Can medical professionals be employed by a private facility?

Certain trends are being noted with the ever-increasing number of medical malpractice claims instituted against medical practitioners. These trends cause all parties involved to incur unnecessary costs and can give rise to a situation where a claimant is placed in a detrimental position and has no option but to pay the other parties’ costs. 

One of these trends can easily be overcome by answering a simple question: “Can a doctor be employed by a private medical facility?” The short answer is no. However it must be borne in mind that there is an exception to every rule.

Private health establishments cannot employ a doctor

When claiming against the state, it is a well-known fact that all medical personnel who work in public healthcare facilities are state employees. Therefore, irrespective of in terms of whose negligence you choose to claim, the entire entity is cited. When a claim is instituted against a public healthcare facility, the claim is against the facility itself. The negligence of the nursing staff and/or medical practitioners involved can then be pleaded against one entity. This differs from the situation in relation to a private healthcare facility.

When answering the question of whether a medical professional can be employed by a private healthcare facility, the answer is not contained in one section in a piece of legislation. Instead the answer is found by reading various pieces of health legislation and guidelines together.

In terms of the Health Professions Act 56 of 1974, a healthcare practitioner is defined as "any person, including a student, registered with the council in a profession registrable in terms of this Act", and in terms of the National Health Act 61 of 2003, a private health establishment is defined as "a health establishment that is not owned or controlled by an organ of state". It is a pre-requisite that in order for a healthcare practitioner to practice, he or she must be registered with his or her professional board in terms of section 17 of the Health Professions Act. When a healthcare practitioner is registered in terms of the Health Professions Act, he or she is then bound by the regulations promulgated by the Health Profession Council of South Africa (HPCSA). As the governing body for all healthcare professionals, the HPCSA has the right to publish certain rules and guidelines with which its members must comply. 

In terms of these powers, the HPCSA published “Ethical and Professional Rules of the Health Professions Council of South Africa” as promulgated in Government Gazette R717/2006, in 2007. These are the Ethical Rules that are binding on all registered healthcare professionals. Any deviation from these rules will result in disciplinary action by the HPCSA. In terms of Rule 8 of the Ethical Rules, a healthcare practitioner is prescribed how he or she should conduct his or her practice, and it reads as follows:

"8. Partnership and juristic persons 

(i) A practitioner shall practise only in partnership or association with or employ a practitioner who is registered under the Act, and only in respect of the profession for which such practitioner is registered under the Act.

(ii) A practitioner shall practise in or as a juristic person who is exempted from registration in terms of section 54A of the Act only if such juristic person complies with the conditions of such exemption.

(iii) A practitioner shall practise in a partnership, association or as a juristic person only within the scope of the profession in respect of which he or she is registered under the Act. 

(iv) A practitioner shall not practise in any other form of practice which has inherent requirements or conditions that violate or potentially may violate one or more of these rules or an annexure to these rules." 

Rule 8(4) specifically indicates that a healthcare practitioner shall not practise in a form which violates any rules or an annexure to the rules. Specific reference is therefore given to the HPCSA's policy on Business Practice as published on 29 September 2015. This policy document is considered to be an annexure to the Ethical Rules and although not promulgated as law, still binds medical practitioners.

The Policy Document makes reference, at paragraph 2.2, to undesirable corporate ownership of a practice. Paragraph 2.2 reads as follows:

"Undesirable corporate ownership means allowing a person (whether a natural person or a juristic person) who is not registered in terms of the Act and in accordance with the Ethical Rules, does not qualify to directly or indirectly, in any manner whatsoever, share in the profits or income of such a professional practice and which, without limiting the generality of the foregoing, may take the form of: 

(i) transferring the income stream (or any part thereof) generated in respect of patients from the practice to such a person; or 

(ii) giving (directly or indirectly) shares or an interest similar to a share in the professional practice to such a person; or

(iii) transferring income or profits of the professional practice to a service provider through payment of a fee which is more than a market related fee for the services rendered by the service provider,

(iv) paying or providing a service provider with some or other benefit which is intended or has the effect of allowing the service provider or persons holding an interest in such a service provider to share, directly or indirectly, in the profits or income of such a professional practice or to have an interest in such a professional practice.

Direct or indirect corporate ownership of a professional practice by a person other than a registered practitioner in terms of the Act is not permissible."

As can be seen from paragraph 2.2, a healthcare practitioner may not transfer any funds earned from patients to a corporate entity and a professional practice may not be owned (directly or indirectly) by any other person than a registered healthcare practitioner. A medical professional’s practice can only be established by one or more medical practitioners and direct or indirect corporate ownership of that practice is prohibited therefore indicating that a private hospital may not employ a healthcare practitioner.

Furthermore, paragraph 2.4 of the Policy Document is more specific as it indicates who may be employ a medical practitioner. Paragraph 2.4 reads:

"Generally the employment of practitioners by persons not registered in terms of the Act is not permissible however the following employment agencies are recognised for the purposes of employing practitioners that are registered under the Health Professions Act: 

(i) The Public Service; 

(ii) Universities/Training Institutions (only limited for purposes of training and research);

(iii) Mining companies & NPOs/NGOs (subject to approval of the relevant professional board);

(iv) All registered persons within the HPCSA may also employ fellow registered practitioners in accordance with the Ethical Rules."

As can be seen from paragraph 2.2 read with paragraph 2.4 of the Policy Document, employment by a private hospital is not allowed for by the HPCSA. As healthcare practitioners are registered with the HPCSA under their respective professional bodies, they are obliged to follow the rules as set out by the HPCSA or face a disciplinary action and the possibility of being removed from the register. Therefore, the healthcare practitioner is prohibited from being employed by a private hospital in terms of the HPCSA's rules. 

Possible exception

Having regard to the National Health Act 61 of 2003, the legislation does not address the concept of a private hospital employing a doctor. As discussed above, a healthcare facility is defined as being “private” if it is not controlled by an organ of state. However, it is possible for a private hospital to be controlled by an organ of state if the private hospital contracts with an organ of state, providing it with the necessary power to control the hospital. A contract of this nature is permissible in terms of the Public Finance Management Act 1 of 1999 and, more specifically, its regulations make express provision for public-private partnerships with a view to fulfilling a public function. Then and in this regard, although the hospital may be constituted as a private healthcare establishment, it may in fact fall within the definition of "public healthcare establishment" as it may be controlled by an organ of state. However, it would need to be ascertained what contracts have been put in place before this determination can be made.

Conclusion

Therefore, when instituting a claim for medical malpractice in the private sector, one must take cognisance of the probability that the healthcare professionals are not employed by the private facility, but are instead private practitioners who are granted admission rights. Misunderstanding this concept can be problematic in a number of circumstances. Claims are frequently instituted against private healthcare facilities on the basis that the facility is the “employer” of a certain medical professional. By the time this issue is clarified, it can have dire consequences for the matter, specifically in relation to prescription. Should the concept be more clearly understood, it facilitate the efficiency with which matters proceed, result in less wasted costs and will protect the interests of all parties involved.


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