Privacy Legislation and the Appraisal and Sale of a Practice

The Personal Information Protection and Electronic Documents Act (PIPEDA), a Federal Act, has an impact upon your practice and my business. Accordingly, I have identified three issues that must be considered when having your practice professionally appraised or while investigating a practice that is for sale.

As it pertains to the appraisal of a dental practice, the most important aspect of the Act is its effect on chart access. As I interpret the legislation, a lay person is forbidden to access your charts, for any reason, in any manner whatsoever. Therefore, an appraiser, even those that are registered dentists, should not be given access to patient charts for business or commercial purposes. While chart count is an important indicator of busyness in a dental practice, I have always maintained that the number of charts has no direct bearing on its business value. For this reason, I have never made it a practice to count a client’s charts, asking instead that the client do so.

Unfortunately, there are methods of valuation that do rely upon chart count to determine business value. If you are having your practice professionally appraised, the method employed to calculate value should not include a chart review by the appraiser. My advice is to be certain that you, or your staff, perform the chart review, count or audit, and supply the figures to your appraiser. This count should not include any confidential patient data.

The second important point you should be aware of in light of PIPEDA is that the sale of a practice normally includes a review of charts by the prospective purchasers. It is customary for a serious, qualified candidate to randomly access charts to determine their clinical compatibility with your style of record keeping, treatment planning protocols, fee guide usage and fees charged, among other data. We do not know at this time if purchasers will be permitted to perform this service after January 1, 2004, as the present legislation restricts access, even to dentists, for business or commercial purposes. However, I stress that lay persons should not be accessing charts, for any purposes, during the sale process. Brokers are therefore restricted. I advise you to make this point clear to anyone who may inspect your practice while it is being offered for sale on the open market.

Finally, regarding your charting system, Michael Gommerman of Safeguard Business Systems says, “It seems inconceivable that a dentist would compromise the practice by disclosing patient information without the patient’s consent. Naturally, this information is important for treatment purposes, and dentists would more than likely disclose patient information for this purpose only. With the impending legislation, consent needs to be given not only to disclose information, but to collect and use this information for treatment. Patient charts should reflect this change.”

Mr. Gommerman adds, “This Act warrants filing cabinets that are lockable in order to protect your practice and your livelihood. A new filing system or modifications to your existing system may be required. For offices with open shelving, doors or locks can be installed on the drawer style cabinets, or perhaps a lockable mobile shelving system for larger practices.”

Whatever your records management system is today, it may need modification to meet the new requirements. In the event that you are considering the appraisal or sale of your practice, be aware of the restrictions for lay persons and ensure that you protect one of your most valuable assets – your patient records.

Ontario Dentist – November 2003