Posts Tagged ‘medical practice’

Following on Part 1 in this series of articles, entitled “The structure of your business“, we will be looking at the concept of “Preparing your Business for Sale”.

This is a concept I came across in a business course, where it was suggested that from day 1 of running a business, one should look at the structures of the business in the light of selling your business. Now this might seem like a strange concept, as your mind is on the new challenge that has presented itself in starting your practice. But think about how you would like to have a new business opportunity presented to you, when someone is trying to encourage you to part with some of your well earned money, to buy a practice.

Now the idea of buying “Good Will” is a contentious issue, which should perhaps be carried over to the next article in this series. For now let’s look at adding the tangible elements which are taken into account when presenting a practice or business for sale. You may in the future wish to either sell the practice whole-sale, or get a partner / shareholder to join you in running the practice. In both these cases you would surely like to get some sort of financial reward for the time and effort put into building your practice and name.

What can I do to add value to my business?

Let’s start with some of the documents that you need to have in place, when preparing your practice for sale. You will see that many of these documents are in fact legislative requirements which need to be in place any way, while others will assist greatly in the smooth running of your practice.


This will include contracts with third parties, as well as with your staff

1. Employment contracts

As per the requirements of the Basic Conditions of Employment Act (BCEA), staff need to be employed contractually. There is a transaction taking place, where you pay someone a salary in exchange for specific services offered to the business. Remember that should you not have a contract in place, the employee is then contracted on the terms of the BCEA, which may be more or less favourable to the employer than if you were to have a contract in place.

Be sure to draw up an employment contract, covering essential issues like leave entitlements, salary, working hours, dress code, place of work, meal intervals, policies & procedures and restraint of trade. This needs to be signed by both the employer and the employee.

2. Job descriptions

While we are usually quite sure and comfortable of the requirements around our duties as healthcare professionals, it is important for all staff and employers to be sure as to what is required from them, and according to which they are contracted.

Please keep in mind that job descriptions are specific, they are not cast in stone. As the working requirements may develop through the growth of the business, it is important for the staff to understand this, and grasp that one cannot respond with that is not part of my job description, unless of course the request is outside of their abilities, or totally unrelated to the position.

You may want to revisit the job description with your annual performance appraisals and salary increases year on year.

3. Lease or rental agreements

Should you be renting your premises, keep in mind that should the landlord not renew your lease contract, you may find yourself in a very difficult position where you need to set up shop in new premises on short notice. This will clearly have a great impact on your practice. With a lease agreement in place, you can negotiate time frames as to which the lease period extends, as well as notice for non-renewal. You may also want to include an annual escalation percentage applicable.

Policies & Procedures

These are the documents within your practice which guide both the conduct and processes within your business. This allows the staff to have a clear understanding of your expectations, gives direction and certainty, and guides any labour issues which may occur. The following are some of the critical policies that should be part of your practice:

a. Disciplinary procedure

b. Grievance procedure

c. Patient confidentiality policy – consider having the staff sign an agreement around patient confidentiality and the protection of their information

You may want to also include the following:

d. Performance Appraisal Procedure

e. Staff Savings Policy

f. Staff Loan Policy

g. Internet & Telephone Policy

h. Dress Code Policy

i. Petty Cash Policy and procedure etc.

You may then also include procedure documents, to assist staff who need to approach a task systematically. An example would be the data capturing procedure, explaining how the treatments are recorded; codes are defined, submitted for capturing, and added to the billing system. And then of course the procedure in submitting these claims to the funders, and finally the credit control procedure which is followed for accounts that are not paid. This also helps should one staff member need to cover for another, or new staff need to be inducted into the practice processes.


Explore if there are any accreditation programmes you can subscribe to, or set up a peer review process where other practitioners review your practice, and you review theirs, to support and improve the standard of care delivered to your patients and staff.

A solid set of financial results

Be sure to keep your practice finances separate from personal spending. A dedicated practice account goes a long way to introducing financial discipline, together with a formal petty cash process to account for cash payments made to the practice, and monthly books of accounts. Be sure to review the financial status of your practice monthly, rather than wait for the year end audit or tax submission.

Regular valuation of the business

It is of value to track the growth of your business through simple practice valuation methods. These can become complicated, especially in the situation where a shareholder / partner wishes to buy in or sell out of the practice. For regular financial management of your business, it is important to choose a simple method of valuating your business to indicate possible growth in the business. Just going with the cash balance in the bank may not be sufficient in identifying areas where the business can be improved, or where the risk areas are.

While there are other areas in which development will add to the preparation of your practice for sale, these mentioned above offer a good and solid start to getting off on the right foot.

Should you require any assistance in “Preparing your practice for sale”, and maximising the return on all the hard work and effort you put into your practice, feel free to contact PROFFESSA Health Services. We also offer complete financial and HR services to practices who wish to outsource these, allowing the practitioner to focus on the areas in which they are trained and are expert in, being patient care!



