An end to an era: When you close your practice
Plan ahead to ensure an orderly end to business
By Steven E. Fisher, MBA
Orthopaedic surgery is a lifelong career, so closing your practice is literally “an end to an era.” The decision to discontinue your business entirely will directly affect your family, staff and patients, and indirectly affect other health care providers in the area.
The steps outlined below cover the basic actions you’ll need to take if you are planning to close down your practice. While numbered, they are not sequential; many must be undertaken simultaneously. More information on these steps can be found in the Practice Management Center of the AAOS Web site (password protected).
1. Contact advisors
Make appointments with your professional advisors, including your accountant, attorney, pension advisor and practice consultant. Inform them that you are planning to close your practice. Ask each one what things must be done from his/her vantage point so that the closure will take place in an orderly manner. Carefully document their answers.
2. Establish a timetable
Develop a master “closing timetable” of four dates. The final date (“D-day”) is the date you will be vacating your office. The next-to-last date (“D-day minus X”) is the date you will stop seeing your existing patients for anything except post-op care. The third date (“D-day minus Y”) is the date you will stop doing surgery. And the fourth date, which will be the first one chronologically, is the date you will stop seeing new patients (“D-day minus Z”).
3. Notify employees
Notify your employees very soon after you have made your decision to close your office. Do this at least 90 to 120 days before D-day. Start with your office manager, and then notify everyone else. Because your decision will have significant emotional and economic consequences for your staff, you should be prepared for a certain amount of “acting out.” Tips for how to handle this delicate matter can be found on the Practice Management Web site.
4. Notify insurer
Notify your professional liability carrier to arrange for tail coverage as of the date you will be closing your business (assuming you will not be continuing to practice medicine elsewhere in the same state). Be sure you get a commitment from the company in writing about what is covered, how much you’ll be paying (if anything), and for how long. Find out what will happen if the insurer stops doing business in your state.
Have your attorney review any information you receive from the carrier and give you a legal opinion in writing. Be sure you understand what the consequences would be on your tail policy if you were to decide to resume practicing (either as a surgeon or a medical orthopaedist, or even to do independent medical exams).
5. Patient arrangements
Make arrangements so that your current patients who need ongoing care can receive it from one or more other physicians in your area. Notify your patients of your arrangements at least 90 days before you close your doors via letter, a hand-out in your office and a notice on your Web site. (A list of what should be included and a sample letter can be found on the Practice Management Web site.)
If you see patients covered by a Health Maintenance Organization (HMO), be certain you comply with the HMO’s requirements. In some states, you may be obligated by law to notify the public as a whole of your plan to close your practice via a notice in your local newspaper. Give careful attention to this matter: your failure to give your patients adequate notice could open you to allegations of abandonment.
At the same time that you notify your patients of your intent to close your office, notify the doctors who refer to you and the doctors you refer to, as well as any hospitals where you have admitting and/or operating room privileges, physical therapy facilities and laboratories. Notifying pharmacies of your intention to close down your practice will decrease the likelihood that someone will be able to fill forged prescriptions for controlled substances.
6. Store charts
Make suitable arrangements for transfer and/or storage of medical charts. Be sure you understand your state’s laws on record retention, including the retention of charts of minors and the physically or developmentally disabled. Call your state medical society and your professional liability insurance carrier for information; both should agree on what must be done.
If you decide to purge charts you are not required to retain, be sure to comply with all federal and state regulations, including the Health Insurance Portability and Accountability Act (HIPAA). If you’ve found a doctor or group to assume care of your patients, that doctor or group also should assume the responsibility for and the expense of storing patient records. If not, you will need to organize the charts for easy retrieval and put them into storage; find a company that specializes in storing medical records.
7. Terminate lease
Make arrangements to terminate your lease or sell your property and dispose of all of your equipment, including office furniture and fixtures. Don’t forget to drop your property and casualty insurance coverage on the day you vacate your premises. If you paid a security deposit, be sure it is returned to you within the period prescribed by law. Complete and file a form (in person or via e-mail) with the post office so that your mail is forwarded to the correct place. Do this again after one year has passed.
When disposing of your X-ray equipment and supplies, be sure to comply with all state and federal laws regarding disposal of hazardous materials. During the period after you stop seeing patients but before you vacate the premises, be sure to shred anything you won’t be needing in the future, such as stationery, envelopes, fee tickets and prescription pads.
8. Disconnect utilities
Make arrangements to disconnect phone, utility and other services such as security monitoring and medical waste disposal. Keep your principal telephone line for at least a year after you close your office; the message should direct patients where they can go to receive medical care and how they can obtain a copy of their medical chart.
9. Accounts payable/receivable
Formally notify all payers you have agreements with (and even those you don’t) of your plans to close your business and when this will occur. Be sure they know where to send payments and explanations of benefits. Don’t forget to notify intermediaries for government programs, including Medicare and Medicaid.
You can collect unpaid accounts receivable yourself or use a reputable collection agency. Doing it yourself may be cheaper, but more time-consuming and less effective than using an agency. A collection agency collects and costs more, but you’ll need to make sure your office systems are compatible and obtain and verify references from the agency.
10. Notify others
Finally, notify other organizations that would reasonably have an interest in your closing. These include the Drug Enforcement Agency; state and specialty licensing boards; all medical societies to which you belong; political action committees you donate to; and other professional associations and committees. If you owe money to any creditor in the name of your practice, you’ll need to notify that organization as well. If you’re retiring, don’t forget to notify the Social Security Administration.
Following these steps will ensure an orderly transition from a process standpoint. However, don’t forget that closing your business will be a significant loss for you regardless of how long you have been practicing medicine and how long you have been in the same location. It does not matter that you made this decision yourself.
Recognize that you will need to go through many or all of the stages involved in dealing with a loss, including anger and depression. Don’t hesitate to seek appropriate counsel if needed.
Steven Fisher, MBA, is manager, practice management affairs, in the AAOS department of socioeconomic and state society affairs. He may be reached at 847/384-4331 or email@example.com.
The AAOS Practice Management Center Web site contains a wide range of resources on all areas of practice management. From coding and compliance issues to news and advice, you’ll find it helpful in increasing your office efficiency and profitability. Visit often — http://www3.aaos.org/member/prac_manag/prac_manage.cfm
Keeping on track
The process of closing your business is, at the very least, a part-time job. As a physician, however, you already have a more than full-time job seeing patients and doing surgery. To stay on top of things, use a notebook and keep careful track of what you have to do, as well as what you have accomplished.
Divide the notebook into 10 sections, one for each of the steps outlined in this article. You can also do this on a computer, but unless you’re comfortable using a hand-held device, you may not always have a computer at hand when questions and issues occur to you or are resolved.
For each step, identify all the subtasks that need to be completed and who is responsible for completing them (if not you). Assign completion dates for each subtask.
Make a point of noting the questions, issues, and other thoughts that occur to you during the course of the day. When you have completed a subtask, check it off. When you have answered a question or addressed an issue, note the resolution in detail and include any relevant information (names, dates, phone numbers, confirmation numbers, identification numbers). Purchase a metal file box and store everything related to closing your business in the box.