The health industry is a major business industry, and a growing one! The combination of technology and medical information means the health tech industry can easily provide more accessible, efficient health services.

If you have an idea for a health tech startup and want to hit the ground running, then that’s great! Great business ventures start with solid ideas, however, it’s crucial to have all your legal obligations in order first to ensure a smooth journey. 

Further, the health industry imposes slightly stricter rules and regulations on certain business activities due to the sensitive nature of health information, so you want to make sure your health tech startup is aware and compliant. 

We break down some key legal obligations for you in this article, so keep reading to learn more.   

What Is A Health Tech Startup?

A health tech startup utilises technology to make healthcare more efficient and accessible. For example, a doctor’s appointment can now be booked through a mobile app, or a consultation with a medical professional can be conducted through Zoom! 

Health tech startups essentially make it easier for patients to access health services, or for medical professionals to deliver these services easily. However, this accessibility and convenience is subject to a number of laws around privacy and security, as well. 

Whether it be an app that helps you keep track of your body’s activity or a telehealth business, your health tech startup has much to consider moving forward.

Types Of Medical Startups In Australia

The medical industry is broad and there are a number of ways that technology can play a key role. As a result, there are different types of medical startups. 

We’ve listed a few of them below, but before you get started, it’s important to keep in mind that some of these can cross over and this is not a definitive list.   

Medical Device Startups Australia

If you’re thinking of creating designs or products that could aid patients or healthcare workers in providing medical services, then you are likely to fall into the medical device startup industry. 

Medical devices can be anything from prosthetics to tacking programs. Once these devices have been created and perfected through a series of trails, they are then sold into the medical profession for use.   

Medical devices in Australia are regulated and governed by the Australian Regulatory Guidelines for Medical Devices (ARGMD). However, these guidelines are currently being reviewed and updated. 

If you’re looking for information around the regulation of medical devices for your startup in the meantime, the Therapeutic Goods Administration (TGA) has written more here

Mental Health Startups

Mental health startups provide services or tools that can assist with managing an individual’s mental health. This can range from mood trackers to being able to find a professional to talk to from a remote location. 

Further, some mental health startups serve as a marketplace to connect patients to licensed therapists or psychologists. 

If this sounds like your startup, it’s important that you read into the basics of setting up a marketplace before you get started. 

Medical AI Startups

Medical AI startups use artificial intelligence (AI) technology to search data and identify patterns. 

Medical AI startups are usually for medical professionals so they can utilise the findings of the AI to provide better care for their patients. For example, Clarigent Health assigns patients with a risk score after analysing their vocal biomarkers, giving doctors more information to base their treatment on. 

Medical Imaging Startups

Diagnosing illnesses requires doctors to view their patients’ bodies. However, not everything can be seen on the surface! This is where medical imaging plays a vital role. 

Ultrasounds, radiology, x-rays and CT scans are all part of medical imaging. Startups in the medical imaging field work to optimise how healthcare workers are able to view and diagnose their patients before finalising treatment.  

Telehealth Business

A telehealth business provides medical consultations to patients either through a phone call or video chat (for example, through Zoom). 

This improves accessibility for patients that are unable to travel to the doctors, and also makes things quick and efficient for the doctor and patient alike. 

Financing A Medical Practice Startup

It can be difficult to raise money for any kind of startup. Even though the medical industry has seen a surge in investments in recent years, it is also known to be one of the more conservative fields when it comes to adapting to new technologies. 

This does not mean it will be impossible to raise money for your startup, but it is definitely something to keep in mind. 

Crowdfunding For Startups

Crowdfunding allows you to pitch your idea to the general public and if they like it, they can donate to your start up. Some startups like to provide their supporters with merchandise or vouchers from their business as a gesture of appreciation. 

However, the main idea is to collect money from a larger crowd base in order to fund your idea. There are websites such as Kickstarter that give people a platform to air their ideas out. 

