Managing Your Practice

Closing Your Practice: What You Need to Know

Joseph S. Eastern, MD

December 09, 2021

"I might have to close my office," a colleague wrote me recently. "I can't find reliable medical assistants; no one good applies. Sad, but oh, well."

Dr Joseph Eastern

A paucity of good employees is just one of many reasons given by physicians who have decided to close up shop. (See my recent column, "Finding Employees During a Pandemic").

If you have made that tough decision and have ruled out other options, such as merging with a larger group, or finding an individual or corporate buyer, there are government regulations and other obstacles to address in order to ensure a smooth exit. First, this cannot (and should not) be a hasty process. You will need at least a year to do it correctly, because there is a lot to do.

Once you have settled on a closing date, inform your attorney. If the firm you are using does not have experience in medical practice sales or closures, ask them to recommend one that does. You will need expert legal guidance during many of the steps that follow.

Next, review all of your contracts and leases. Most of them cannot be terminated at the drop of a hat. Facility and equipment leases may require a year's notice, or even longer. Contracts with managed care, maintenance, cleaning, and hazardous waste disposal companies, and others such as answering services and website managers, should be reviewed to determine what sort of advance notice you will need to give.

Another step to take well in advance is to contact your malpractice insurance carrier. Most carriers have specific guidelines for when to notify your patients – and that notification will vary from carrier to carrier, state to state, and situation to situation. If you have a claims-made policy, you also need to inquire about the necessity of purchasing "tail" coverage, which will protect you in the event of a lawsuit after your practice has closed. Many carriers include tail coverage at no charge if you are retiring completely, but if you expect to do part-time, locum tenens, or volunteer medical work, you will need to pay for it.

Once you have the basics nailed down, notify your employees. You will want them to hear the news from you, not through the grapevine, and certainly not from your patients. You may be worried that some will quit, but keeping them in the dark will not prevent that, as they will find out soon enough. Besides, if you help them by assisting in finding them new employment, they will most likely help you by staying to the end.

At this point, you should also begin thinking about disposition of your patients' records. You can't just shred them, much as you might be tempted. Your attorney and malpractice carrier will guide you in how long they must be retained; 7-10 years is typical in many states, but it could be longer in yours. Unless you are selling part or all of your practice to another physician, you will have to designate someone else to be the legal custodian of the records and obtain a written custodial agreement from that person or organization.

Once that is arranged, you can notify your patients. Send them a letter or e-mail (or both) informing them of the date that you intend to close the practice. Let them know where their records will be kept, who to contact for a copy, and that their written consent will be required to obtain it. Some states also require that a notice be placed in the local newspaper or online, including the date of closure and how to request records.

This is also the time to inform all your third-party payers, including Medicare and Medicaid if applicable, any hospitals where you have privileges, and referring physicians. Notify any business concerns not notified already, such as utilities and other ancillary services. Your state medical board and the Drug Enforcement Agency will need to know as well. Contact a liquidator or used equipment dealer to arrange for disposal of any office equipment that has resale value. It is also a good time to decide how you will handle patient collections that trickle in after closing, and where mail should be forwarded.

As the closing date approaches, determine how to properly dispose of any medications you have on-hand. Your state may have requirements for disposal of controlled substances, and possibly for noncontrolled pharmaceuticals as well. Check your state's controlled substances reporting system and other applicable regulators. Once the office is closed, don't forget to shred any blank prescription pads and dissolve your corporation, if you have one.

Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at

This article originally appeared on, part of the Medscape Professional Network.


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