Closing a Medical Practice

Introduction

The decision to close an obstetric/gynecologic practice can be the planned culmination of a rewarding career at retirement, or an imposed result of a failure to succeed in a market, bankruptcy from financial mismanagement or after losing a large lawsuit. Whatever the precipitating event, orderly closure of the practice is important in protecting the physician to avoid liability and litigation, capturing earned income and paying outstanding debts, assisting staff in their transition to new employment, and, most important of all, assuring ongoing and orderly care of patients.


The following is a brief review of considerations and guidelines for the obstetrician/gynecologist contemplating or completing practice closure. More information can be obtained from the references listed at the end of this article.

Patients and Their Medical Records

The Ob/Gyn should notify patients in writing when the practice is closing, ideally at least 3 months ahead of the planned closure date. This notification should include both the final date of availability, where to go for emergency care, a list of other physicians who can care for the patient and a records release form with instructions for obtaining copies of medical records both now and in the future. Guard against the appearance of abandonment, a serious medico-legal concern. A copy of the written notification sent to patients should be kept in their record to demonstrate that this important step has been taken. At the minimum, all ‘active’ patients should be notified; the definition of an active patient varies, but generally includes at least everyone seen within the two year period prior to practice closure. Consult your attorney, county medical society of malpractice carrier for instructions unique to your locale.

Considerations regarding how long to maintain medical records include statutes of limitation for malpractice actions (a physician’s best defense in a medical practice action is his or her medical record) and the obligation to make records available for patient’s future medical care. Both of these have legal requirements, and if they differ the longer of the two retention requirements should be followed. Typically, the former of these considerations imply a longer required holding period, extending in some jurisdictions to beyond the age of majority for malpractice cases involving birth trauma. Again, you should consult both your county medical society and malpractice carrier for instructions on this important issue. Beyond length of retention, the physician should also consider how (physical form – paper chart, digital media, microfilm, etc.) and where charts will be stored, as well as how patients will gain access to those records in the future. It is important to insure confidentiality of records for HIPAA compliance, an issue which should be specified in written agreements with storage facilities.

Employees

Here the competing interests of physicians to keep their staff to the very end must be overridden by considerations of fairness to employees, who deserve to know as soon as possible that the practice will be closing. The employees will begin to look for suitable future employment, and many or most may be lost before the physician would have wanted the employee to terminate employment. The physician can greatly help the employee with letters of reference, referrals to other practices for new jobs, etc. Severance packages should be considered, with the general guideline of 1 week pay for each year of employment. Unemployment insurance, payment for sick time and vacation time banked but unused, and COBRA also require attention as the practice closes.

That said, the physician closing her or his practice must also consider how to maintain functionality of the office to the end, not only in terms of patient care but to attend to the operational aspects of closure (see below). Bonuses for employees that remain to the time the practice literally closes can be offered to key employees.

Practice Operations

The devil is in the details, and many details need to be addressed to settle the finances of the practice, terminate the legal entity, dispose of assets, and inform everyone with a ‘need to know’ that the practice is closing. Legal guidance is important with many of these issues, and a paid consultant to manage some or all of these issues may be money well-spent to ease the burden of practice closure – especially if a practice manager is not employed or does not remain available.

From: http://ping.fm/SdSEY