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Medical Facilities Agreement: A Guide for Medical, Dental, and Allied Health Clinics

A Medical Facilities Agreement is an essential contract that plays a crucial role in maintaining a smooth and efficient working relationship between practitioners and medical centres, dental clinics, physiotherapy practices, radiology centres and many other healthcare providers. This comprehensive overview will delve into the importance and components of a Medical Facilities Agreement, as well as the benefits it provides to all parties involved.

What is a Medical Facilities Agreement?

A Medical Facilities Agreement is a legally binding document that outlines the terms and conditions under which medical, dental, and allied health professionals can use the premises, equipment, and services provided by a clinic or other medical facility. This type of agreement is essential for ensuring that both the practitioner and the facility owner understand their respective rights and obligations, thus minimising the risk of potential disputes and misunderstandings. This can include details such as the rent or fee to be paid, the services and utilities provided, the maintenance and repair obligations of each party, and the duration of the agreement.

Key Components

A typical Medical Facilities Agreement will include the following key components:

  1. Parties Involved: This section identifies the medical professional and the facility owner, as well as their respective contact information.
  2. Premises: This section describes the specific area(s) within the facility that the medical professional will use, as well as any restrictions on their use.
  3. Term: This section specifies the duration of the agreement and any renewal or extension options.
  4. Rent and Fees: This section outlines the rent or fee to be paid by the medical professional to the facility owner, as well as any additional charges for services or utilities.
  5. Services and Utilities: This section describes the services and utilities provided by the facility owner, such as reception, billing, and patient record management.
  6. Maintenance and Repairs: This section allocates responsibility for the maintenance and repair of the premises and equipment between the medical professional and the facility owner.
  7. Termination: This section describes the circumstances under which the agreement can be terminated by either party, as well as any notice requirements.
  8. Dispute Resolution: This section outlines the process for resolving any disputes that may arise between the parties, such as mediation or arbitration.
  9. Assignment and Subletting: This section specifies whether the medical professional can assign their rights and obligations under the agreement to another party or sublet the premises to another medical professional.
  10. Miscellaneous Provisions: This section includes various other provisions, such as indemnification, insurance requirements, and governing law.

Benefits of a Medical Facilities Agreement

A well-drafted Medical Facilities Agreement offers two specific benefits to both the medical professional and the facility owner, including:

Protection of Interests

A well-drafted Medical Facilities Agreement helps to protect the interests of both parties by clearly defining the scope of their respective rights and obligations. This can include provisions related to the use of the premises, the services and utilities provided, and the termination of the agreement.

Consideration of Payroll Tax Issues

Following the NSW Supreme Court of Appeal’s decision in March 2023, certain facility management agreements and other similar arrangements used by healthcare centres were found to give rise to Payroll Tax. Medical centres, dental clinics, physiotherapy practices, radiology centres and many other healthcare providers must now urgently review their arrangements. Practitioners in all the eastern States of Australia are affected.


If you are a business owner who operates a health clinic or are a practitioner who is entering into such as an arrangement, please contact a member of our commercial law team for further information and advice. 

Important Disclaimer: The content of this article is general in nature and for reference purposes only.  It does not constitute legal advice and should not be relied upon as such.  Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.



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