Physicians and HST – Sharing a medical practice

Many physicians and dentists (collectively, “practitioners”)  practice in groups and it is common for one or two practitioners (the “Principal”) to own the practice (i.e. the lease, equipment and administrative support) and for the other physicians to remit a portion of their billings to the Principal for use of the practice facilities.

Recently, we advised a senior doctor, the Principal in this practice, with a busy practice that includes two other senior doctors.  The two doctors use the practice facilities and staff and in-exchange remit a portion of their billings to the Principal.   This practice group is not a “partnership”.    In order to not trigger GST/HST liability on the payments from the doctors to the Principal, our advice was for the Principal to “hire” the two doctors as “associates” of the practice.  In this way, their billings would be billings of the medical practice and each associate doctor would be entitled to a certain percentage.

Due to OHIP billing requirements, the associate practitioners bill OHIP directly and then forward a portion of the fee paid by OHIP to the Principal.  This portion may be based on a percentage of the associate’s billing or another formula.  As long as the associate and the Principal have entered into a bona fide arrangement to share fees, CRA will not consider the payment by the associate to be in respect of a supply of practice facilities (i.e. offices, administrative support, equipment, etc.).   Rather, CRA accepts that the payment between the practitioners is an apportionment between the two parties and not subject to GST/HST.    When drafting associate agreements for medical or dental practice groups, it is critical that the “apportionment” nature is made clear.  If the agreement between Principal and associate doctor or dentist, as applicable, characterizes the payment as being “for use of the facilities of the practice”, CRA takes the position that GST/HST will apply to the payment made by the associate to the Principal.

As an added precaution, the associate agreement we prepared for our Principal included the following clause:

“The parties believe the GST/HST does not apply to the Associate’s supply of Services hereunder; however, in the event Canada Revenue Agency or its successor finds the supply of Services hereunder to be subject to the GST/HST or other similar tax based on supply of services, the Associate shall be liable for, and shall promptly pay, such taxes.”  

Using Foreign Trained Doctors as Physician Assistants in Ontario

Using physician assistants is a way for doctors in Ontario and other jurisdictions to increase their productivity.  However, the rules regarding when and how to use a physician assistant are open to interpretation because physician assistants are unregulated, and this may be because doctors like it this way.

A “physician assistant” is a health care professional who works under the supervision and authority of a physician to provide health care – to do everything from take patient histories, conduct physical examinations, order and interpret tests, diagnose and treat illnesses, counsel on preventive health care, assist in surgery, conduct research and teach.   Some post-secondary schools have started offering programs to train physician assistants.  However, because physician assistants are unregulated, foreign trained doctors and other medical professionals may be used by doctors, medical professional corporations and medical practice groups as physician assistants.
As doctors look for new ways to increase their productivity and bottom line, individual doctors, medical professional corporations and medical practice groups are taking a serious look at physician assistants.  Moreover, the use of physician assistants by doctors will only become more prevalent now that schools, such as McMaster University, are offering Physician Assistant Educational Programs.
 
