Updated on: March 14th, 2020 4:08 PM

How to Start a Clinic?

The healthcare industry is one of the largest industries in India with a market size of over Rs.6.5 lakh crores, growing at an compounded annual growth rate of 22.9 percent. Rising affluence, longevity, population and health awareness are key drivers behind the growth of the healthcare industry. Though a strong network of hospitals and healthcare infrastructure has been established in major cities, the availability of healthcare facilities in tier-2 cities, town and villages are minimal. Hence, there exists a huge amount of untapped healthcare service demand from over 70% of population residing in rural India.

Healthcare clinics are an important channel in providing tertiary care to a majority of the population residing in tier-2 or tier-3 cities and rural areas. With minimal investment required in terms of infrastructure or equipment, healthcare clinics are a great small business for Doctors and Medical Practitioners. In this article, we look at the process for starting a healthcare clinic in India.

Business Entity

It is best for any business to be started as a registered corporate entity, so it provides limited liability protection for the promoters and is easily transferable to another person as a going concern in the future. In such a case, it is recommended that a healthcare clinic be started as a Limited Liability Partnership Firm (LLP). One or more Partners of the LLP could be a licensed Medical Practitioner, to provide the necessary services while investors or other stakeholders can still be a part of the LLP in a non-healthcare service delivery role.

In case of large clinics or investment in equipment of more than Rs.25 lakhs, then a private limited company is more preferred. In case of very small clinics, with an annual sales turnover of less than Rs.10 lakhs, a Proprietorship is preferable.

Trademark for Clinics

In case of a clinic having an unique brand name, a trademark registration can be obtained for the same to create an intangible asset and buildup goodwill over time. In today's economy, many healthcare chains have been established successfully through branding and expansion. Hence, it is necessary to protect any investment in branding and intellectual property right from the beginning.

Service Tax Registration

The following types of healthcare services are not taxable under the service tax regime:

• Service provider should not be hospital, nursing home or multi-specialty clinic;
• The service is provided by a an independent doctor or a resident doctor of a hospital;
• The individual receiving health services is an employee of the same business (hospital or clinic) that is providing the health service;
• Preventive care offered to the insured person;
• Payment made by the individual for health services obtained by the individual;

Other healthcare service providers including clinics that do not fit into the above requirements must obtain service tax registration when crossing Rs. 9 lakhs and becomes liable to pay service tax. More information about service tax on healthcare services.