What steps are to be taken to start private medical practice?

As part of the medical reform, public health care facilities are increasingly being reorganized into municipal non-profit enterprises. This step is required to transit from the command-and-control model (when the institution receives fixed budget funds, regardless of the workload, etc.) of the relationship between the customer of medical services and suppliers of these services to the contract-based model (when the actually provided medical services are financed).

Subject to labour legislation, such reorganization allows a newly established facility to reduce its staff or number of employees (in accordance with Article 36 of the Labour Code of Ukraine).

In this case, the disengaged employees face the need to find a new job and the most common solution today is to open a private medical practice. At the same time, reduction of staff or full-time employees very often means the availability of vacant spaces (including the medical offices where the dismissed employees previously worked). In this article, we will elaborate on opening private medical offices on the basis of such space.

This material will be useful not only for those who have been laid off during the downsizing, but also for those who are just starting their medical practice (when the local municipal health care facilities have vacant premises), as well as for those who continue working in the public sector, but for various reasons want want to increase the number of their working hours. In addition, this information may be useful for the chief physicians at the health care facilities and heads of local governments (depending on the leased property), who agree on the lease of municipal property.

The process of starting a medical practice can be divided into the following stages:

• Registration of an individual entrepreneur or a company;
• Office space lease;
• Obtainment of a Sanitary and Epidemiological Conclusion;
• Obtainment of a license of the Ministry of Health of Ukraine.

 Registration of an individual entrepreneur or a company

Registration of an individual entrepreneur is one of the key stages when starting your own business. In practice, there are quite common situations when doctors that are not registered as a business entity enter into lease agreements and even receive Sanitary and Epidemiological Conclusions, leaving the registration procedure until the stage of obtaining a license. In such cases, both the lease agreement and the Sanitary and Epidemiological Conclusion have to be revised, as the license commission of the Ministry of Health cannot approve such documents. In addition, the law of Ukraine provides for certain restrictions on lease of state and municipal property.

One of the most widespread fears among doctors who still work in the municipal health care facilities, but intend to start their own private medical practice or combine public and private practice is the inability to combine individual entrepreneurship with work in a municipal or public institution. Such fears are largely groundless. Such a restriction does exist, but only for those who hold managerial positions, namely, the chief physicians, their deputies, heads of structural units and their deputies. Ordinary employees are free to work part-time in the private sector, even without getting the approval of the management at the primary place of employment. Such conclusions are made on the basis of the Resolution of the Cabinet of Ministers of Ukraine “On part-time work of employees of state-owned enterprises, institutions and organizations” No. 245 of April 3, 1993, and the joint Order of the Ministry of Labor, Ministry of Justice and Ministry of Finance of Ukraine “On approval of Regulations on conditions for part-time work of employees of state-owned enterprises, institutions and organizations” No. 43 of June 28, 1993 and the letters of the Ministry of Social Policy of Ukraine No. 731/13 / 84-11 of September 8, 2011 .

Since the scale of workers disengagement is more or less massive, in practice it is quite popular to obtain a license immediately for a group of medical workers. In this case, one person from the group of medical workers registers as an individual entrepreneur, rents premises and obtains a Medical License, while the others act as hired workers. An alternative option is to create a health care facility where medical workers may act both as the founders and employees.

Renting premises in municipal health care facilities

As it was mentioned above, in most cases, though not always, downsizing means also disengagement of some office spaces. In addition, even without laying off employees, health care facilities usually have vacant offices, which can be rented out.

Just like in the case of the registration, there are popular narratives surrounding the lease of communal property. According to one of them, for example, that the law prohibits to rent out such property. Such an opinion is especially widespread among the chief physicians of health care facilities and heads of local authorities, who, being the signers of lease agreements, try to minimize their potential liability.

In fact, the lease of communal property is quite legal, provided that the special terms and conditions stipulated by the Law of Ukraine “On the Lease of State and Communal Property” No. 2269-XII of April 10, 1992 are met.

Thus, the lease of immovable property (buildings, structures, non-residential premises) and other individually defined individual property is allowed.

In addition, the developers of licensing regulations on medical practice (Resolution of the Cabinet of Ministers of Ukraine No. 285 of March 2, 2016) went further and allowed to use not only premises, but also medical devices that are necessary to provide health care services under a particular specialty. The possibility to rent out medical devices is confirmed by the aforementioned Law No. 2269-XII, according to which such devices can be classified as “separate individually defined property of enterprises”.

The key advantages of leasing medical office space in a municipal facility include:

• high probability of compliance with sanitary and construction regulations, and hence minimum investment in repair and redevelopment of the premises;
• a stable flow of patients who come to a large multi-specialty facility;
• the ability to work as a private practitioner in the same medical office of the health care facility afterhours, which is convenient in terms of optimizing your travel and time expenses.

Obtaining a Sanitary and Epidemiological Conclusion

The procedure for obtaining a Sanitary and Epidemiological Conclusion for the premises rented in the operating municipal health care facility has practically no specific peculiarities. The only nuance is that even if a municipal institution has obtained its own Conclusion for the entire property complex (which most likely includes the leased premises), the doctor shall also obtain a personalized Conclusion for the leased office(s).

The final stage connected with the obtainment of a Medical License does not have any specific peculiarities associated with the rental relationship, so we will not elaborate on this issue in this publication. You can read more about the licensing procedure and related analytical publications of our lawyers in the relevant Service section.

Conclusion

The transition to a contract-based healthcare model often results in the disengagement of a significant number of medical personnel. Although at first glance this situation seems to be exceptionally negative, many health care providers can take advantage of it by optimizing their schedules and increasing their incomes if working as individual entrepreneurs.

As a result of the reform, income can be generated not only from the patients’ pockets, but also through the compensation system of the State (represented by the National Health Service) covering free medical services provided according to the relevant list.

It’s also worth noting that the reorganization of the health care facilities into non-profit enterprises allows the latter to flexibly administer their funds. This in turn provides an opportunity for further cooperation between such enterprises and private practitioners, for example, in terms of civil transactions.

In order to start private medical practice, doctors need to follow a certain algorithm of actions, namely:

• To register as an individual entrepreneur;
• To rent a medical office space;
• To get a Sanitary and Epidemiological Conclusion;
• To submit documents to the Ministry of Health of Ukraine and to obtain the license.