Your practice as a business

To make a clear distinction between the concept of owning or running a practice, and establishing and growing a business, one needs to develop the acuity of separating the caring therapist role from clear business principles and investment opportunities which present themselves.

In the next few articles, I will be presenting a series looking at the various aspects of developing the business edge of your practice.

The business structure of your practice

Due to the fact that we as Healthcare Providers need to be registered with the Health Professions Council of South Africa (HPCSA) as our regulatory body in order to practice, we are also required to keep to the ethical and legal requirements as laid out by the HPCSA Regulations.

The HPCSA is quite clear on the manner and vehicle through which we can run a practice. It is important that we take cognisance of these rules before embarking on the process of registering a company at the Companies and Intellectual Property Commission (CIPC– the old CIPRO).

As a healthcare provider, we need to maintain direct liability for the treatment we provide. In other words, we can’t hide behind a “Corporate veil” should a patient want to sue us for malpractice. An owner of a Pty (Ltd) could have an aggrieved client take legal action against the company they work for rather than them as an individual, but we as healthcare providers are not afforded this alternative.

For this reason, we have the following options when establishing a practice:

1. Run your business in your own name, as an individual – Solus Practitioner

2. Run your business with a partner or partners – Partnership

3. Run your business in association with other healthcare providers – Association

4. Run your business with other healthcare providers as shareholders – Incorporated Company

There are of course pros and cons in each of these structures, which you will need to understand well before making your decision.

Often we find that practitioners start their practice as a one-man-practice, trading in their personal capacity not having any formal business registered. In these cases, it would be critical to introduce carefully structured and well planned strategies to monitor and track the performance of the business. Now this may seem obvious, but too often we find that personal expenses and business expenses are run from the same bank account. Books of accounts are not drawn up on a regular basis, and the business owner has no idea of the current financial status of their practice.

This can only be achieved through clear financial management, regular analysis of the business’s performance, and timeous reaction and realignment of goals on current financial indicators. The only crude measure of financial success of the practice may be the cash in the bank! Very often a response to this may be too late.

Although the SARS requirements regarding annual tax submissions in the case of a Solus Practitioner is that individual and practice income and expenses are submitted together after the February year end, it would be a good idea to run your personal and business finances separately throughout the year, only merging these prior to the annual tax submission, with good tax advice and reconciliation.

I think it is critical that we look at the business structure in which we practice with a long term view. Not only regarding its current structure to ensure a business approach, but also with the view of “Preparing my business for sale”. We should in fact start a practice with this in mind. In keeping with this motto, one looks at the practice as a business, seeing in the light of an investment, which will hopefully offer you good returns in the future, for all the hard work you put into its growth and development.

In the next part of this series, we will look at the various elements that you should consider when “Preparing your business for sale”, and how this can add value to your business.

Basic Conditions of Employment and your Medical Practice

Deon and I recently attended a Basic Labour Relations Workshop which focused on integrating the Basic Conditions of Employment into your company structures. We would like to share with you a few interesting and important issues that we find most commonly affect the medical practitioner in their practice. This article follows on a previous one in the series, written by Elja regarding Policies and Procedures.




  • Before discussing the threshold, did you know that any Employee that has been with your Practice for 6 months and longer are considered to be permanently employed and have the protection of the Basic Conditions of Employment Act. The extent of their protection depends on whether they are above or below the earnings threshold.
  • The earnings threshold currently in place is R14 333.33 per month (from 1 July 2012 it will increase to R15 250.67 per month) before deductions. This means that employees that earn over the threshold can not seek protection from Chapter 2 of the Basic Conditions of Employment Act when it comes to their ordinary hours of work, the claiming and rates of overtime etc. These employees would need to turn to their employment contracts to seek clarity and protection in this regard.
  • As per the BCEA, the overtime rates are 1.5 times their rate for extra hours worked during the week and Saturdays, and 2 times their rate for Sundays and Public holidays worked. They are also not protected when it comes to the entitlement of meal intervals and regulating of working on weekends and public holidays. Because the employee is not protected by the BCEA they do not have the legal right to place demands in respect of the above mentioned but they still have the right to negotiate them into their employment contract. An employee earning under this threshold is fully protected by the BCEA.


Employment Contracts and Job Descriptions


  • Remember that even in the process of applying for a position, a potential employee is protected by the BCEA. As an employer one must remember that your conduct at the interview may expose you to legal recourse under labour laws. For example, asking an applicant if she is planning to fall pregnant in the near future may be seen as discrimination even before an agreement to employment has taken place.
  • An employment contract protects BOTH the Employer and Employee. In the absence of an employment contract, the BCEA terms and conditions of employment prevail.

