What to Know When Relocating as a Physician

October 13, 2016
Iulia Filip

Looking to move to one of the Best States to Practice - or another new state? Here's a guide that will help you out.

For Harry L. Greenberg, a dermatologist based in Las Vegas, Sin City had long represented the ultimate location, both due to its quirky character and to its opportunities for practicing his specialty.

After finishing his dermatology residency in Temple, Texas, Greenberg joined a large single-specialty practice in Las Vegas in 2006. One year later, Greenberg created his dream practice, Las Vegas Dermatology. "I've always wanted to live in Las Vegas and have my own practice," he says. "Vegas represented an underserved area with plenty of opportunity to do medical and cosmetic dermatology."

While some physicians relocate to pursue new markets or employment opportunities, others make the move for personal reasons. Deciding where to relocate is the first of many challenges, according to Keith Borglum, a Santa Rosa, Calif.-based healthcare business consultant who assisted Greenberg with opening his practice. "Most are focused on a particular city because they are relocating to be near family or the spouse's family, or sometimes for a personal avocation, like surfing or mountain biking," Borglum says.

Once location is no longer a variable in the equation, the soon-to-be displaced physician can take the next steps. These may vary, depending on whether the physician is considering a job offer, buying a practice, or starting from scratch. If starting from scratch, setting business objectives and creating a marketing plan are essential steps.

Regardless of scenario, the physician should start developing the blueprints of her new professional life before relocation, says Neville M. Bilimoria, a partner in the Chicago office of the Health Law Practice Group of the law firm Duane Morris. "Many physicians realize [after moving] that the grass is not always greener in a new location," Bilimoria says. "It takes sometimes years to establish a practice in a particular locale. I counsel my clients all the time on developing a good business plan and marketing strategy to help establish their practices."

Building a New Practice

For physicians who do not plan to join an existing practice, "mystery shopping" is the best initial strategy, Borglum says. In other words, physicians should test out healthcare providers in their new area to see what the needs are in that market. "The longer the wait time for non-emergency new patients in the community, the easier it is to start from scratch," he says. "Your wait time will equal the community [wait time] within the first year. I've had physicians have full practices within two or three weeks of opening. Others lag for months."

Picking an underserved market, such as locations 30 minutes or more outside the core urban area, is the best way to jumpstart a new practice, Borglum says.

As a new business owner, Greenberg put a lot of effort into attracting new patients. "I joined the Las Vegas Chamber of Commerce, went door to door introducing myself to other physicians, asking them for their business, and gave multiple lectures at the medical school and various community organizations," he explains. "Whenever you move to a new city, no one knows who you are and no one cares, so it does take time to get established."

Stephen Hirshorn, a retired general surgeon and anesthesiologist, relocated from Michigan to Florida in 1982 to be near his elderly parents. He says establishing a successful practice as a newcomer starts with the three As: availability, affability, and ability. "You must be available when needed, nice to patients, and, of course, reasonably talented."

Borglum advises clients to "hammer the marketplace with appropriate marketing during the first month to jumpstart patient acquisition, which then increases patient referrals." Physicians can use internet search engine optimization, direct mail, and similar marketing tools to familiarize the community with the new practice. "Plan to spend half your annual marketing budget during the first week," the consultant says.

Buying an Established Practice

In well-served markets, buying an established practice may be the better choice. However, Borglum cautions that practices are often over-valued, which could cause the buying physician to lose money for the first few years. Physicians should retain an appraiser who specializes in medical practices to avoid overpaying, he says.

Physicians joining an existing practice have the advantage of an established patient base and business infrastructure. "Plan to not change operations for at least 60 to 90 days, to learn everything they are doing," Borglum says. He advises clients in this situation to keep the existing staff, who can help familiarize the new physician with the practice and its patients.

The former owner of the practice can also help make the transition seamless by sending a notice to all patients to introduce the new physician. "Have a photo in the letter with the smiling seller's arm around the buyer, demonstrating acceptance, with wording such as 'I've finally found a physician that I am confident that can take care of you as well as I have,'" Borglum says. The buying physician can send a follow-up letter in 60 to 90 days, and have staff call and schedule patients who have missed regular appointments.

Administrative Aspects of Relocation

Whether joining an established practice or starting from scratch, physicians must tackle the administrative aspects of relocation, such as meeting the licensure requirements for their new state. "This can be done by going to each state's board of medicine and understanding the licensure requirements, applications, and registration requirements," which differ by state, says Bilimoria. "Some states offer reciprocity, others may not." The AMA is another resource for practitioners who contemplate relocation.

For physicians who never practiced in another state, relocation also involves entering a physician provider agreement with the managed care organizations (MCO) in the new state. "Each state has different MCOs that have their own separate physician provider agreements that must be entered into by the physician to participate in an MCO network," Bilimoria explains. "Depending on the state and the specialty of the physician, different standards of practice may apply, and means of billing can vary from state to state." Physicians should reach out to local MCOs and become familiar with their manuals for billing in a particular specialty, to make sure they are billing properly, the attorney says.

In addition to medical licensure, some states require physicians who are setting up new practices as sole owners to establish a limited liability corporation and register it with the applicable department of professional licensing. "That is something that is overlooked by many physicians and could lead to disciplinary action down the road if the state realizes that a physician's practice is not properly registered," Bilimoria cautions.

It's important to plan ahead. "Setting up a corporation, getting your accountant on board, enrolling as a participating provider with MCOs, and obtaining licensure and registration with applicable state boards of medicine takes time," Bilimoria explains. "The more time you have to get the process in place before you move, the better." Employment agreements for joining a hospital or an Accountable Care Organization (ACO), as well as [EHR] agreements may take additional time.

Hirshorn, who relocated twice as a practicing physician, says getting licensed in a new state has become more challenging and time consuming. "When I moved for the first time, in the 1970s, getting licensed and obtaining hospital privileges was quick," Hirshorn says. "Hospitals and medical boards have since become much more aggressive about credentials." A professional credentials service could make the transition smoother, the surgeon says.  

Additionally, as physicians settle in their new homes, they should watch out for possible pitfalls in employment agreements with hospitals or other physician groups, and even in technology and software contracts. "Physicians need to engage experienced counsel to guide them through these contracts," to avoid costly litigation down the road, Bilimoria recommends.

Don't Forget the Patients

In moving their practice to a new state, practitioners must also consider the fate of the patients they leave behind. "Patients deserve at least 30 days' notice to find a replacement physician," Borglum says. "If employed, it's the employer's responsibility. If you owned the practice, you have a liability for medical record retention and recovery, which can add up to tens of thousands of dollars."

If physicians sell their practice, the new owner takes on record retention. Borglum says owners who are unable to sell the practice might consider "giving the practice" to a local physician or hospital in exchange for taking on record retention, with the help of counsel specialized in medical practice law. Keeping the records in a storage-and-retrieval service is another option, the consultant says.

Some physicians continue serving former patients across state lines by practicing telemedicine. However, the practitioner of telemedicine must be licensed in every state where her services are delivered. "Problems come in the unauthorized practice of medicine where a physician delivers phone consultation or other medical services across state lines without being licensed in the state in which the patient resides," says Bilimoria. "The answer is to maintain licensure in each state in which the physician's patient population resides."  

Greenberg, now the owner of a growing practice that serves Las Vegas and surrounding areas, says there are many challenges physicians face when starting over in a new market. For those who open their own practices, getting specialized advice and adequate financing is crucial. "If I had to do it all over again, I would work with someone else for a number of years initially, so that I had a bigger starting nest egg," Greenberg says. "The expenses of starting a new practice cannot be understated."