Regulatory Framework in Ontario
Physician assistants in Ontario are unregulated. In January 2012, the Canadian Association of Physician Assistants (“CAPA”) submitted an application to the Health Professions Regulatory Advisory Council (“HPRAC”) for Regulation of the Physician Assistant profession in Ontario. On November 30, 2012 the Ministry of Health and Long-Term Care decided against regulation of the Physician Assistant profession. This decision was based on HPRAC’s recommendation that public safety and quality of care are sufficiently upheld at this time through the delegation model under the supervision of a licensed physician.
The result of which is that PAs derive their authority from the physician’s delegation.
Performance of Controlled Acts 
The Regulated Health Professionals Act (RHPA) prohibits performance of controlled acts by those not specifically authorized to perform them.   The following is a list of “controlled acts”, the first 13 of which may be performed by a physician and may, in appropriate circumstances, be delegated.  Basically,  “dele­gation” occurs only when a physician directs an individual to perform a controlled act that the individual has no statutory authority to perform.
Controlled Acts under the RHPA:
  1. Communicating to the individual or his or her personal representative a diagnosis identifying a disease or disor­der as the cause of symptoms of the individual in cir­cumstances in which it is reasonably foreseeable that the individual or his or her personal representative will rely on the diagnosis.
  2. Performing a procedure on tissue below the dermis, below the surface of a mucous membrane, in or below the surface of the cornea, or in or below the surfaces of the teeth, including the scaling of teeth.
  3. Setting or casting a fracture of a bone or a dislocation of a joint.
  4. Moving the joints of the spine beyond the individual’s usual physiological range of motion using a fast, low amplitude thrust.
  5. Administering a substance by injection or inhalation.
  6. Putting an instrument, hand or finger,
    1. beyond the external ear canal,
    2. beyond the point in the nasal passages where they normally narrow,
    3. beyond the larynx,
    4. beyond the opening of the urethra,
    5. beyond the labia majora,
    6. beyond the anal verge, or
    7. into an artificial opening in the body.
  7. Applying or ordering the application of a form of energy prescribed by the regulations under the RHPA.
  8. Prescribing, dispensing, selling or compounding a drug as defined in the Drug and Pharmacies Regulation Act, or supervising the part of a pharmacy where such drugs are kept.
  9. Prescribing or dispensing, for vision or eye problems, subnormal vision devices, contact lenses or eye glasses other than simple magnifiers.
  10. Prescribing a hearing aid for a hearing impaired person.
  11. Fitting or dispensing a dental prosthesis, orthodontic or periodontal appliance or device used inside the mouth to prevent the teeth from abnormal functioning.
  12. Managing labour or conducting the delivery of a baby.
  13. Allergy challenge testing of a kind in which a positive result of the test is a significant allergic response.
  14. Treating, by means of psychotherapy technique, deliv­ered through a therapeutic relationship, an individual’s serious disorder of thought, cognition, mood, emotion­al regulation, perception or memory that may seriously impair the individual’s judgement, insight, behaviour, communication or social functioning.
Use of Physician Assistants by Ontario Doctors

The PA’s scope of practice is determined on an individual basis and formally outlined in a practice contract or agreement between the supervising physician(s), the PA and often the facility or service where the PA will work. Activities may include conducting patient interviews, histories and physical examinations; performing selected diagnostic and therapeutic interventions or procedures; and counseling patients on preventive health care.  See CPSO Policy re Delegation of Controlled Acts.

The Policy sets out various requirements relative to the delegation of “controlled acts”.
According to the Policy it is the physician’s responsibility to evaluate and confirm delegate has appropriate knowledge, skill and judgement to perform the delegated act and the requirement to obtain informed consent from patients.  Note, the delegating physician can’t rely exclusively on the credentials of the delegate.  Specifically, the Policy states as follows:
“If physicians choose to delegate controlled acts to interna­tional medical graduates (IMGs) who have credentials or licences obtained in other jurisdictions but who do not have certificates of registration in Ontario, they must fol­low the same protocols that apply when delegating to any other individuals. Physicians cannot rely exclusively on such credentials or licences to ascertain whether an IMG has the requisite knowledge, skill and judgment to safely perform a controlled act.
Footnote 10 of the Policy states:
“Delegation is not intended to provide IMGs [International Medical Graduates] who do not have certificates of registration with opportunities to gain credentials for their application for certification, nor to allow physicians to delegate controlled acts to IMGs for monetary or convenience reasons. As with any delegate, activities of the IMG must only substitute for the direct care of the physician when this is in the patient’s best interests.”
The Policy also includes the guidance regarding delegation to a PA.  Since a physician assistant is essentially an extension of the delegating physician, responsibility, accountability and liability remain with the physician.
Before engaging foreign trained doctors or other medical professionals as physician assistants, we advise our doctor, medical professional corporation and medical practice group clients to carefully review the Policy and establish clear, well documented processes and practices to ensure their compliance.

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