Legal and Regulations

Small business regulations for healthcare providers

In the healthcare industry or considering a healthcare provider business? Be aware of these types of requirements for healthcare businesses.

Published: May 09, 2017

Healthcare is a highly regulated industry, and the rules can come from a variety of sources: federal law, state law, local law, and other industry authorities like hospitals, insurance companies, and accreditation agencies. However, most rules governing healthcare businesses fit into one of a few main categories. Familiarize yourself with these regulation types and understand which ones may apply to your business.

Professional validation

Many regulations are designed to ensure the qualifications and quality of the people providing health care. As a result, healthcare providers must get licensed to practice their profession. Each license has educational and testing requirements through each state's professional regulation department. Physicians, dentists, midwives, psychoanalysts, opticians, medical assistants, nurses and physician assistants, among others, have varying educational and testing requirements. Further, nearly all healthcare professionals must maintain their licenses by completing qualified continuing medical education classes every couple years.

The business of medicine

Many regulations are designed to ensure that healthcare provider businesses are run without interference from unqualified outsiders. As a result, it's often the case that only licensed health care professionals can own healthcare provider businesses. However, the healthcare industry has created a work-around strategy with management services organizations owned and managed by non-providers to provide administrative and billing functions.

To protect the integrity of the healthcare industry, there is also a huge body of rules prohibiting payments for referrals for healthcare services. Anti-kickback statutes and the Stark laws (named after the federal Ethics in Patient Referrals Act introduced by Congressman Pete Stark in 1989) both come from federal and state governments. Essentially, physicians cannot receive a reimbursement fee from Medicare or Medicaid for referring patients for other services without providing extensive documentation. In addition, some states prohibit referring patients to another facility where the physician or a family member has a financial interest without disclosure and presenting the option to pick another facility. These rules are complicated, and the stakes are severe.

Patient care

Another set of regulations is designed to ensure the quality of patient care. Health care providers can only perform services on a patient if that patient has granted his or her informed consent. "Informed consent" means that a patient must have full information about the treatment and the risks before his or her consent is valid, except in emergencies. Informed consent is the backbone of patient care regulations, but there are others. For instance, there are rules about the structure, quality, and cleanliness of facilities.

Another area of detailed regulation concerns patient records and protection of patient data. Healthcare providers almost always have obligations to keep accurate records, to retain those records for a number of years, and to provide patients access to their own records.

There are also obligations regarding how to keep patient data safe, secure, and confidential. These privacy rules come from federal law (e.g. Health Insurance Portability and Accountability Act (HIPAA)) as well as state laws that require providers to protect patient data, to get patient's permission to disclose data to third parties, and to tell patients how they can get their own data.

If you’re in the healthcare industry or considering opening up a healthcare provider business, it’s essential to stay fully informed on these and all applicable small business regulations.


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