Steps to Forming a Mental Health Practice in New Jersey

June 10th, 2020
Steps to Forming a Mental Health Practice in New Jersey

Forming a mental health practice is a challenging yet rewarding process. Luckily, doctors don’t have to go through the entire process alone. An NJ medical license attorney can be very helpful while you’re setting up your practice. At Bowne-Barry & Barry, we have years of experience in helping medical professionals form their mental health practices. We want you to worry about your future patients and the medical side of things; we’ll take care of the legal side. Read on to learn more about the steps to forming a mental health practice.

Limited Liability Formation

The first step is the limited liability formation. In the medical world, practices usually form limited liability partnerships (LLP) as opposed to limited liability corporations (LLC). With an LLP, the profits and losses are passed through to the partners. In an LLP, each partner is protected from the liability of the other partners. This means if one partner commits malpractice, it does not affect all the other partners who work in the practice.

For tax purposes, with an LLP, the business does not have to pay income taxes. Any profits and losses are passed through to the partners who pay the taxes. An LLP is also flexible in that partners can join or leave, and these changes are easy to manage. There are numerous steps that have to occur to form the LLP, including applying for a business license and filing for a certificate of LLP. At Bowne-Barry & Barry, we will make sure you are on track with all the necessary steps to form your LLP.

Get Insurance

As medical professionals, you will want to get medical malpractice insurance. This type of insurance protects the practice from claims of negligence that cause some sort of injury to patients. This is essential to have. In addition, getting business insurance is another way to make sure you are covered. This type of insurance encompasses things like workers’ compensation and property insurance. This is another vital step in the process of forming a mental health practice. Without insurance, your practice will not be able to open.


Starting a practice comes with a lot of contracts. The first contract you may encounter is the lease for your office space. When working with landlords, they will often try to get you to sign on for a longer term. Keep in mind you can take the time to negotiate with them. This is where an attorney comes into play. They will work with the landlord to negotiate terms and rates to save your practice money. It is also important to get a cancellation clause written into the lease, just in case the location of your new practice doesn’t work out. 

In addition to the lease, starting a new practice comes with hiring employees and/or independent contractors. At Bowne-Barry & Barry, we can help you create standard contracts as you make hires. 

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In addition, each person hired needs to sign a confidentiality agreement. In the medical world, patient privacy is taken very seriously. It is spelled out in HIPAA laws that are designed to protect patients. Lawsuits can be filed if these laws are not taken very seriously. Even little things like friending a client on social media can be breaking the patient-provider confidentiality. This contract should spell out exactly what it means to follow HIPAA and to keep patient information confidential. 

Additional Contracts

Another type of contract to have when hiring to your practice is a non-compete agreement. This is to ensure that practitioners don’t leave your practice to go work for a competitor and share practice information. These agreements typically state where the employees are not allowed to work and the duration of time they are expected to not work for a competitor. All of these contracts can seem very overwhelming to those who are starting their own practice. At Bowne-Barry & Barry, we will help you get your contracts set up and make sure that all crucial information is included in these contracts. Contracts are vital in the medical world as they provide necessary protection for the practitioners.

Practice Policies

Another item that needs to be created when forming a mental healthcare practice is a policies and procedures document. This states everything that is needed in order to keep the office running smoothly, even in the case of emergencies. The document should also include emergency evacuation plans. This section of the document should state what to do in the case of an emergency like a fire, earthquake, or power outage. 

The document should also outline standard office procedures. This section includes items such as appointment scheduling, emergency after-hours calls, cancellation policies, and more. It is also important to include how medical records will be handled. With medical records, you must follow HIPAA laws to maintain patient confidentiality. All employees must receive a copy of this document. It should also be readily available inside the office to reference when necessary. At Bowne-Barry & Barry, we can help you create this document by suggesting a standard template and then helping customize it to fit the needs of your practice.

Finding a NJ Medical License Attorney

Starting a mental health practice can seem overwhelming at first. Between negotiating the lease and writing up employee contracts, it may feel like an eternity until the practice actually opens. This is why it is so important to hire a NJ medical license attorney to help out with the legal issues of opening up a practice. At Bowne-Barry & Barry, we know that your specialty is providing excellent care to patients. We understand that legal documents might not be part of your knowledge. That is why we are here to help. We will help you to form, build, and grow your practice and we will make sure that you are legally protected. For more information about the services we provide, contact us today.