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What you should consider when you decided close medical practice?


 

Whatever your reasons for winding down your medical practice, you’ll need to consider both legal and practical issues before you lock up and leave. This article addresses some of the key considerations you’ll face.  

 
Selling the practice
Once you have decided to close your practice, typically the simplest—and most ideal—approach is to sell it to a hospital or another local practice. Keep in mind, however, that your practice will be more attractive to potential buyers if you are willing to stay on for at least a transitional period of time following the sale. If patients know that their long-time physician is still available to treat them, they will likely return to the practice after the sale, ensuring a solid patient base for potential buyers.
 
The next step is selecting a date to cease practicing. Contractual obligations may be a deciding factor when choosing this date. To avoid becoming the target of a breach of contract lawsuit or other legal claim, review your existing service and vendor contracts—including managed care participation agreements—because each of these may have specific termination and notice requirements.
 
Notifying patients
The next step should be to notify patients of your decision to close your practice. Ideally, you should give patients sufficient time to make other arrangements for their ongoing care, because failure to do so could lead to a claim of patient abandonment. Some states require that you give a specific number of days notice before terminating the physician-patient relationship. If your state is silent on the subject, consider seeking guidance on how much notice is advisable from both legal counsel and your malpractice insurance carrier.
 
Insurance considerations
Even if you are retiring completely from practice, you may still be named in a malpractice action based on services rendered while you were in active practice. Accordingly, you should notify your medical liability insurance carrier of the decision to close your practice. If you have claims-made insurance, make arrangements to purchase an appropriate extended reporting endorsement (ie, tail insurance).
 
Dissolution
Once you have stopped actively rendering services through your practice, you can begin the actual “wind-down” process. If your plan is ultimately to dissolve your corporate or other legal entity, you will need to review and follow state law on the dissolution process. Typically, this involves collecting all accounts receivable due to the practice, liquidating the practice’s assets, and paying the practice’s outstanding debts and taxes. The practice accountant will then file a final tax return for the entity, which clears the way for the dissolution process. This process may require you to obtain clearances from your state corporate and revenue departments and can take several months or even years to complete.
 
 
 
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