By Gil Abras, Partner & Business Advisory at William Buck

Starting your own medical practice is an exciting step. It gives you the opportunity to shape your working environment, build a team and create a business that reflects your approach to patient care.

It also brings decisions that extend well beyond the consulting room. How you structure the business, purchase premises, share ownership and manage cash flow can influence your practice for years to come.

Drawing on William Buck’s experience advising healthcare professionals, this article explores the foundations to consider before establishing or purchasing a private practice.

Start with your long-term plans

Before choosing a business structure, consider what you want your practice to become.

Will you remain the sole owner, or could other doctors join as equity partners? Do you plan to purchase the premises? Could you eventually expand into additional locations?

Your personal circumstances, family situation and future plans all help shape the most appropriate approach.

Thinking through these questions early can help you avoid a structure that becomes difficult or costly to change as your practice grows.

Choose a structure that supports your business

There is no single structure that suits every medical practice. Common options include sole trader arrangements, companies and different types of trusts.

A sole trader structure can be straightforward for an individual practitioner starting out, although it provides limited separation between personal and business liabilities.

A company provides a separate legal entity for the business and can accommodate ownership through shares. Its suitability depends on the practice’s commercial objectives, tax position and governance requirements.

Trust structures may also be considered. Unit trusts can provide defined ownership interests where multiple doctors invest together, while discretionary trusts may have a role within broader family ownership or investment arrangements.

More complex arrangements require careful assessment. The aim is to choose a structure that suits the practice’s needs and can be managed effectively.

Your advisers should consider both the entity operating the practice and the individuals or entities that ultimately own it.

Understand the difference between clinical income and practice income

The income you earn from treating patients may be treated differently from income generated by the practice as a business.

A doctor’s clinical earnings may be personal services income, or PSI. Where the PSI rules apply, they can affect how that income is attributed and reported. Establishing a company or trust does not automatically change its character.

Income generated by a business structure needs to be assessed separately. This distinction matters when designing service arrangements, allocating profits and planning ownership.

Getting advice early helps ensure your structure reflects how the practice actually operates.

Define the role of any service entity

Some practices use a separate service entity to provide the infrastructure and support practitioners need to deliver care.

This may include reception, administration, rooms, equipment, technology, bookkeeping and marketing.

A service entity can help clarify responsibilities and allocate operating costs, particularly where several doctors work within the same practice.

However, the arrangements need to be commercially supportable and properly documented. Agreements should clearly explain what services are provided, how fees are calculated and what each party is responsible for.

Decide what you want to own

Practice ownership and property ownership are separate decisions, even when they form part of the same long-term plan.

You might purchase an existing practice business while leasing its premises, acquire a property for your practice, or purchase both the business and the building.

Buying an established practice may involve acquiring goodwill, equipment, systems and existing staff arrangements. Purchasing premises introduces another set of considerations around funding, ownership and long-term investment objectives.

Leasing may suit doctors who want to establish their patient base before committing to property ownership.

Whichever pathway you choose, consider the business and property decisions together so your funding and ownership arrangements support the overall plan.

Put shared ownership agreements in writing

Buying a practice with other doctors can create opportunities to pool resources and share responsibilities. It also requires clear agreement about how the business will operate.

Before committing, owners should document:

• Ownership percentages and financial contributions.

• Decision-making rights and responsibilities.

• How profits will be distributed.

• How much cash will remain in the business.

• The process for admitting new owners.

• What happens when an owner leaves, retires or becomes unable to work.

• How disputes will be resolved.

Profit distribution deserves particular attention. Agreeing on ownership percentages is only the beginning: owners also need a policy for balancing distributions with working capital, equipment purchases and future growth.

Formal agreements provide clarity even when the owners have a strong personal or professional relationship.

Include payroll tax in your planning

Payroll tax can be relevant to practitioner arrangements as well as employed staff.

In some circumstances, payments involving contractor doctors can fall within the relevant contract provisions, even where there is no ordinary employment relationship. The treatment depends on the arrangements and the applicable jurisdiction.

Before establishing or acquiring a practice, seek advice on the rules in the state or territory where it operates.

Your review should consider who contracts with patients, who receives fees, how practitioners are paid and how service arrangements work in practice. Any potential liability should also be considered when modelling cash flow and profitability.

For an acquisition, historical payroll tax exposure should form part of the due diligence process.

Plan for the costs beyond opening day

A practice needs enough funding to operate while patient numbers and revenue develop.

Alongside acquisition or establishment costs, allow for wages, rent, technology, insurance, equipment and other ongoing commitments.

Set up accounting, billing and practice management systems early so you can monitor performance and identify cash flow pressures.

Regular financial reporting can then help you assess whether the practice is meeting expectations and when it can afford to invest in growth.

Consider your eventual exit from the outset

You may be years away from selling or retiring, but those plans can still inform today’s decisions.

Consider how a future owner could join, how an existing owner could leave and whether the business can operate independently of any one practitioner.

Your advisers should also review how practice ownership fits with your broader financial position, including property, investments and retirement plans.

The foundations you establish should support the practice you are opening today and give you room to adapt as your goals change.

Bring the right advisers together early

Business structure, funding, property and practitioner agreements are closely connected. A decision in one area can affect the others.

Working with an accountant, solicitor and finance specialist before making major commitments helps you assess those decisions together.

William Buck supports healthcare professionals through practice establishment, acquisition, growth and succession. Its central message is straightforward: the right foundations depend on your circumstances and the business you want to build.

About the Author

With over 20 years of experience, Gil has a refined approach to complex matters and presenting focused solutions to clients. Gil and his team have a diverse client portfolio spread across several industries, allowing them to assist clients at every stage of the business cycle, including structure & tax planning, business strategy, growth advice, finance management and exit strategy. This breadth of experience offers clients a comprehensive view of their business, enabling the team to develop successful strategies for the future. Gil’s client-service approach revolves around building strong relationships, uncovering clients core priorities. Collaborating with specialist teams across the firm, he ensures comprehensive support for clients personal and business assets, encompassing wealth creation, risk management, succession planning and estate planning.

Gil and his team possess a wealth of experience and knowledge in the health industry, specialising in various aspects of both general and specialised practices. They provide a deep understanding of this sector, enabling them to deliver tailored solutions and guidance to individual practitioners and their practices.

Beyond his professional endeavours, Gil is passionate about environment preservation and protection, actively supporting causes related to national park waterways and wildlife.

Connect with William Buck

Level 29/66 Goulburn St, Sydney NSW 2000
williambuck.com | (02) 8263 4000

Explore the full Industry Priority Report

This article is adapted from Medi Financial’s comprehensive 96-page Industry Priority Report - a practical guide to the financial, legal and operational considerations involved in establishing and growing a successful private practice.

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