Who, What, When Considerations for Closing a Practice

Disclaimer: The following is explicitly not intended as business or legal advice and is intended to be used for the sole purpose of providing an outline of cogent issues to consider. The engagement of services of a licensed attorney who specializes in healthcare law and an accountant or business consultant is highly recommended.

Who

When anticipating the closure of a practice, one can expect to engage with numerous entities in the process. That list includes the following on the topics indicated.

State Medical Board

Licensure
State specific regulations on storage of patient records
State guidelines on patient referrals for continuing care

State and/or Local Medical Society

Recommendations on facilities for secure record storage
Recommendations for colleagues to care for patients outside the immediate area
Recommendations for local attorneys, accountants, and business consultants

Medical Malpractice Provider

Requirements for record storage may differ from state regulations (potentially more restrictive).
Purchase of “Tail Coverage” for potential future liability

Attorney Specializing in Healthcare Law

To provide broad oversight to ensure all legal requirements are satisfied
The American Health Law Association is a good resource to find their members in specific geographic areas.

Accountant or Business Consultant

Oversight of financial matters to include accounts receivable, notification of payers, etc.
National Society of Certified Healthcare Business Consultants is a good resource.

What

Closing a practice requires consideration of all the various components that make up the daily life of that practice. By far, the most critical matters to consider are those surrounding the practice’s patients, their medical records and the staff that support the practice.

Patients

No new patients should be accepted after the closing date is announced.
Send notice to patients at least 60 days prior to date of closure and place a copy of the notice in the patient’s chart.
Include with the notice an authorization to transfer the records to another surgeon at their request.
If records will not be transferred and it is known where their records will be stored, so indicate in the closure notice.
Consider providing recommendations for surgeon(s) for continuity of care.

Medical Records

Individual state medical practice acts, as well as medical malpractice insurance providers, likely have specific guidelines or requirements for both the length of time and secure means of record storage.
As discussed above, specific arrangements must be made for either storage of patient records OR transfer (with patient's authorization) to a different surgeon.
Records not transferred to another surgeon will likely need to be designated to legal custodian.
Safe and secure storage of both paper and electronic records will be required.
Some state medical boards require notification of the location of those records.
Location designated should have experience with the storage of patient records, the confidential information they contain, and all applicable laws and regulations, including HIPAA.
As part of designating the facility, plans should be made for accessing and requesting the records going forward.

Office Staff

Notify staff as soon as the decision is made to close the practice, preferably at least 60 days prior.
- Anticipate need for some temporary staff as some may depart ahead of practice closure.

Payers and Payment

Provide notice of closure to all contracted payers with instructions for remitting payments after the closure date.
- Includes Medicare and Medicaid (as applicable)
Attempt to collect and reduce accounts receivable as much as possible prior to closure date.
- Engage staff in that effort.
- Consider outside assistance.
Make arrangements for continued collection efforts after the practice closes.

Miscellaneous Business and Related Matters

DEA registration: consider submitting a request to retire your number.
Phone, utilities and rent: provide notice of closure and make arrangements for final billing invoice.
Vendors of supplies and services: provide notice and make arrangements for final billing invoice.
Review insurance provisions, provide notice of cancelation, or make provisions as appropriate.
- Business liability insurance
- Employee health insurance

Referring Physicians and Other Professional Colleagues

Provide notice as soon as a decision is made to close the practice to those with whom call is shared, referrals are made, and referrals are received.

Hospitals and Other Institutions Where Privileged to Provide Services

Provide notice and consider resigning privileges and/or resigning from the medical staff.

When

In general, the closer to 90 days one can begin the process the better. At the outset, noticing patients and staff is paramount. The complexity of managing the patients and their records can be expected to be detailed, and potentially, labor intensive and cumbersome.