When setting up your own private practice, it's important to lay the legal and professional groundwork to ensure compliance is always front of mind when you're practising as a psychologist.
Establishing a private practice in psychology can be an exciting step to take.
It creates an opportunity to develop a career to suit your preferences – whether you’d like to focus on a niche area or enjoy more flexible hours.
However, private practice also demands a high level of responsibility. Before going ahead, it is essential to understand your obligations – professionally, ethically and legally.
Below, we speak with Dr Zena Burgess, CEO, Australian Psychological Society, about some of the key things to keep in mind. And, in May, we will be going deeper on this topic at our Business of Psychology Symposium where Jonathan Teh, Principal at Russell and Kennedy Lawyers, will deliver a presentation delving into legal matters and sharing his top 10 tips to avoid being sued as a psychologist running a private practice.
1. Make sure you meet your business requirements
The first step is to ensure your practice meets the requirements common to all businesses in Australia.
To begin, determine whether you wish to form a company, which requires registration with Directors and an Australian Company Number (ACN), or a sole trader, which means you require an Australian Business Number (ABN).
The main difference is that a company is a unique legal entity, which is responsible for its own debts and legal matters, including employment of staff and psychologists. If legal action is threatened, depending on the issue, the company and/or the treating psychologist may be sued. In certain circumstances, the Directors could possibly be sued too.
In contrast, a sole trader is connected to their business. If someone takes legal action against you as a sole trader, then you are usually personally liable and/or any treating psychologist employed or engaged.
It’s best to seek advice before deciding which model is right for you, with the next steps being to form your business as a company or sole trader and register your business with the Australian Government. Remember, if your turnover reaches $75,000, then registering for Goods and Services Tax (GST) is mandatory.
APS offers 60 minutes of free business, tax and accounting advice for its members. Learn more about this benefit here.
“As well as keeping confidentiality front of mind, it’s also necessary to keep accurate records of your sessions that demonstrate professionally reasoned views and provide details of clients concerns, issues and progress,” says Dr Burgess.
2. Develop a privacy policy
A psychology practice should have a variety of business policies in place. One of the most important is a privacy policy.
This is mandatory under the Privacy Act and the Australian Privacy Principles – whether you collect any information whatsoever from your clients or have an annual turnover of more than $3 million.
“As psychologists, we deal with a lot of data,” says Dr Burgess. “This might range from personal details, such as email addresses gathered via contact forms, to information about medical conditions and treatment.
“Your privacy policy should explain exactly what you do with that data.”
Further, if you are intending on using automated computer software, including AI, then privacy implications will arise around that, including where data and records are stored.
If in doubt that your privacy policy is adequate, you could have it drafted by a legal practitioner.
3. Be aware of the rules governing confidentiality
All psychologists must adhere to strict rules and principles around confidentiality. These are determined by various conduct rules, including the APS Code of Ethics, as adopted by the Psychology Board of Australia.
“These provide that psychologists must safeguard confidentiality,” says Dr Burgess. “This applies not only while your private practice is operational, but also after it has concluded.”
However, there are also a number of legislative requirements which obligate psychologists to report certain matters to authorities, and these must be kept in mind both when dealing with clients and when setting up service arrangements with clients, including consent.
So, you also need to know when confidentiality doesn’t apply. In a limited number of circumstances, you may be required, by law, to disclose confidential information.
“For example, it may be necessary to disclose in order to report that the safety of a child, including an unborn child, is at risk,” says Dr Burgess. “This may be the case where there is potential evidence of physical or sexual abuse, neglect or danger.”
4. Set up service agreements
Before engaging a client, you need to establish the terms and conditions of your relationship. This is done by a service agreement, which is a document that sets out your fees, cancellation policy and liability, confidentiality and its limits, and ensures the client’s consent.
“Having the terms of your engagement in writing can help protect you against legal action,” says Dr Burgess. “It removes uncertainty. By signing a service agreement, your client indicates that they are happy to proceed, according to your terms.
“If any questions or confusion come up later, then you’ll have a piece of paper to point to as evidence.”
5. Understand advertising law for psychologists
Once you’re established, you’ll no doubt want to attract as many clients as you can.
It is legal to market a psychology practice. However, laws and guidelines must be followed – and they change frequently. Principally, the Psychology Board of Australia oversees that psychologists adhere to the Guidelines for advertising a regulated health service under the National Law.
“For example, back in 2011, new regulations came in preventing psychologists from using testimonials in advertising,” says Dr Burgess. “Then, in 2022, changes to the TGA [Therapeutic Goods Association] Code of Advertising were introduced, expanding the rules against endorsing therapeutic goods.
“It’s long been against the law for health professionals to endorse them, but that was extended to include students and retired practitioners.”
What’s next?
Taking the leap into private practice can be both inspiring and challenging, says Dr Burgess.
“Before setting up, make sure you understand all your legal obligations, and seek professional advice.”