Before you begin crowdfunding, it’s important to be aware of crowdfunding laws that could impact your startup.  

The downside to crowdfunding is that your idea for your startup will no longer be private information as it will be available for the public to view. If you are okay with this, then you can proceed with crowdfunding! If not, then it’s best to look into alternative methods to finance your start up. 

Capital Raising For Your Startup

Capital raising is one of the more traditional approaches to getting funds for a startup business. Essentially, raising capital involves recruiting investors to place their funds into your business and in return, they become shareholders. 

Allocating shares can get a bit tricky when your company hasn’t been valued properly yet, however, there are a number of options to overcome this. It’s best to talk to a legal professional to learn more. 

How To Run A Health Tech Startup

Before you get caught up in mapping out your ideas, it’s paramount to remember that your startup is a business and must be run accordingly.

Here are some tips to help you run your startup

Register Your Health Tech Startup

Your health tech startup will need to be registered as a business by attaining an Australian Business Number (ABN) which can be applied for online

All businesses will need an ABN, however, the rest of your registration process may depend on the business structure you choose. 

If you are registering a company, then you will also need to apply for an Australian Company Number (ACN). 

If your business is based outside of Australia or you are setting up a subsidiary, there are additional requirements that you may need to look into, such as getting a Tax File Number. 

Finally, the taxes you apply for are also likely to be impacted by the kind of business you choose to register. You may wish to consult a startup lawyer who can chat you through your options so you can understand which is best for your business. 

Protect Your Startup’s Intellectual Property

Your intellectual property (IP) includes your business’ intangible assets.  For example, if you have a logo for your business, then this will be considered your intellectual property. 

However, to ensure that no one else uses your IP, you’ll need to register it with IP Australia. For example, you can register a trade mark

You can also register patents for any designs you may have. 

Other ways to protect your intellectual property are through your legal documents. For example, confidentiality clauses, and Non-Disclosure Agreements can aid in preventing people such as employees or contractors from using your IP without your permission. 

What Qualifications Do I Need?

Whether or not you will need qualifications will depend on what your startup is all about. 

For example, you cannot run a service that provides counselling remotely if you are not licensed to do so. Therefore, if your particular field or specialisation requires some kind of qualification, it’s important to keep with it and get qualified before you launch your startup. 

We’ve written more about which licences you may need depending on the industry your startup is in. 

What Privacy Laws Apply To Me?

Privacy laws apply to almost all businesses that deal with personal information. This is quite common because personal information can include email addresses and phone numbers, which are commonly disclosed when engaging with a business or their website. 

However, these regulations are  much stricter when it comes to the health profession as it involves some of the most sensitive kinds of information. 

Running a health tech business sometimes requires collecting the private information of patients. This means you will need to follow the regulations under the Australian Privacy Principles and the Privacy Act 1988 – we’ll cover this in more detail later. 

Running An Online Medtech Startup

An online medtech startup is a medical service or product that is online. While medtech startups are convenient and can even service a bigger market than something in a physical location, there are a couple of additional considerations for online businesses

We’ve listed a few legal documents that can help with these considerations below.  

Website Terms And Conditions

Website Terms and Conditions lets users of your website know their rights and responsibilities when navigating the site. It can also aid in giving you the authority to make decisions for your website, such as removing content that is inappropriate (i.e a user spreading false medical information). 

Additionally, having Web T&Cs can also help in reducing your liability in some cases. So, you can limit your legal responsibility if something goes wrong while a customer is using your website. 

If you’re running an online medtech startup, it’s important to set out good business terms and conditions to protect your startup.  

Do I Need A Privacy Policy?

We mentioned the Australian Privacy Principles and the Privacy Act 1988 earlier on in this article, but let’s dive a little deeper into the implications this has for the health tech startup space. 

According to Australian privacy laws, any business that collects the private information of its customers needs to have a Privacy Policy in place. 

