Closing Your
Practice
Can You Sell Your Medical Practice?
A physician may
sell his or her practice to another physician or a limited selection of other
entities. Salability of practices
varies from community to community, and specialty to specialty.
If your practice
engages a practice-broker or consultant to assist you in the sale, check with
your State to make sure if licensure is required in that state, and they are
licensed to do so, like in California. Ask for a copy of the law, don't just
rely on their word, as laws change. Licensed consultants/brokers are required
to provide a copy of their license number.
Does Your Practice Have Value?
There is no
single formula for valuing a medical practice. This information is meant only as a guide and is not a
complete list of what you will need to appraise your practice. You will need
assistance from your attorney, accountant, and possibly a professional practice
appraiser, such as at http://www.MedicalPracticeAppraisal.com. The practice
value consists of accounts receivable, tangible assets and intangible assets
(goodwill). A common value for goodwill is approximately 25% of the past year's
collections, though this can vary widely.
Partnership and Corporate Practices
Have your
attorney review carefully the arrangements of your agreement with your
partners, and advise you of any concerns.
Controlled Substances
For specific
instructions on disposal of controlled substances, you must contact the Drug
Enforcement Agency local office
Return any
unused DEA order forms (not to be confused with the State triplicate
prescription pads) to the DEA. Be
sure to VOID ALL FORMS before mailing.
If you wish to
maintain your DEA registration after retirement, contact the DEA to inform them
of your change of address
To surrender
your DEA registration, mail it receipt-requested to the DEA at the Washington,
DC address. Include a letter
stating your intent.
You may sell
drugs which are not controlled substances. Discuss this with your pharmaceutical detail person(s) as
pharmaceutical companies may take back unopened, unexpired stock.
Return any
unused state triplicate prescription pads with a letter regarding your
retirement or office closure (registered, receipt requested) to your State Bureau of Narcotics Enforcement.
Be sure to VOID
ALL PADS. Ask both the DEA and BNE
what retention requirements are for your records pertaining to controlled
substances when you turn in your registration and triplicate pads.
Informing Your Patients of a Move or
Retirement
You must inform
your patients of your intent to retire or move in good time for them to
establish a relationship with a new physician and have copies of their medical records
transferred. See attached the
example notification letter. There
is a convenient records release form at the bottom of the letter which your
patient may fill out and return to you.
If you charge a fee for the duplication of patient records, it may be
appropriate for you to indicate this on the letter to avoid misunderstandings
between you and your patients.
Note any
transfer of records, and to whom they were transferred, in your retained copy
of the patient's medical record.
Do not
transfer original records.
Physicians,
their estates, or a
physician-custodian should retain medical records ( or digital copies) in
perpetuity as a safeguard against malpractice liability problems. Ask your
malpractice carrier about their requirements.
For patients who
made no arrangements for duplication of records at the time of your retirement,
you may wish to make your attorney the contact person between your and patients
who seek copies of records in the future.
You may wish to consider putting your records on microfilm or placing
your records in a rented storage location. As a precaution, notify your local medical society of the
location of your records.
Insurance Coverage
In advance of
your planned retirement date, go over all of your insurance policies with your
insurance broker. Remember to
request a refund on unexpired policies that are canceled.
Talk to your
liability insurance broker about what coverage you will need to protect
yourself in retirement.
Be sure that
your workersÕ compensation insurance remains in effect while your employees are
still working. Review life,
health, and disability policies.
The Office
A well-run
office will be easier to sell or close than a poorly-run one. Invest in good office staffÑit pays
off.
If you died,
would your office staff know what to do?
Would they be able to help your family close your practice? Provide them advanced directives.
Medical License
Upon request,
you may be permitted to renew your medical license at no cost. Contact your state medical board
You may also become
exempt from continuing medical education requirements by requesting that
exemption from MB.
Professional
Associations: your local medical society, State
Medical Association, the American Medical Association, and your specialty
societies. Most specialty society
addresses may be obtained by writing the AMA, or by contacting your local
medical society.
Major
insurance carriers: These should be advised of your change
in status and address due to the long lag time between filing claims and final
payments. Be sure to notify
Medicare, MediCal, Blue Shield of California, and other major commercial
carriers.
Social
Security Administration: The SSA should be another stop if you
are approaching your 65th birthday.
Apply for your benefits as well as Medicare coverage. Evaluate supplemental coverage as
needed.
Check with your
local medical society for special benefits that they offer.
This checklist may assist you in closing
your office
¥ Notify
your patients and arrange for record transmittal and storage.
¥ Insurance: be sure to ask for premium refund!
- Office
insurance, both personnel and contents, must be maintained until business is
formally concluded. File final
unemployment return, cancel workersÕ compensation, office contents and
liabilities when premises are totally vacated. Keep any accounts receivable coverage until accounts are
paid or turned over to a collector.
- Professional
liability may be canceled only if you plan to cease practicing entirely. If you've been covered under a Òclaims
madeÓ policy, arrange for your ÒtailÓ coverage. Be sure to keep all old policies readily accessible.
¥ Accounts
payable items:
- Notify
all suppliers and request final statements. You may be able to return some unopened items for credit.
- Notify
utilities, including the telephone company of date you wish service
discontinued.
- Keep
business checking account open for three months after closing. This should allow all bills to be paid. Deposits from patients, insurance
payments may straggle in after that date, but can be deposited to your personal
account, as long as a record is kept.
Check with your accountant.
¥ Items
for your accountant:
- File
necessary final tax returns.
- Notify
Keogh or corporate retirement plan of your and your employeesÕ intentions.
- Make
arrangements for retention of business and personnel records.
¥ Mail
delivery items:
- Leave
a forwarding address with the post office.
- Discontinue
magazine subscriptions and ask for a refund or notify printers of your new
address.
- Write
ÒRetiredÑReturn to SenderÓ on all Ójunk mailÓ.
Also:
¥ Cancel
or change status in personal and/or professional organizations.
¥ Send
personal letters of appreciation to individuals who have helped you in your
career.
¥ Donate
books, journals to a medical library.
¥ Dispose
of drugs and prescription pads according to DEA regulations.
¥ Securely
store all diplomas, licenses, indications of medical membership.
¥ Give
some thought to keeping your answering service active between three months to a
year, depending upon local circumstances, your specialty and/or patient
population.
¥ Be
sure to advise your local medical society of the location or your remaining
records.
Letter for Physicians Discontinuing
Practice
Dear Mr/Mrs/Ms:
Please
be advised that because of my (retirement/reasons of health/etc) I am
discontinuing the practice of medicine on (Date), 20____. I shall not be able to attend to you
professionally after that date.
I
suggest that you arrange to place yourself under the care of another
physician. If you are not
acquainted with another physician, I suggest that you contact the (Local)
Medical Society.
I
shall make my records of your case available to the physician you designate. Since the records of your case are
confidential, I shall require written authorization to make them available to
another physician. I am including
at the end of this letter an authorization form. Please complete the form and return it to me.
I
am sorry that I cannot continue as your physician. I extend to you my best wishes for your future health and
happiness.
Yours
very truly,
(Name),
M.D.
Date:
To: (Name), M.D.
I
hereby authorize you to transfer or make available to:
,
M.D., (address), all the records and reports relating to my case.
Signed
© Professional Management and Marketing 2003 all rights
reserved
This article is intended as a general guideline and not
intended to give legal advice. Contact your attorney for current requirements.
You may contact PMM for practice appraisal, closure or sale
assistance at:
Professional Management and Marketing
3468 Piner Rd, Santa Rosa CA 95401
ph 707-546-4433
email info@practicemgmt.com
member:
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Institute of Business Appraisers