents that understand the changing healthcare environment otherwise a lot of time and money is wasted on a myopic understanding of the issues that will need to be addressed by your agreements. If your arrangements are left ambiguous by not having any written or signed agreements, this leaves the practice open to prosecution under the Income Tax Act and the Fair Work Act. Fines up to $33,000 per incident may apply because agencies can deem your self employed doctors as employed doctors which in turn makes you liable for all employee related costs which can apply retrospectively such as 9% employer superannuation and related employee entitlements such as annual and sick leave.

However, the worst aspect are doctors who feel the practice is not handling their affairs professionally and are putting their own arrangements at risk. Now is a good time to clear up any confusion once and for all – there is an optimum answer.

3.2 Employment template – As we said in our last news alert, if you do not have a signed employment agreement with your staff you are probably not Fair Work compliant even if you are paying above the minimum Award entitlements.

Our very popular selling employment kits are the only alternative solution if your doctors refuse to go on service agreements as detailed above. Just because they are paid over the Award free threshold of over $108,000 p.a. you need to have them signed up to an employment agreement where they acknowledge that they are being paid above the Award and they agree they are Award free. For Award free staff annual, sick and other leave entitlements still apply. You need written consent via employment agreements to engage in any “permitted” Award variations such as absorbing over time. Under the Medical Practitioners Award, employee doctors are entitled to over time. Our Employment Templates cover all support staff, nurses and doctors from all three Awards. They include the National Employment Standards, job

descriptions, restraint of trade, employment agreement preparation tips and any Fair Work updates from this series. Email us for a quote at pa@healthandife.com.au.

3.3 Head Lease template – A lease between a property owner and the practice allowing full sub leasing rights; 3.4 Pharmacy Lease template – Include non solicitation clauses; and 3.5 Pathology and Radiology Lease templates – Short and long term leases that include a fit out payment and non solicitation.

We can send your practice a flat fee quote to purchase our templates and yes, we accept credit card payments. Email us at pa@healthandlife.com.au or call and ask for Emma to arrange a no obligation free chat. Before selling any templates it is important that they are fit for purpose. We are happy to discuss any points raised in this news alert and provide further assistance charged at our standard hourly rates in addition to the template if required.

You will find these templates will help you simplify the process without having to re-invent the wheel with advisers that are not familiar with the issues raised.

4.0 2010 Seminar Presentations Below is a summary of dates for our seminars across Australia. At each seminar there is an opportunity to meet with us face to face to discuss any practice issues you may have at no obligation. Email us at pa@healthandlife.com.au to pre-book an appointment.

If you would like your local medical organisation to host a seminar, forward them this email with our seminar details and copy us at pa@healthandlife.com.au into your email. We will contact them directly about presenting in your local area. We thank you in advance for your interest and support. You would be surprised how it only takes one person to make things happen!

New confirmed programs are detailed below.

Please contact the organisations directly for details about the course program, content and costs. More seminars will be announced during the year.

1.

Host and Where

Date

Contact Name

Contact Details

Orthoptic Association (SA)

Confirmed

Hayley Neate

hneate@melbpc.org.au

RACGP 15 Gover Street, North Adelaide, SA

st

(08) 8267 3211

Sunday 21 November, 2010

Adelaide North Eastern Division of General Practice

To be confirmed

The NEW Fair Work Act, and the Health Professionals and Support Staff Awards.

Still confused? The latest changes!

12.30pm – 4pm

2.

Topics

Irene Glasson

iglasson@andgp.org.au (08) 8362 1636

The NEW Fair Work Act, the Medical, Nurses and Health Professionals and Support Staff Awards.

Adelaide, SA Still confused? The latest changes!

3.

Health & Life Melbourne Office Essendon Fields House Level 2, 7 English Street

Confirmed Tuesday 14 September, 2010

th

Emma Gilbertson

(08) 8415 5400 Limited places – Strictly first in best dressed.

Please submit your questions prior to the meeting to ensure we can allocate time at the presentation.

Essendon Fields, VIC

4.

New England Division of General Practice Armidale, NSW

Confirmed

pa@healthandlife.com.au

Kyra Moss th

Saturday 5 – th Sunday 6 March, 2011

kmoss@nedgp.org.au

Q&A session, Taking the next step from Good to Great, Trouble Shooting your Practice – You are not God!, Optimal legal and tax structures, The New Awards, Medicare Audits and Succession Planning to sustainable practice models.

Key Note Speaker – David Dahm

(02) 6771 1146 Strategic planning so you have a future.

Efficient practices - have you got the right systems in your practice?

5.

Mid North Coast Division of General Practice

To be confirmed

Karen Plume

kplumbe@mncdgp.org.au (02) 6651 5774

The NEW Fair Work Act, the Medical, Nurses and Health Professionals and Support Staff Awards.

Coffs Harbour, NSW Still confused? The latest changes!

5.0 Catching Up with David Dahm and the Team If you would like to catch up with us the next time we are in your neighborhood feel free to email us at pa@healthandlife.com.au or call for a no obligation chat in relation to these or any other issues you may be concerned about. We are planning trips to Sydney, Melbourne and Perth in the next couple of months. Alternatively feel free to contact one of our State Offices to arrange a no obligation appointment.

6.0 Where to from here?

1.

Consult your professional adviser in relation to any advice suggested;

2.

If you require any back issues of our news alerts please email us;

3.

If you are not sure about any issues raised in this broadcast contact David Dahm on 1800 077 222 for an initial no obligation consult or email us at pa@healthandlife.com.au. Health and Life provides comprehensive Practice consulting, accounting, taxation and financial planning advice for group Practices and individuals.

Which topics would you like to be covered?

If there is a particular topic that you would like covered in one of our future News Alerts, please email pa@healthandlife.com.au and let us know what it is. We will then endeavor to cover your requested topic.

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Copyright Notice 2010 This email, including any attachments, is for the personal use of the recipient(s) only.

Republication and re-dissemination, including posting to news groups or web pages, is strictly prohibited without the express prior consent of Health & Life Pty Ltd. Disclaimer Notice Health & Life Pty Ltd’s Best Practice News Alert is designed as a comprehensive and up-to-date Accounting and Practice Management news service to alert readers to the latest in Practice and related developments affecting the medical, dental and allied health professions as they happen. It is published when there is news to report. No responsibility can be accepted for those who act on its content without first consulting us or obtaining specific advice.

Health and Life Pty Ltd Accounting, Tax & Practice Management Services.

“Looking after your future” PO Box 8145 Station Arcade, Adelaide SA 5000 Telephone: 1800 077 222 Fax: 1800 077 555 Email: pa@healthandlife.com.au Web Site: www.healthandlife.com.au th

WE ARE MOVING…. Our office will be closed on Friday 30 July and reopen on Monday nd 2 August from our new premises. Please note that we won’t have access to computers or phones during this time although we will be contactable for emergency purposes only on 0458 620 199. We hope to be fully functional by Monday but if for any reason we incur any problems, we would appreciate your patience.

Please update your databases with our new contact details as of the 2nd August 2010: Head Office: Level 5, 108 King William St, Adelaide SA 5000 Postal Address: GPO Box 11042, Adelaide SA 500 All phone/fax numbers and emails to remain the same