Are you thinking of retiring? Relocating? Are you thinking of closing your practice to work at another group or in a healthcare system or clinic? There are specific laws and considerations for all healthcare practitioners in relation to closing up shop, whether you are selling your practice or just closing it altogether. No matter your specialty, some obligations live on well beyond when the practice closes. The Licensing Boards must be notified. Patients have a right to notification and to transfer their care, and they have a right to access their records. Patients also have a continuing right to the privacy of their records - for at least seven years. Here is what you need to know before making this significant change in your career to protect you from liability, disciplinary action by the State Boards, and potential exposure from future lawsuits.
NOTIFICATION TO THE STATE LICENSING BOARD
For all areas of practice in medicine and psychiatry/psychology/social work/ therapy, rehabilitation of all types, etc., (from now on "practice group"), the state where the practice is located has rules and regulations for closing it. If you are planning on retiring and no longer planning on practicing in the state in any capacity, a Voluntary Surrender of License form should be completed and sent to your Board. The requirements differ as to whether you need to surrender your physical license and wall certificate - check with your Licensing Board.
If the reason you are closing the practice has to do with disciplinary action, that must be disclosed to the Board as well.
If you are relocating and may return to the area at some point, it does not require the surrender of your license, and you can stay actively licensed in the state as long as you continue to meet the CME requirements, pay your licensing fees as required, and re-credential with your Board as required. While the state's CME and licensing requirements must be maintained if your license is active, you do not need to practice in the state to keep the license on active status.
NOTIFICATION TO PATIENTS
If you plan to close your practice for any reason, patients need to be informed of the change usually no less than 6 months' in advance. Notification must include information on the closure, when it will happen, and be given a general recommendation to groups or other options for continued care. It is important not to refer to specific providers because there is a cause of action in litigation that involves a "negligent referral." If a subsequent provider is the target of a later lawsuit, a referring provider can be implicated for an allegedly negligent referral. For this reason, only provide the names and contact points for groups, clinics, or hospitals with the same or similar specialty.
If a patient requires prescriptions that you have previously provided, the option of offering a 30 day supply of medication should be provided after the date of closure, unless the patient has transferred care before the closure, or has a supply or refills for more than 30 days.
NOTIFICATION TO FUNDING SOURCES AND BUSINESS PARTNERS
Similarly, notice of the practice closure should be given to funding sources, including insurance carriers, Medicaid, Medicare, and other contractual partners. If the practice is affiliated with a health care institution, clinic, or has a coverage agreement with other practices, notice should be sent regarding the plan for practice closure and the date of closure. Not only is it helpful to get a plan in place at least six months in advance, but this will also provide an opportunity to resolve any billing disputes or unpaid claims before the closure to reduce the accounts receivable balance by the time the closure occurs. Also, any collection for unpaid services, deductibles, or contractual fees can be resolved before the practice closes. It is much easier to resolve billing issues and collections on accounts receivable before the practice closes.
If you are a solo practitioner with employees, it is important to have all agreements regarding severance pay in writing. Your employees should have enough notice to find new employment or make arrangements for benefits upon the practice closure. If you are in a practice with others, in addition to having all financial agreements regarding the closure in writing, any agreements among the partners as to asset distribution, such as furniture, equipment, and supplies, should also be done in writing. If the assets are to be sold, the distribution of the funds received should have an agreement in place before the sale of the assets.
MEDICAL RECORD DISTRIBUTION AND RETENTION
All Medical Boards have rules and regulations for the handling of medical records and other important documents, such as unused drug prescription pads after the closure of a practice.
Electronically stored medical records require storage on an encrypted system for storage and, if the records can be transferred to an external hard drive, the hard drive can be locked in a safe deposit box for safe storage. For all paper records, scanning and saving to the hard drive will prevent the need to rent space from a medical record storage facility. Records must be kept for seven years from the date of the last visit. For minors, they must be kept for two years after the age of majority, or when the patient is 20 years old. It is important to protect the records in either form from unauthorized access, or damage such as fire, water, and humidity. If you are a solo practitioner and planning on maintaining paper files, the expense of storage in a HIPAA compliant facility should be considered in your financial planning. If you are in practice with others, the ongoing expenses of storage and the details of accessing records in the future should be worked out with your partners before the practice closure.
A patient's access to their records always requires a signed HIPAA complaint release for records, and for mental health records, the release must be specific to mental health records. If the patient is not signing the release in the presence of you or someone on your staff, it should be notarized to verify the identity of the person requesting the records. Patients should be required to pick up records in person to verify the identity of the recipient. If pick up is not possible for a verifiable reason, the records can be sent via certified mail with a signature of the patient required on the return receipt. The practice can charge a reasonable fee for copying records and for postage if that is elected. The Medical Board for your specialty has guidelines on recommended fees that can be charged. Patients can also choose to have records sent directly to a subsequent treating physician. This does require a signed consent, but the records can be sent directly to another provider without the need for certified mail signed by the patient.
The destruction of physical records and unused prescription pads require shredding. For electronic record destruction, deletion is sufficient until the hard drive contains no further records. Once all records are deleted, the hard drive should be destroyed to prevent unseen metadata from being retrieved. Simply deleting records does not mean that you have permanently erased them as the unseen metadata can be accessed from a seemingly empty hard drive.
FUTURE POTENTIAL LIABILITY
The statute of limitations on medical malpractice claims varies by state, but it is typically between 2 to 3 years from the date of alleged injury or the date that the patient should have reasonably known an injury. For patients less than 18 years old, the statute of limitations does not expire until the patient is two years beyond the date of minority, or 20 years old. For those practicing in areas involving infants, children, and adolescents, this is significant. For this reason, as well as many others, the safe storage and protection of medical records are very important to defend yourself in the future, if necessary.
During the closure of the practice, it is incumbent on the professional to discuss ongoing requirements for professional liability coverage with your insurance broker for some time after the practice closes. If litigation is brought after the practice closes, you will still be required to defend yourself and possibly protect even your personal assets. Having insurance coverage is a post-closure expense, but well worth it in the event of future litigation. After the assets of the practice are liquidated, and depending on the nature of the incorporation, if it was incorporated, a source of funding will be required to retain counsel, cover the costs of defending litigation, and possibly cover any financial settlement or verdict. Closing a practice does not eliminate the potential for future legal exposure for medical malpractice claims. This must be discussed with your carrier or broker to protect you and your heirs. It is an expense that must be considered in your post-closure financial planning.
For whatever reason you are choosing to close your practice, you deserve the peace of mind that comes with proper planning and implementation. It is always advisable to contact your professional liability attorney and professional liability carrier to review the steps that you have taken to ensure that they are sufficient, and to provide information regarding compliance with state and governmental regulations. Every situation is different, so it is important to have all the information you need to ensure a smooth transition and a protected future. Your attorney and carrier can help to achieve this goal.