Closing A Medical Practice Upon Retirement
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When physicians decide to close their medical practice, whether due to retirement, change in practice, or a career change, several questions come up. Common issues include how to smoothly transition patients to another provider, who to notify, and what should be done with medical records. This article will address some of those questions.
Attorney Consultation
Physicians who plan to retire and sell their medical practice should consider consulting with an attorney who specializes in business and/or healthcare law for advice on signing sales contracts, determining appropriate compensation, selling office equipment, etc. Among other things, the attorney may advise that while physicians may sell the tangible and intangible assets of the practice, including “good will,” they may not “sell” or otherwise transfer patients to another physician without the patients’ consent. Patients must be given the option of choosing another doctor and having a copy of their records sent to the new physician.
Others who would benefit from consultation with legal counsel before retirement include physicians who intend to close their practice without selling any of its assets, those who are retiring from a group practice or a medical corporation or partnership, and executors of the estates of deceased physicians.
Notifying Patients
This is perhaps the most important part of closing your practice; patients must be given appropriate notice (as early as practical; MIEC recommends a minimum of 30 days) so that they can begin to transition their care to another provider- this may include scheduling follow-up appointments if necessary, obtaining refills of medications, and perhaps soliciting assistance in finding another provider.
There are several ways to notify patients about the impending closure of your practice. The most direct and efficient way is to send a letter to all patients you have seen in the past three years or so. The letter should include information about when the practice will close, what services are available in the meantime, and how they can obtain a copy of their records or have them forwarded to another provider. Include an authorization for the release of the patient’s records. You may charge the patient for a copy of the records, consistent with allowable copying charges under state law, or you may choose to waive the fee.
If the patient authorizes you to send the chart to another physician, MIEC suggests that you provide the copy to that physician without charge.
As an adjunct to sending out letters, you may speak to patients individually when they present for treatment. Depending on the nature of your practice, you may wish to approach certain patients individually and early in the process; this is particularly useful for patients with acute or serious medical conditions, for patients who require special accommodations, and/or patients who generally require more attention and might have a more difficult time transitioning to another provider.
Additionally, you may wish to post signs in your reception and/or treatment rooms to notify patients of the impending closure of your practice.
If you need to reach a large number of patients, you may consider taking out an advertisement in a local newspaper as an alternative, or as an adjunct, to sending out personal letters. While this is not required, it may serve as an effective communication tool for larger patient populations.
Custody and Transfer of Medical Records
If you sell your practice, and the buyer agrees, you may designate the purchaser of your practice as the new custodian of your records. You may not sell patient records or “transfer” patients automatically to another physician’s care. You may recommend to your patients that they continue treatment with the new provider, but be careful to advise patients that they are free to select any physician they wish.
When transferring custody of records as part of a sale, it is prudent to specify in the purchase contract that the buyer:
- Agrees to be custodian of your medical and billing records, and will maintain them in a safe and secure place;
- Will make the records available to your former patients and to any physician to whom a patient requests a copy be sent;
- Will make the records available to you in the event you require them for any reason, including the defense of a claim; and,
- Will preserve the records for at least ten years following transfer of custody, and that the records may not be destroyed without your consent.
If you do not sell your practice, you may still designate a physician to be custodian of your records if they agree to do so. This person must keep the records for the required period of time; and they make them available to you, the courts, and to patients upon presentation of an appropriate authorization or subpoena. Whether or not a fee is paid to the custodian of records, MIEC recommends that you and the custodian sign a written agreement delineating the terms of the custodianship.
Lastly, you may store the records yourself and continue to act as the custodian of records. In any case, provide your patients with specific information regarding how they can request a copy of their medical records after your retirement.
For more information on retaining medical records and state-specific requirements, please see MIEC’s publication entitled, “How Long Should We Keep Medical Records?”
Telephone Service
Physicians who are retiring and closing their practice completely might want to retain an answering service for 3-6 months. If another physician purchases your practice, ask his or her staff to take your calls and inform patients of your retirement. Include this provision in the sale contract. Alternatively, if you terminate telephone service immediately upon closure of your practice, arrange for your office number to be forwarded to your home telephone for several months. If necessary, it would be appropriate to have an answering machine or recorded greeting to advise callers that you have retired from practice.
Notifying Contracted Insurers
If you have providers contracts with health insurers, notify them of your retirement plans well in advance of your retirement date. Depending on the terms of your agreement, plans may reassign your patients to another physician. If so, you can modify your patient notification letter to inform patients of the contact information for their new physician, how their plan will handle reassignment, and/or who to call for further information about reassignment of providers.
Notifying Licensing Boards, Drug Enforcement Association
If you are retiring, taking a temporary leave from the practice of medicine, or moving to another state, you should inform your state licensing board and discuss whether it would be appropriate to change the status of your medical license. Some states allow physicians to choose between maintaining an active license, changing to an inactive license, or changing to retired status- these involve different processes for reactivating your medical license, should you choose to do so in the future.
Also, you should notify the DEA or any practice change so that appropriate changes can be made to your DEA registration for prescribing medications- this includes location of practice, which should be updated if your address is changing and you will maintaining an active registration.
Notifying MIEC
Before your retirement date, notify MIEC’s Underwriting Department and arrange for “tail coverage” (also called a reporting endorsement), which is an extension of your professional liability policy to provide ongoing coverage after you retire. This coverage insures you for malpractice claims reported after your retirement, but which involve treatment that occurred while your regular liability policy was in effect. Importantly, MIEC offers tail coverage at no charge to retiring physicians.
If you plan to close your medical practice, but plan to continue practicing on a limited basis, you may qualify for part-time coverage depending on how many hours per month you plan to work. For further information, ask your MIEC Underwriter.