What to Think About When Selling or Closing a Medical Practice

For owners of a medical group or solo practice, there usually comes a time when the business needs to be winded up, whether for sale or closure. The reasons vary widely. Some practitioners may decide to join a larger healthcare organization, reducing administrative burdens and overhead. Others might simply be retiring and want to transfer ownership to a successor. Whatever the motivation, careful planning and execution are critical to protecting the interests of both the practitioner and their patients.

When planning to sell or close a practice, physicians should follow a detailed checklist to ensure a smooth transition. Key tasks include providing sufficient notice to patients, notifying employees and vendors, and addressing outstanding financial and legal obligations. Patients must be informed in writing well in advance, typically 60 to 90 days before closure, allowing time to find new healthcare providers. State medical boards and licensing authorities have additional notification requirements. Records management is another critical priority. Physicians must determine how long to retain patient records and must ensure they remain accessible in compliance with state and federal laws, such as HIPAA, which governs the confidentiality and security of health information. Informing patients of how to obtain their records before the practice closes is essential.

Additionally, contracts with staff, landlords, and other service providers may need to be terminated or renegotiated. Physicians should review lease agreements, equipment financing contracts and supplier arrangements to identify any penalties or fees associated with early termination. It’s also necessary to resolve outstanding accounts receivable and payable to avoid lingering financial issues. For those selling rather than closing outright, negotiating the terms of sale and transferring ownership smoothly are vital steps. Succession planning, including contracts with a buyer or new partner, ensures continuity of care for patients and a fair valuation of the business.

A business lawyer experienced in professional practice management can provide indispensable guidance during this complex process. Legal counsel can review and negotiate contracts with successors or buyers to protect the seller’s financial and legal interests. They can also help with structuring agreements related to patient record storage, ensuring compliance with privacy laws and with addressing potential liabilities associated with record retention or destruction. A lawyer can help prepare employee severance agreements, minimizing the risk of employment-related legal claims.

The Law Office of Donald W. Hudspeth, P.C. in Phoenix, Arizona, offers experienced legal counsel for physicians dealing with the sale or closure of a medical practice. Our firm assists with everything from contract negotiation to regulatory compliance with a view toward achieving a smooth and legally sound transition. Call us at 866-696-2033 or contact us online to set up a consultation.