Topics:

Closing Your Medical Practice: Steps to a Smooth Retirement (Part I)

Closing Your Medical Practice: Steps to a Smooth Retirement (Part I)

Although many retirement-age physicians look for willing buyers for their medical practices, others simply elect to close their doors. When a decision is made to retire without selling, there are certain steps that should be followed. This week I will talk about notifying patients and other third parties regarding a practice closing. Next week I will focus on medical record issues and the use of a record custodian.

When closing your practice, the first step is to develop a mechanism to provide notice to patients. As a general rule, physicians should provide at least thirty (30) days notice before closing a practice; however, the time required depends on: state law; type of practice; health status of the patients; availability of other physicians of the same or similar specialty who would be willing to accept new patients; and the number of patients involved. Notice to patients is absolutely necessary to avoid claims of patient abandonment and to assure continuity of care.

Notice to patients can be accomplished by sending a letter to active patients (usually those the physician has seen within the past twelve (12) months, but this can depend on specialty) and by placing an advertisement in the local newspaper. Some states and counties have specific rules on publishing notices about practice closings, so always check local law. Information provided in the notice should include the date the practice will close and how copies of medical records can be obtained, where patient records will be stored after closing, how to have the records transferred to another physician, and the cost, if any.

If you are allowing another physician to take over the practice (not selling), this should be mentioned in the notice but it should be clear that no patient is obligated to use the new physician. The notice should also offer assistance to patients in finding new providers. You may want to offer a list of physicians to provide to patients who request such information, including contact information for state or local medical societies, for example.

When you know your practice will be closing, make sure your staff reminds patients of the closing when they come in for appointments or call the office. A notice of closing should also be posted in the waiting area. Certain high-risk patients may need specialized notice because of cognitive problems or special needs. These patients may need to be notified by certified mail, or their parents or guardians may need to be notified. Place a copy of the notification in each patient’s chart, along with any returned letters with the associated envelopes.

Other than patients, there are also third parties who should be informed of the practice’s closing. This list could include the state board of medical examiners, the federal Drug Enforcement Administration, your malpractice carrier, Medicare/Medicaid and other payers, referring physicians, hospitals, as well as state and local medical societies and other organizations, if applicable.

While most physicians are likely to review the termination date for their lease before deciding to close, don’t forget other contracts you may have such as for cleaning, waste disposal, laboratory services, or equipment rental. Also, make sure you review any contacts with your personnel or ones you may have with other entities (i.e. medical director). It’s important to provide appropriate notice to all impacted parties.

I always recommend that my clients work with an accountant to determine known or ascertainable trade payables and other liabilities that will need to be paid. In addition, you may need to determine whether it will be necessary to establish a reserve fund to pay estimated expenses, taxes, and contingent liabilities and to decide how collections and other post-closing related matters will be best handled.

Finally, creating a checklist of tasks to address before closing is the most effective approach to making sure you have not forgotten anything. Closing a practice is a process that can take months to do properly and should not be rushed. Failure to think through all the necessary steps can be legally and financially detrimental to a physician. So, if you are looking forward to a trouble-free departure from practice, make sure you plan ahead so as to avoid an unexpected delay to that peaceful retirement you’ve envisioned.

Find out more about Ericka Adler and our other Practice Notes bloggers.

Disclosures

 
Loading comments...
Please Wait 20 seconds or click here to close