FAQ: Closing a Practice

Closing a Practice- What Physicians Should Know

Physicians considering closing their practices, whether to retire, relocate or join another physician practice, often consult the Arizona Medical Board for advice. These physicians often ask about what kind of notice they are required to give their patients, how that notice should be given, and in what timeframe. While Arizona laws provide direction for the retention of medical records (A.R.S. §12-2297) there are no laws that specifically relate to closing a practice. However, there are several organizations that provide guidelines on this subject. These guidelines, while not in law, provide a good rule of thumb for physicians to follow. A brief synopsis of the American Medical Association (AMA) guidelines to closing a practice are provided for your information.

7 Steps to closing a practice:

Notify employees and review employee ethical and legal obligations: Offer employees an incentive to stay to the end, assist employees in finding other employment. Review employee retirement plans, healthcare plans, and requirements to pay for unused employee benefits, such as vacation time and sick leave.
Notify patients to ensure continuity of care: Send a letter to each active patient at least 3 months prior to closure. Avoid abandonment by notifying patients of your intent to terminate their care in writing and in sufficient time for the patient to arrange for care with another physician.
Record retention: Retain records according to state retention laws and Medicare/Medicaid laws if applicable. Also check with insurance carrier for “tail” coverage guidelines. Federal law mandates that mammograms be retained for at least 10 years. If records are not being transferred, archive with a reputable commercial storage firm or rent space from another physician. Make sure storage agreement includes confidentiality terms. Only provide patient with copies of records. Establish method of honoring record requests.
Notify appropriate agencies: Notify the Arizona Medical Board and other medical licensing boards (if licensed in another state), Drug Enforcement Administration (DEA), professional associations, major insurance carriers, referring physicians, and the Social Security Administration if approaching retirement age.
Collect accounts receivable: Work out payment plans with patients as they come in the office for visits, send collection letters, arrange for another physician (if transferring practice) to collect remaining accounts for a percentage of amount payable or for a fixed fee (check with Medicare and Medicaid for provisions), and if necessary, turn past due accounts over to a collection agency.
Collect payments from slow-pay insurers: Send AMA sample letter (Provided by the AMA), filled out by patient, with a photocopy of the claim form.
Coordinate closing with managed care payment practices: Review managed care contracts and coordinate closing with capitation plans and risk pool or bonus payments.

Other important information:

(Please note, this information is provided for guidance purposes only. Unless Arizona laws are cited, physicians are not required by law to comply.)

Notification:

Notify your malpractice insurance carrier and make sure malpractice insurance continues after practice is closed.
Print an announcement in local newspapers.
Send a letter to active patients (registered mail for high-risk patients) including the following information: office closing date, where records will be stored and how to access them, release of information form, deadline for submitting records request, and information on how to contact a new physician/healthcare provider. Place a copy of the notification in each patient’s chart. (For more information on the Arizona laws pertaining to record retention, see A.R.S. §12-2297.)

Charging for Records:

Although physicians may charge for records, the AMA recommends that the physician provide the records at no charge. (For more information on the Arizona laws pertaining to charging for records, see A.R.S. §12-2295.)

Additional contact information:

While the information provided by the AMA is fairly comprehensive, there are other sources for Arizona physicians to contact. A listing of some of these sources is as follows:

Mutual Insurance Company of Arizona (MICA): Risk Management - http://www.mica-az.com, (602) 956-5276 or toll free at (800) 352-0402.
Food & Drug Administration (FDA) - http://www.fda.gov (For information on medical records related to original mammograms (films) and mammography reports.)
American Health Information Management Association (AHIMA) - http://www.ahima.org, (312) 233-1100.

For a complete listing of the American Medical Association guidelines, contact the AMA to purchase Closing Your Practice, 7 Steps to a Successful Transition, 1997. Copies of the book may be ordered by calling toll free 800-621-8335 or by visiting the AMA website at http://www.ama-assn.org.