If an employee does not have an employment contract, you may set one up at any time through mutual agreement to the terms. An employment contract must contain the following:

  • Full name and address of the Employer
  • Name and occupation of the Employee
  • Place of work
  • Starting date of employment
  • Hours of work
  • Rate of remuneration, overtime rates and frequency of payment
  • Benefits and deductions
  • Leave entitlements
  • Notice periods


Sick Leave


  • Sick leave is a very sensitive subject and there are very fine lines as to the correct and incorrect granting of sick leave. Section 22 of the BCEA will give you a clear description of sick leave. In terms of section 23 an employer may request a Dr’s note or Medical Certificate as proof of the incapacity to work should the employee be absent for more than two consecutive days.
  • Note that taking sick leave is due to incapacity. This means that you need to be physically or mentally incapacitated to work in order to qualify for sick leave. Planned monthly clinic and Doctors visits and monthly medicine collections are not considered to be sick leave under the BCEA, while the employer may grant sick leave for these reasons at their own discretion.


Maternity Leave and “Adoption of a Child” Leave


  • The basic terms of Maternity Leave is that an employee is entitled to at least four consecutive months maternity leave for the mother prior to and following the birth of their child. An employee may commence maternity leave at any time from four weeks before the expected date of birth, unless otherwise agreed.
  • While the BCEA does not recognise the adoption of a child as maternity leave, The Unemployment Insurance Act recognizes maternity leave following the adoption of a child under the age of 2 years old, allowing employee to claim for the leave.
  • “Adoption of a Child” leave may be included in the employment contract through a negotiated agreement.


Annual Leave Rates


  • As per Section 21 and Section 35of the BCEA regarding annual leave: “An Employer must pay an Employee leave pay at least equivalent to the remuneration that the Employee would have received for working for a period equal to the period of Annual Leave”
  • In the case where an employee typically works overtime or earns commission resulting in a fluctuating remuneration rate, the remuneration amount used to calculate the rate at which they are paid at during their annual leave needs to take the previous 13 weeks remuneration into account.
  • It is therefore inconsistent with the BCEA if you pay the employee during annual leave at their basic salary should their remuneration fluctuate.




  • Absenteeism contributes heavily to the loss of production in a company. Attendance is the basic duty of the employee and they may be in breach of contract for taking unauthorized time off.
  • Absenteeism is not being where you are supposed to be according to your working hours agreement. Turning up late or leaving early, extended lunch and tea breaks and not turning up for work without informing anyone are a few common examples.
  • You can be absent from work even if you are on the premises, catching up on Facebook, or engaging in activities which are not work related during working hours.
  • Do remember however that the employees lunch time is unpaid, entitling them to attend to any personal maters and even leave the premises during that time.
  • It is therefore very important to have a clear Company Attendance Policy in place. An employer should deal with absenteeism in a consistent way with all employees.




  • Schedule 8 of the Labour Relations Act shows the Code of Good Practice. This must be followed when dealing with disciplinary actions, grievances and details the steps that may lead to the dismissal of an employee.
  • Section 188 of the Labour Relations Act is of great importance in understanding how to follow fair procedure, and that the reason for dismissal is valid.
  • We would also suggest contacting the CCMA before taking any action that you may be unsure about. They have proven to be very helpful and are happy to send you the relevant rules and regulations.


Note to Employees


  • If you plan to claim for loss of earnings from the Unemployment Insurance Fund (UIF), please remember that you can only claim if you have been dismissed. This may seem obvious, but should you choose to resign voluntarily, you may not claim from the UIF.


Please feel free to contact us if you have queries or require labour advise. We can also assist with Employment Contracts, Job Descriptions, and Procedures and Policies for your practice. Kindly contact us on 012 751 2867 or at

September 12, 2011 @ 3:35 pm
posted by Deon

Following the changes proposed to the Companies Act, the regulations regarding the final audit threshold are now in effect.

So if your practice is registered as an Incorporated Company, this will affect you.? Before these changes, it was mandatory to have your books of accounts audited on an annual basis, costing up to R20 000 per annum to do.


The new regulation allows for a determination based on a public-interest point system of your business.? If you score above a certain amount, you have to be audited. This is worked out as follows:

  • A company scores 1 point for every employee
  • A company scores 1 point for every R1 million in turnover per annum
  • A company scores 1 point for every R1 million in third-party debt
  • A company scores 1 point for every shareholder of the business

If you employ your own accountant, who does your books internally, a score above 100 points means you need to be audited. Companies that outsource their accounting function only have to undergo a compulsory annual audit if they score above 350 public-interest points.

Now we as medical practitioners would seldomly score over 100 points, and can not be silent shareholders in our practices we play an active role in the management of our practices. The regulation states that in this case only annual financial statements are needed.

It is however my opinion that choosing to voluntarily audit your books is still a strong option. My reasons being:

  • An audit of one’s books, and the relevant tax advice that goes with this may well off-set the actual cost of the audit, through good business structuring and practice
  • The benefit of an external control mechanism to the internal processes, management and professional attitude of all staff should not be under estimated
  • If you are wanting to sell your practice in the near future, a set of audited results hold a lot of benefit
  • Financiers may request audited results

I would love to hear some of your thoughts on this. If you would like to discuss the issue further, and its impact on your business, feel free to make contact through email or a comment below: