12 Steps to Closing Your Practice Without Problems
Whether you’ve decided to retire, relocate, or work for your local hospital, unwinding your practice will take time. Physicians can avoid mistakes by planning ahead and making a checklist for what to do and when to do it.
“Doctors shouldn’t assume everything takes care of itself. Many don’t think about compliance issues, patient abandonment, or accounts receivable that they need to keep open to collect from billing, which can occur months after the dates of service,” said David Zetter, president of Zetter HealthCare management consultants in Pennsylvania.
Debra Phairas, president of Practice and Liability Consultants, LLC, in California suggests doctors start planning for the closing of their practice at least 90 to 120 days from their closing date.
“Many people and entities need to be notified,” said Phairas. The list includes patients, payers, vendors, employees, licensing boards and federal and state agencies.
Medical societies may have specific bylaws that apply; malpractice carriers have rules about how long you should retain medical records; and some state laws require that you communicate that you’re closing in a newspaper, Zetter added.
Phairas recommends that physicians decide first whether they will sell their practice or if they’ll just shut it down. If they sell and the buyer is a doctor, they may want to provide transition assistance such as introducing patients and staff, she said. Otherwise, doctors may need to terminate their staff.
After making that decision, Zetter and Phairas recommend taking these 12 steps to ensure that the process goes smoothly.
What To Do 60-90 Days Out
1. Check your insurance contracts. The Centers for Medicare & Medicaid Services requires physicians to notify them 90 days after deciding to retire or withdraw from Medicare or Medicaid. Other payers may also require 90 days’ notice to terminate their contracts.
You’ll also need to provide payers with a forwarding address for sending payments after the office closes, and notify your malpractice insurance carrier and any other contracted insurance carriers such as workers’ compensation or employee benefit plans.
2. Buy “tail” coverage. Doctors can be sued for malpractice years after they close their practice so this provides coverage against claims reported after the liability policy expires.
3. Check your hospital contracts. Most hospitals where you have privileges require 90 days’ notice that you are closing the practice.
4. Arrange for safe storage of medical records. If you are selling your practice to another physician, that doctor can take charge of them, as long as you obtain a patient’s consent to transfer the medical records, said Phairas. Otherwise, the practice is required to make someone the guardian of the records after the practice closes, said Zetter. This allows patients at a later date to obtain copies of their records at a cost.
“This usually means printing all the records to PDF to be retained, otherwise doctors have to continue to pay the license fee for the EMR software to access the records and no practice is going to continue to pay this indefinitely,” said Zetter.
Check with your malpractice insurance carrier for how long they require medical records to be retained, which may vary for adult and pediatric records.
Phairas also advises doctors to keep their original records. “The biggest mistake doctors can make is to give patients all their records. Your chart is your best defense weapon in a liability claim.”
What To Do 30-60 Days Out
5. Tell Your Staff. They should not hear that you’re retiring or leaving the practice from other people, said Phairas. But timing is important. “If you notify them too soon, they may look for another job. I recommend telling them about 45 days out and just before you notify patients, although you may want to tell the office manager sooner.”
Doctors may need help closing the practice and should consider offering the employees a severance bonus to stay until the end, said Phairas. If they do leave sooner, then you can hire temporary staff.
6. Notify patients to avoid any claims of abandonment. You should notify all active patients, which, depending on your state, can be any patient the physician has treated sometime in the past 12-36 months.
Some state laws require the notice to be published as an advertisement in the local newspaper and will say how far in advance it needs to be published and how long the ad needs to run. Notification also should be posted throughout the practice, and patients who call or visit should be given verbal reminders.
“Your biggest expense will be mailing a letter to all patients,” said Zetter. The letter should include:
The date of closing
The name(s) of the physicians taking over the practice (if applicable)
Local physicians who would be willing to accept new patients
Instructions for how patients can obtain or transfer medical records (with a deadline for submitting record requests)
How to contact the practice if patients and families have any concerns about the closing
7. Notify your professional associations. These include your state medical board, credentialing organizations, and professional memberships. It’s critical to renew your license even if you plan to practice in other states. He recalled that one doctor let his license lapse and the medical board notified Medicaid that he was no longer licensed. “CMS went after him because he didn’t notify them that he was no longer operating in Washington. CMS shut him down in every state/territory. This interventional radiologist spent 3 years with two attorneys to get it resolved,” said Zetter.
8. Terminate any leases with landlords or try to negotiate renting the office space on a month-to-month basis until you close or sell, suggests Phairas. If the practice owns the space, the partners will need to decide if the space will be sold or leased to a new business.
What To Do 30 Days Out
9. Notify referring physicians of when you plan to close your practice so they don’t send new patients after that date.
10. Send a letter to the Drug Enforcement Agency to deactivate your license if you plan not to write another prescription and after you have safely disposed of prescription drugs following the federal guidelines. Destroy all prescription pads and contact drug representatives to determine what to do with unused samples, if needed.
11. Notify all vendors. Inform medical suppliers, office suppliers, collection agencies, laundry services, housekeeping services, hazardous waste disposal services, and any other vendors. Make sure to request a final statement from them so you can close out your accounts.
12. Process your accounts receivable to collect money owed to you. Consider employing a collection agency or staff member to reconcile accounts after the practice has closed.
Zetter also suggested retaining a certified accountant to handle the expenses for shutting down the business and to handle your future tax returns. “If you shut down the practice in 2023, you will still have to file a tax return for that year in 2024,” he said.
Christine Lehmann, MA, is a former senior editor and writer for Medscape Business of Medicine based in the Washington, DC area. She has been published in WebMD News, Psychiatric News, and The Washington Post. On Twitter @writing_health
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