A Privacy Policy lets customers know their information is being collected and what is being done with their information, such as how it is being stored or whether it is being provided to third parties. 

The requirements for a Privacy Policy are even firmer for healthcare businesses, as it is likely you are collecting sensitive health  information. As a result, it’s important to ensure you have the consent of your customers prior to collecting their information. 

Your Health Service Provider Privacy Policy should reflect these requirements and aid in being compliant with them. Chat to an expert privacy lawyer to learn more. 

Do I Need A Disclaimer For A Health Tech Startup?

Generally, there’s no legal requirement to have a disclaimer. However, it can aid in reducing your startup’s liability incase of an incident. 

A disclaimer is essentially a waiver of any kind of legal responsibility for a particular event or scenario. Naturally, this needs to be reasonable – your startup can’t actively commit a crime and be shielded from any legal consequences due to a disclaimer. However, a disclaimer can protect your startup in certain situations. 

For example, disclaimers can be placed on food supplements so that consumers know this is not be used in lieu of actual food and the business takes no responsibility for consumers that do so. 

It’s wise to consult a legal professional to ensure that your disclaimer is reasonable and can be enforced under the law. 

How Does Liability Work In A Health Tech Startup?

Most businesses are exposed to some form of liability, that is, your legal responsibility to make sure others are not harmed by your startup’s actions or lack thereof (or lack of action). In most cases in the health industry, there’s a duty of care between those providing medical services and those that are receiving it. 

Essentially, liability works the same way in the health tech startup industry as it does in most other businesses. However, due to the nature of the work, you may find yourself exposed to it more frequently or severely. 

Many businesses use limitation of liability clauses or exclusion clauses to reduce their responsibility for things that go wrong. However, it’s important to note that there are limits to the protection these clauses can offer due to the high duty of care that doctors and medical professionals have. 

So, limitation of liability can only protect your business to a certain extent in a health tech startup. 

No matter which category your startup falls under in the health startup industry, it’s important to be aware of your liabilities and responsibility towards those associated with your business. 

Handling Medical Records? Understand The Health Laws

If your startup idea involves handling medical records, then it’s important to abide by the laws associated with them. 

Medical records in Australia are governed by state regulations, so be sure to look the ones up for your state in order to remain compliant. Generally, only medical professionals serving a patient or someone else that has been given permission can access the records of another person, so keeping records secure is paramount. 

We’ve written more about who can access medical records in Australia. 

Using An App For Your Health Tech Startup?

Healthcare apps are becoming increasingly popular. In fact, health or fitness tends to be a category of its own with major platforms that sell apps. 

No matter what audience you’re building an app for, it’s important to make sure your app meets all legal requirements and regulations- a legal professional can help you sort through this.  

For example, you’ll need to have appropriate App Terms and Conditions. These will help limit your liability for any mishaps on the app, and will help you regulate the activities that take place. 

Key Takeaways

Health tech startups are growing in popularity, changing the healthcare industry and making things more efficient for doctors and patients alike. 

Health services are easily accessible now more than ever. However, this convenience comes with legal responsibilities and obligations. To summarise what we’ve discussed:

  • A health tech startup uses technology to efficiently deliver health services
  • Like other startups, you’ll need to fund your business through capital raises or crowdfunding 
  • Be sure to take care of your business’ legal obligations such as registrations and IP protection
  • There are additional requirements for running an online health tech startup, such as a Privacy Policy or Web Terms and Conditions
  • You should have contracts in place that limit your liability for your business activities
  • If you’re launching an app, make sure to get App Terms and Conditions drafted and comply with other obligations

Chat To A Startup Lawyer 

Startups often work a bit differently to other traditional businesses. A lot of startups like to make use of technology and have an online presence making their needs and priorities somewhat different. This is why it’s important to talk to a professional startup lawyer

At Sprintlaw, we help startups and small businesses every day. We’d be happy to help you out, too! 
If you would like a consultation on launching a health tech startup, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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