Closing a dental practice: The devil is in the details

To say there are many steps to take while closing or transitioning a dental practice is an understatement. Professional guidance helps, but ultimately the practice owner must make sure all items are checked off. Here's a helpful list to follow while making the transition.

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To say there are many steps to take while closing or transitioning a dental practice is an understatement. Professional guidance helps, but ultimately the practice owner must make sure all items are checked off. Here's a helpful list to follow while making the transition.

Closing a dental practice comes in many forms, from the first step into retirement to transitioning the practice to a new owner. Regardless of the reason, the transition can be stressful and, as with many major business transactions, the devil is in the details. In this article, I will provide a short checklist of issues that must be addressed before a practice is closed or transitioned. While this list provides guidance, it should not be considered a substitute for legal or other critical professional advice, and it is highly recommended that you seek the appropriate professional advice, and do so well in advance so that proper planning can be accomplished.

The patients
The American Dental Association's (ADA) Principles of Ethics and Code of Professional Conduct Section 2.F prohibits patient abandonment. Specifically, a dentist is required, prior to discontinuing treatment, to provide patients with “adequate notice and the opportunity to obtain the services of another dentist.” To avoid allegations of abandonment, risk of malpractice claims, and to assure the continuity of patient care, provide patients with a 60- to 90-day notice of the practice closure.

How do you accomplish reasonable notice? Here are some ideas:
Place a notice in a highly visible area of your waiting room.
Place ads in your local newspapers.
Discuss the closing with each patient personally and document the discussion in the patient record.
Have staff inform patients calling for appointments of the expected closing date.
Hand each patient a written notice when possible.
Include an announcement of the closing in your invoices.
Send written letters of notification to all patients seen in the past two years.

Do not accept new patients and consider restricting non-emergent appointments. Essentially, do not initiate treatment that you will not be able to complete.

Advising regulatory agencies, third-party payors, and colleagues
Most state dental and pharmacy boards require notice of closure of a dental practice. You must also advise Medicare, Medicaid, and the Drug Enforcement Administration (DEA). It is recommended that you contact each of these agencies to obtain specific information as to how the notice should be provided; that is, some agencies may require written notice while others may permit electronic notice.

Make sure to notify dental insurance partners and provider networks with whom you have contractual relationships. Each insurance partner and network may have specific contractual requirements regarding the termination of the relationship as well as deadlines for submission and payment of claims. This is an important factor to ensure that payment is promptly made but, in the instance of a practice sale, it is an important part of the evaluation of accounts receivables.

You will also want to contact your malpractice carrier to review your coverage to determine whether you have an occurrence or claims-made policy. An occurrence policy provides coverage for any lawsuits filed where the claim arises out of treatment that was provided when the policy was in effect. A claims-made policy provides coverage for lawsuits where both the injury and the claim are made during the coverage period.

With this in mind, if you have a claims-made policy, you will want to consider tail coverage to convert your claims-made policy into an occurrence policy. This can be expensive, but the peace of mind is well worth it. Contact your malpractice carrier for information concerning tail coverage.

In addition to the above, you will want to provide notice to the following: referral sources, professional societies, professional organizations, hospitals where you have privileges, surgical centers, and labs. Lastly, and perhaps somewhat overlooked in the greater scheme of things, is providing notice to the US Postal Service, and phone, computer network, and utility providers. It’s the little things that can cause headaches if they’re overlooked.

Records
Patient records are the property of the practice. However, patients have the right to access their records and the right to obtain a complete copy of their treatment record. The Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as most licensing boards, require you to provide a copy of a patient’s record upon request.

Here are some points to remember when responding to a patient’s request for his or her record:
A reasonable fee can be charged for duplicating a record. Check state law for any guidance on what constitutes a reasonable fee.
The record cannot be withheld due to an outstanding patient balance or lack of payment for the copies.
If your practice maintains electronic health records, you must provide a copy in a readable format. As such, it can be produced, subject to the patient’s election, on disc, flash drive, or secure emails and web-based portals.
HIPAA requires that the record be produced to the patient within 30 days of the request, and permits a one-time extension of an additional 30 days upon written explanation for the delay to the patient.

Retention of records
Unfortunately, there is no national standard regarding how long you must maintain patient records. HIPAA requires that records be maintained for six years. You must also consider state dental and pharmacy board requirements as well as contractual obligations with your health insurance and malpractice carrier partners. You should review your policy and contact these entities for further guidance.

If you’re selling your practice, consult legal counsel regarding your purchase contract. Execute a Business Associate Agreement (BAA) to ensure compliance with HIPAA. Be aware that, according to HIPAA, the owner of the record—the dentist who created the record—has the responsibility to protect the patient’s confidential information. Most contracts surrounding the sale of a practice place the responsibility on the purchasing dentist to store and retain the records of the practice.

The business
You will need to consult with legal counsel and other professionals to address how to proceed with closure of the business. Important items include dissolution of documents; cancellation of registrations, permits, licenses and business names; compliance with employment and labor laws; and resolution of financial obligations to include loans and any accounting required under articles of organization or incorporation. The US Small Business Administration provides a helpful guide in Steps to Closing a Business.


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Paul-Michael La Fayette is an attorney with Isaac Wiles in Columbus, Ohio. He counsels dentists and other medical professionals in the daily operations of their practices as well as major transactions, such as opening, closing, purchase, and sale of a practice. La Fayette also represents dentists in malpractice claims and in front of administrative boards. He may be reached at plafayette@isaacwiles.com or at (614) 221-2121.

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