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Closing a practice for retirement is a hard decision as it is-here are tips to make closing your doors smoother.
A physician’s practice is more than a sign on a door. It’s a link to the community, it’s people, sometimes generations of them, who relied on medical wisdom here to help them feel better or maybe even to survive. It’s memories, it’s even family but, now, you want to close it in order to find your way to opening a new chapter. But, of course, it’s not as simple as making the decision and then turning off the lights.
It begins with your patients. “There are abandonment laws and you have an obligation to give them time to find another physician,” says Erin Whaley, partner in law firm Troutman Sanders. “You don’t have to recommend someone but it’s something to consider.” For Charles Dinerstein, who closed his vascular surgery practice in 2012, he did provide recommendations, which he estimates took care of 10 to 15 percent of his patients. Whaley recommends giving 30 days notice at the minimum to patients and Dinerstein gave about six months.
You also won’t just be in touch with new physicians when it comes to records-you need to keep records for a certain amount of time, depending on your state. For Dinerstein, he says its eight years in his state as he had his practice in Freehold, New Jersey. “You need to answer the question of where the electronic medical record (EMR) will be retained and who responds to that requests,” Whaley says. “Engaging a third party with a medical custodian to respond on a physician’s behalf may be the answer.” Consider costly EMR contracts as well when it comes to the timing of your retirement. “A reason to start looking at retirement a few years in advance is because some of those contracts have longer terms that automatically renew,” Whaley says. “If the provider says they want to retire in six months and the EMR contract renewed for three years that could create some expenses for physicians that could have been avoided with more planning.”
For your employees, there needs to be consideration for time they would need but also for their retirement plan, that it follows its needs for them moving forward. “There are employment law considerations with respect to terminations that will vary depending on the size of the practice,” Whaley says. COBRA obligations, accrued PTO and benefit plans or retirement funds must be also considered for post closure and whether those need to be wound down, she says.
Dinerstein had one employee who had worked there over 20 years. “One of the things I was happiest about was we were able to find them work with a group-they had great talent,” he says.
“You also need to give consideration when winding down to the revenue cycle for the practice,” Whaley says. “They see a patient and hopefully it’s no more than 30 days to file the claim and then you file the claim in 30 to 60 days, but then there are denials and requests for information. You may keep staff on to collect that outstanding A/R and work that down or you may hire an outside party.” Dinerstein also reminds to get in touch with your state as much as years later. He actually received a letter that the state had money of his from payments that had been sent to his office after they had closed their doors years before.
There is also the state board. You need to check with them on how long certain certifications are required to be kept up, In New Jersey, for instance, Dinerstein said there was a requirement for taking an ad out in the newspaper about the closure.
Insurance also shouldn’t end on your last day as claims are also possible. Dinerstein had tail end insurance and you want to make sure with your broker that you are covered for years after.
But, of course, you may not be retiring alone. “If you have a partner in the business and you are both retiring then closing the practice has similar considerations, but the potentially complicating factor is how to split any assets from the practice,” Whaley says. “If they are going to sell all of their exam tables, if they own the building, etc. Hopefully it’s spelled out in the corporate documents for the practice.”
Finally, be prepared in another way-for the next step and for the emotional component.
“We talk about this on a regular basis…” says Stephen A. Timoni, Partner in law firm Lindabury, McCormick, Estabrook & Cooper, P.C. “Are you psychologically ready for it? When a physician stops practicing, it can be tough. I had a client retire…they were very active and did very complex surgeries and then they’re not. They’re bored and very anxious. They maybe could have been a consultant. I think looking back they would have done it differently. You go from a high intensity job to playing golf and tennis-that may not cut it for these physicians…I think you should start planning two years in advance to consider different alternatives and the one that’s right for you.”
Of course, even when you do, there’s still that last word: goodbye. Be ready because it probably won’t be easy.
“A lot of tears were shed on both sides many times when I told patients I was retiring…” Dinerstein says. “It was a different job where you could see patients for many years. I look back on my time as a chance to help the community, enjoy the challenge of medicine and help my family. I was ready to move on, but…the memories mean so much.”