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By David L. Stokes, Manager, Professional Issues
with Frank Tinney, APS Workplace Issues Advisor

Claire had a problem. For once it wasn't a man, her messy house or her grumpy teenage son. Her problem was in fact an abundance of riches - in a way.

For many years now she had been running a private practice that had steadily continued to grow. Most of her clients were referred from medical and allied health practitioners in her community. More recently she found that a significant number of new clients were self referrals, many of whom told her that they had been advised to come to see her by their friends or neighbours who had previously been her clients.

The problem was that the practice was now growing to a size where she could no longer see all of them without an unacceptable waiting list. She did not believe that any client should have to wait for more than three weeks before being offered an appointment. So she began to consider how her problem could be resolved.

  • Option 1: Employ a psychologist. To this point in time she had done all her own management of appointments, mailing of accounts, correspondence and other clerical work. But if she employed another psychologist that would mean the clerical responsibilities of her practice would grow to such an extent that her own time with clients would be severely reduced. Therefore she would need to employ not just an additional psychologist but also an office assistant. She did not know whether the practice could afford that expense.

  • Option 2: Refer on. Alternatively she could refer the excess clients to other psychologists, but this would reduce the further development of her own practice.

  • Option 3: Contracting. So she considered contracting out some of the work. She could offer clients to another psychologist but still retain them as part of her own practice. This could be done, she thought, by having the other psychologist work in her rooms and use Claire's letterhead and filing system. That other psychologist could do his or her own clerical work, but Claire could provide supervision if required and thereby maintain quality control. She would pay the other psychologist a proportion of the fee she charged and retain the remainder for the supervision and the rental. Thus her costs would be covered and the clients remain within her practice.

This seemed an admirable and positive solution to her problem. But is it that simple? Or did it have hidden complications that she had not thought through?

Common confusions

Some of the most common questions directed to staff at the APS National Office are about relationships between professional colleagues in their private practice. Most are easily resolved but sometimes there are instances where confusion about professional practice protocol leads to considerable bad feeling, conflicts and occasional legal wrangles.

Some questions that arise are:

  • If I employ a psychologist in my practice do I have to pay Workcover or professional indemnity insurance for them?
  • The psychologist I employed recently has left my practice and taken her clinical files with her. Were they hers to take?
  • The clinical rooms that I own are shared with another clinician. Do my colleague's clients belong to the practice or to the individual clinician?

If any of these questions have crossed your mind, read on.

Contracted or employed?

Some psychological practices reach a stage of development where it becomes necessary to determine whether to employ or contract another psychologist. This sounds reasonable at first, but may actually produce some quite complicated and unclear arrangements. It is felt by many of us at the APS that there are only two viable options.

The employee option:

  • If a psychologist decides to have his or her practice employ another psychologist there are certain clear consequences:
  • If the psychologist is an employee, the employer will pay all on-costs. Thus all costs such as leave entitlements, superannuation, workers' compensation and arrangements like hours of work and employment conditions will comply with the minimum standards stipulated in the local psychologist's award. Similarly all clerical and secretarial services will be provided at the cost of the employer.
  • The 'employer' owns all files and all expenses, taxation, bad debts and non-attendance of the clients will be the responsibility of the employer. Thus the employee will be paid their wage regardless of whether or not the client appears for the session.
  • If the psychologist is an employee, the employer accepts responsibility for the professional services provided, including compliance with legislation, failure to comply with the requirements of the APS Code of Ethics, and any professional practice issues.

The private practitioner (contractor) option:

As a private practitioner renting rooms and paying for shared facilities, he or she will have:

Responsibility for all clinical activity (it will not be under the control of the referring practice).

  • 'Ownership' of the file and the client.
  • Responsibility for all practice costs, insurance, on-costs, bad debts, risk management issues and privacy regulation requirements arising from his or her practice.
  • Professional responsibility for all the work carried out.

The mixed model

In our experience, confusion arises from other arrangements. Where practices have developed a mixed model with no explicit contract, payments have often been made by dividing the client fee. This raises a number of issues, for example, what proportion of the fee is just or appropriate for either practitioner? Is this tantamount to the 'other' psychologist providing a spotter's fee and, if so, is it ethical? (See APS Code of Ethics, Sections B 15, 16, 17.)

Secondly, who 'owns' the client?

  • Are they clients of the referring practice or of the practitioner?
  • Who owns the file and must retain responsibility for it?
  • Who is professionally responsible for the work carried out?
  • Who is answerable to legislative demands covering such issues as privacy, confidentiality, file management, court reports and court attendance if a subpoena is issued?
  • What is the professional relationship between the referring psychologist and the other practitioner?
  • Is it legal, ethical or good practice to have the client pay the referring agent?

A corollary to the question of who 'owns' the client arises when the referring psychologist requires that the 'other' psychologist will not continue to work in that geographical vicinity if he or she ceases to work in that practice. If that 'other' psychologist is a private practitioner, he or she may work anywhere and cannot be so constrained unless there was an original legal contact to that effect.

Our experience of mixed options is that they generally fail to create, clarify or construct a workable arrangement and in most cases fail to satisfactorily identify for the 'other' psychologist (contracted/employed) the nature of the relationship (legal, ethical or administrative).

Institutional arrangements

Professional arrangements that are simple and clear cut are not always easy to arrange. Although we urge private practitioners to adopt clear options as above, one group that regularly runs into problems in this area is psychologists employed by institutions, such as schools, hospitals and universities. We have had to go 'in to bat' for a number of members where employers/contractors (e.g. school principals, insurance companies, HR managers or even government departments) wish to access or manage client files in order to simplify file maintenance and auditing systems.

This is a complex area. Traditionally, the court has argued that files are owned by the employer. But even in these situations, other legislation modifies the notion of ownership. For example, the Privacy Act (1988) requires that personal information gained for one purpose should not be used for another or secondary purpose. Therefore the psychologist's file, owned by the employer, should be accessed only for the reasons for which it was created, by the appropriate professional and in accordance with all the requirements of the legislation.

In practice, and for a specific example, this means that recorded information gained from a student counselling session for the health and well-being of the student cannot be later used to inform administrative or educational decisions. It would be expected, however, that psychologists would provide advice and informed guidance to teachers and administrators regarding such matters on the basis of their clinical knowledge.

So getting back to...

When we apply this same principle to the employee/contracted psychologist raised above, it is clearly the case that the employer owns the file when he employs a psychologist; the private practitioner owns the file when he is contracted to provide a service; but who owns the file and all the associated responsibilities in the mixed model?

These are essential matters that can not only foul good relationships but create errors of practice that compromise regulatory and legal compliance. We urge all our members to carefully address these issues, preferably in advance of making an arrangement, or hasten to clarify or alter current arrangements to avoid the pitfalls noted above. We welcome member's enquiries about such issues but also recommend accessing legal advice when setting up these arrangements.

Next edition: Getting the employment contract right: But it wasn’t in the contract: avoiding the contractual hornet’s nest