Proposed conditions under which close corporations could be
established by medical practitioners and dentists
BACKGROUND
The Medical and Dental Professional Board of the Health Professions Council has adopted
the following approach in respect of practice arrangements:
- Practitioners may conduct their practices in the following manners:
- In solus practice
- In partnership
- In an incorporated company (exempted in terms of section 54A of the Act)
- In association
- In a trust under the same conditions as in the case of an incorporated practice.
- A dentist may not practice in any other form such as in a close corporation with lay
persons [non-dentists]. Practitioners may not form any of the above entities with persons
not registered under the Health Professions Act, 1974 [such as businesspersons,
accountants, pharmacists etc].
- However, a practitioner might form an entity to manage and administer his or her
practice and/or to own assets used by the practice. In that sense the practice was renting
services, such as the administration or property from that entity. Such an entity might be
a close corporation which must be administered separately from the practice established to
render patient related services.
- Close corporations could, therefore, be utilised by practitioners registered under the
Act to render non-patient related services. Non-patient related services included, amongst
others, the renting of rooms, leasing of vehicles and office equipment, payment of staff
salaries and maintenance of buildings.
- It would be possible for practitioners to form a close corporation [or any other entity]
with a clinic for purposes of owning the equipment in question. The close corporation was
not to operate the unit as that was being regarded as conducting a practice. It could
operate the unit in an ownership and administrative sense and rent the unit to a
practitioner who wished to utilise it.
- Unfortunately no provision had been made for an entity, other than a hospital, to
collect fees from patients for the use of equipment such as X-ray units owned by the
hospital (the one third principle). Therefore, the close corporation could not bill
patients and had to collect rent from practitioners utilising the unit. The practitioner
had to bill the patient for the full amount to which he or she was entitled.
RESOLUTION
In August 2001 the Executive Committee of the Medical and Dental
Professions Board
RESOLVED that the above guidelines be adopted.
Issued 27/9/2001
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