Launching Your Practice: Legal 101

Legal Essentials For the Solo Clinician:

This guide is meant to inform you of key components to consider when going into private practice. Legally speaking, you’ll need to think about:

• Business Incorporation 

• Intake Forms

• Reviewing your Insurance Contracts (If applicable) 

• Business Associate Agreements (BAA)

• Written Information Security Program (WISP)

Keep in mind that this is not an exhaustive list, but rather a starting point to ensure compliance on key issues. When starting a business, it's important to remember that each situation is different, each business unique, and solutions are tailored to specific needs based on how you envision this exciting new venture! 

Business Incorporation: 

First, you may decide to incorporate your business by registering it with the State as a legal entity (e.g. LLC or PLLC). Incorporating your business can help protect you and your personal assets from liability. They also help legitimize your business as a professional entity.

Many solo clinicians in private practice choose to operate as a sole proprietorship instead. While this structure is the most simple and straightforward, it does not provide a legal distinction between your personal and business assets, meaning you are personally liable for any debts or legal actions against your practice.

Intake Forms: 

By this point in your career as a therapist, you know about intake forms and the important role they play. These documents are vital, not only to meet ethical standards and provide top-notch care for your clients, but they are also required by law. What is more, each state has different requirements for what must be disclosed to clients prior to the first session. Some states even have different legal requirements by license type.

So, needless to say, intake forms are a must-have. The intake form templates you get from practice management and EHR software are helpful starting points, but they tend to be one-size-fits-all. Also, these templates typically include disclaimers, placing the responsibility on you, the therapist, to ensure compliance with state-specific laws. 

Review of Insurance Contracts (if Applicable)

If you plan to accept insurance and be credentialed with insurance companies, it is important to get a grasp on what kinds of contracts those companies will be asking you to sign. You’ll want to be sure to understand your contractual obligations, identify terms that may be unfavorable or warrant negotiation, assure that the contract aligns with your professional liability insurance, clarify dispute resolution processes, and navigate the legal and regulatory landscape when it comes to healthcare laws and insurance.

Business Associate Agreements (BAA): 

A BAA is a legally binding contract between a covered entity (such as a therapist) and a business associate - any third party that handles Protected Health Information (PHI) on behalf of the covered entity (think billers, consultants, contractors, etc). This agreement outlines each party's responsibilities in safeguarding PHI and ensures adherence to HIPAA regulations.

This is a big one because the penalties are harsh, can be costly, and add up quickly. For example, civil penalties range from $141 to $71,162 per violation. 

Written Information Security Program (WISP)

While we're on the topic of information security, WISPs are required for any business that “receives, stores, maintains, processes, or otherwise has access to personal information in connection with the provision of goods or services or in connection with employment”. 

Needless to say, this includes therapists who not only store, maintain, and process PHI, but also personal financial information. State laws vary on what information must be included in a WISP, so be wary of these templates as well. 

Launching a private practice is a rewarding journey, but it’s crucial to address these legal essentials early on to safeguard your business and provide the best possible care to your clients. As you build your practice, don’t hesitate to consult legal professionals for tailored advice. Every practice is unique, and yours deserves a strong foundation.

This blog is intended for educational purposes only and does not constitute specific legal advice for any individual. Reading this material does not establish an attorney-client relationship between the reader and our firm. For personalized legal guidance, please consult a licensed attorney in your jurisdiction.