You worked hard your entire life to build your medical practice, and now you are ready to enjoy retirement. Regardless of whether you choose to sell your practice or gradually wind it down over a period of time, you must take certain legal steps before you can leave.
Explore this issue:January 2016
Deciding to Retire and Making a Plan
Once you decide to retire, it is critical to inform your team of advisors of your decision, including your attorney, accountant, insurance agent, and financial planner. Provide your advisors with as much time as possible to ensure that each one has sufficient time to take the necessary steps to assist you in closing the practice. If you are selling your practice, it is best to allow additional time for contract negotiation with the prospective buyer. In addition, you will need to introduce your advisors to each other so they can coordinate efforts. It is important to delegate one advisor as the “team lead.” This individual should be the one most involved with closing your practice and will usually be an attorney or accountant. This person can help you develop a checklist with corresponding due dates for steps to be completed. These steps, and recommendations for timeframes for completion, are discussed below.
Timeframe: Complete as part of your initial decision to retire.
As part of your decision to retire, you should review your existing service and vendor contracts, including managed care participation agreements, for specific termination and notice requirements. In addition, it is critical that you review the employment agreements of your employees. Typically, an employment agreement will address the grounds for termination and notification requirements of your intent to terminate. It will set forth the allowable reasons for termination and any restrictions on termination rights. The agreement should also include the proper method to provide notice of termination, such as first class mail, overnight courier, or hand delivery. The amount of advance notice you must give to the employee prior to closing your practice will factor into the timing of your decision. While the notice provisions set forth the minimum amount of notice you must give, your specific circumstances may necessitate providing more notice in order to stay on good terms with your current staff by giving them enough time to handle the transition and find new work.
If the employment agreements for your staff do not address some of the terms discussed above, you may want to consider drafting a separation agreement with each employee, to be entered into after notification to the employee of your decision to retire. A separation agreement can help provide clarity and avoid unnecessary issues and disputes and will typically include the following:
- The date that the employment will be terminated as you transition into retirement;
- Any post-termination compensation owed to each employee, including unused vacation days, bonuses, or expenses reimbursements; and
- Employer obligations, including those associated with retirement plan contributions, health insurance, life insurance, and other fringe benefits.
Timeframe: At least 30 days in advance.
The physician-patient relationship is an ongoing responsibility. To avoid claims of patient abandonment and to assure continuity of care, patients should be notified of your decision to retire at least 30 days in advance of the practice closing; however, some states specify the manner and content of this type of patient notification. Further, the timeframe for providing notice depends on the type of practice, the health status of the patients, the availability of other physicians within your specialty to accept new patients, and the number of patients involved. The notification letter should clearly state that the practice is closing, along with the effective date of its closure, and that the patient will need to seek medical care from another physician; it should also delineate where medical records will be stored, how copies of medical records can be obtained, and how to have medical records transferred to another physician. If you are allowing another physician to assume your practice, but you are not selling, be sure to state this in the notification letter and inform patients that they are not obligated to use the new physician. A copy of this written notice should be placed in each patient’s medical record.