Because of geographic variations in law, regulations, and organizations it’s not possible to provide a complete guide on how to close a practice. That’s why you’ll want to obtain qualified legal and financial advice for specific guidance throughout the process. The following checklist may help you get started.
- Hold a staff meeting to notify employees of practice closure and how it will affect them.
- Prepare to hire temporary staff if current employees leave prior to closing date.
- Consider offering incentives to one or more employees to stay until the last patient is seen, and/or until the practice is officially closed, or even longer to help collect any remaining accounts.
- Write a short script announcing the practice closure that your staff can use when discussing the issue with patients on the phone.
- Change your office’s voicemail message to announce the date of the practice closing.
- State employment agencies (to discharge your employer obligations).
- Practice insurance carriers (e.g., health, workman’s comp, commercial multi-peril, fidelity, employment, etc.).
- Check payer contracts for any patient notification requirements.
- Notify patients of the impending closure.
- Send a letter to each patient informing them for the retirement and/or closure (see sample patient notification letters for Closing a Medical Practice and/or Retirement). These letters include reason for closing, planned date of closure, how to obtain copies of medical records, the patient’s options for obtaining continued medical care (both routine and emergency), where to obtain copies of medical records after closure, how long records will be retained and be accessible, and contact information for future record requests. Include a transfer of record authorization form to transfer copies of medical records to your patients’ new providers. Place a dated copy of the notification in each patient’s medical record.
- Send additional closure notifications/reminders to patients by email and/or text.
- Allow enough time for patients to obtain copies of records and find a new physician.
- For high-risk patients, consider using certified mail with return receipt. Place a copy in each chart. If undeliverable, make a note in the record about any special attempts made to notify the patient.
- Post signage in your office to notify visitors of your last day of business.
- Place a notice on your practice website and any social media accounts.
- If required/applicable, publish local newspaper ads with details about the closing.
Drug Enforcement Agency (DEA)
- Inform the DEA whether you want to either continue or surrender your DEA registration.
- Notify the hospitals where you have privileges of your intention to close your practice.
- Announce your decision to close to colleagues that you work with or refer to.
Alert all payers of your practice closure.
- Public (Medicaid, CHIP, Tricare, etc.).
- Private (PPOs, HMOs, etc.) – Some contracts have specific requirements regarding notification of patients for planned closures.
- Give payers a forwarding address to send payments that resolve after the office is closed.
- Pay attention to contract terms and payment cycles for capitated contracts. Mid-month closure may cause accounting complications, not to mention patient care obligations. Off-cycle closures could also jeopardize any risk pool or bonus payments.
- Notify your state medical board, licensing board, and credentialing organizations.
- Report your new address to the AAP. If retiring, note this. You may be eligible for senior membership status (if so, consider joining the Section on Senior Members).
- Inform other medical organizations’ membership departments.
- Inform labs and other ancillary services to which you refer patients.
- Contact business organizations such as collection agencies, medical suppliers, office suppliers, housekeeping services, hazardous waste disposal services, and magazine subscriptions, etc.
- Request final statements from these vendors to close your accounts with them.
- No new patients should be accepted once the closing date is announced.
- Start restricting nonemergent appointments as much as possible.
- Patients who need continual follow-up and care should be referred to another provider.
- Process your accounts receivable, as much as possible, to collect money owed to you.
- Consider employing a staff member for 90 days (before turning it over to a collection agency) to reconcile accounts after the practice has closed.
Additional Financial Considerations
- Keep your business bank accounts open to receive electronic payments.
- Consult with your accountant as to what information will be needed for tax filing purposes for the year of closure and beyond (and complete corporate tax filings at year end).
- If you have a retirement plan for yourself or your employees that you administer, you have an obligation to continue or arrange for a move to a different plan. Make sure you notify employees of this change.
- Notify your landlord if you do not own your property / close out your lease.
- Notify and pay your final utilities, cable, and other facility bills.
- Finalize the selling of the hard assets of the practice (if applicable).
- Review your and your employees’ insurance policies and update or cancel where appropriate: i.e., liability, health, life, disability, workers compensation, etc.
- Obtain tail coverage extended liability insurance, if necessary, which provides coverage against claims reported after the liability policy expires. See the article on the Basics of Medical Liability for additional information.
Few issues raise more questions when closing a practice than what to do with the medical records. Remember that the physical record (whether paper or electronic) is the property of the practice and the protected health information in the record is the property of the patient. That means the patient is entitled to obtain copies of the record, but the physician must retain the original in case a liability claim is filed. See article on Medical Record Retention for additional information.
- Contact your state government and/or liability insurer for record retention guidance, including the legal length of time records should be retained, and any other state specific requirements. Do this first.
- Arrange for safe storage for both paper and electronic original medical records. They must be stored in compliance with all regulations and in a place where they are safe from tampering, loss, access by unauthorized personnel, fire, or flood. Make sure the storage facility has experience handling confidential patient information and HIPAA agreements.
- Notify your state medical board of the storage location.
- Establish a mailing address or PO Box for copies of medical record requests after closing.
- Obtain written authorizations to transfer copies of all patient records. Keep a copy of this authorization in the original record.
- If original records will be held by another physician or practice, make sure they will comply with all legal requirements. Obtain a written agreement specifying the length of time records will be held, arrangements to transfer authorized copies of records at patient requests, guaranteed access for you in case of a liability claim or other requirement, and notification to you before record destruction or transfer.
- When transferring medical record information on behalf of patents, you may charge the patient a reasonable fee to reflect the cost of the materials used, the time required to prepare the material and the direct cost of sending the material to the requesting physician or other party (note: This fee may be determined by law). Since this is generally an uninsured service, make reasonable attempts to collect the fee. Nonpayment of the fee or any other unpaid bills are not reasons for withholding patient charts.
- Consider using a professional to destroy any records containing protected health information (paper and electronic). Obtain certificates of destruction. Destruction can be by incineration, shredding, pulverization, or, in the case of computer media, reformatting or de-magnetization.
Other Practice Documents
- Keep tax returns, personnel files, accounts payable invoices, contracts, and other financial records according to recommended guidelines (per the instructions of your business or legal consultants).
- Retain HIPAA documentation, such as acknowledgement of privacy notice, requests for amendments, and workforce training documentation per legal requirements.
Arrange the proper storage and eventual disposal of clinic documents such as financial records especially anything containing protected health information.
- Follow the federal guidelines for disposing of prescription drugs and medications.
- Contact pharmaceutical representatives to determine what to do with unused samples.
- Contact the U.S. Postal Service regarding mail forwarding details.
- Consider a phone/messaging service for office phone calls for a period after the closing date.
American Academy of Pediatrics