How to Structure a Medical Clinic in Ontario: Legal and Business Considerations
- Mar 19, 2025
- 3 min read
Setting up a medical clinic in Ontario involves more than securing a location and hiring staff.
Medical clinics operate within a regulated environment while also functioning as businesses with multiple practitioners, revenue streams, and operational structures.
The way a clinic is structured from the outset affects:
• how practitioners are engaged
• how revenue is allocated
• how risk is managed
• how the clinic can grow over time
A well-planned structure helps avoid issues as the clinic expands.
How Medical Clinics Are Typically Structured
Most medical clinics are not owned and operated in a single way.
Common elements include:
• physicians practicing through professional corporations
• a central clinic entity that manages operations
• shared facilities, staff, and systems
• independent contractor relationships between the clinic and practitioners
These elements must work together.
The Role of Professional Corporations
In Ontario, physicians often provide services through a professional corporation.
These corporations must comply with the requirements of the College of Physicians and Surgeons of Ontario.
A professional corporation:
• is owned by a licensed physician
• is used to bill for medical services
• must meet regulatory requirements
This creates a layered structure within the clinic.
The Clinic Operating Entity
In addition to individual professional corporations, many clinics have a separate entity that:
• leases the premises
• employs administrative staff
• manages equipment and systems
• provides support services to practitioners
This entity often enters into agreements with physicians.
Key Agreements in a Medical Clinic Structure
1. Physician Services Agreements
These agreements define the relationship between the clinic and the physician.
They should address:
• how services are provided
• how revenue is allocated
• use of clinic resources
• scheduling and availability
Clear agreements reduce operational friction.
2. Overhead and Cost-Sharing Arrangements
Clinics typically allocate overhead costs among physicians.
These may include:
• rent
• staffing
• equipment
• administrative services
Agreements should clearly define how these costs are calculated and shared.
3. Independent Contractor vs Employment Structure
Many clinics engage physicians as independent contractors.
However, the structure must align with how the relationship operates.
Factors such as control, scheduling, and integration into the clinic are important.
4. Billing and Revenue Flow
Medical clinics must consider how billing is handled.
This includes:
• how services are billed through provincial systems
• how payments are received
• how revenue is distributed
The structure should be clear and consistent.
5. Use of Space and Resources
Agreements should address:
• use of clinic space
• access to equipment
• administrative support
This ensures that expectations are aligned.
Common Structuring Mistakes
Clinic owners often:
• rely on informal arrangements
• do not clearly separate entities
• fail to document revenue and overhead structures
• use generic agreements that do not reflect their operations
These issues can lead to disputes and inefficiencies.
Planning for Growth
A clinic structure should account for future expansion.
This may include:
• adding new practitioners
• expanding services
• adjusting compensation models
A flexible structure helps avoid the need for significant changes later.
Why This Matters for Medical Clinics
Medical clinics are both regulated environments and business operations.
A clear structure helps:
• maintain compliance
• support efficient operations
• reduce disputes
• enable growth
It also provides clarity for practitioners and staff.
Speak With a Lawyer Who Works With Clinic-Based Businesses
If you are setting up a medical clinic or your current structure does not reflect how your clinic operates, it may be time to review your setup.
If you want to structure your clinic properly from the outset or update your agreements, you can Book a Consultation to discuss your next steps.
