Five things you must do when you close a medical practice
Closing a medical practice in Australia is a significant decision for a medical practice owner. It creates a myriad of legal, financial, and operational considerations and can be tricky to navigate. Whether you're retiring from practice, relocating, experiencing illness or transitioning to another phase of your career, it's critical to approach the process with diligence and care.
In this article, we set out five key items that will form your “must do” list to close your medical practice in Australia.
As a bonus, we have also provided a practical checklist to guide you through the process.
Item 1 – Protecting your practice: meeting legal and regulatory requirements
When you close a medical practice, there are many legal and regulatory requirements. You need to make sure all of these obligations are met so that potential liabilities and legal issues don’t crop up long after the practice is closed.
When you close a practice, you must notify governing bodies, regulatory authorities and local health authorities, including but not limited to:
• The Australian Health Practitioner Regulation Agency (AHPRA) including updating your registration status if necessary;
• ASIC (where applicable)
• Medicare Australia – provider PBS numbers;
• Medical Board of Australia (including whether you wish to maintain your registration after the closure);
• Your state or territory health department;
• Local hospitals & specialists; and
• Other practices in your region, town or suburb.
Item 2 – Protecting your patients: where your health information and records should go
Management of patient health information is also a key consideration when you close a medical practice. You need to protect your patients and comply with your obligations under the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APP). You should keep the following in mind when you are planning to close your practice:
Patient Notification & continuity of care
Your patients need careful management as you transition to close your practice. They must be informed with plenty of notice of your intention to close the practice.
In some states and territories in Australia, health service providers (or their lawyers) are required to publish a notice in a local newspaper at least 2 months prior to the practice closure. It is important you comply with the relevant requirements in your state or territory, with the notice requirements varying around Australia, making detailed advice about your specific situation crucial.
As part of the notice to patients, it is advisable to prepare an information sheet for them and display notices in your practice. This information should inform of the date of impending practice closure and how patients can arrange to access their medical records or have them transferred to another practice of their choice.
You also need to think about who will look after your patients when you are no longer available. When you transfer Patient Health Records to third parties (such as another medical practice), your patients must consent to the transfer and you need to document this consent along with transfer details.
While your practice transitions to closure and after the closure, it is also essential to have protocols in place to communicate test results to patients and provide continuity of care.
Medical Records Management
All personal information collected in the course of your practice is considered health information under the Privacy Act and classified as ‘sensitive information’, meaning there are stricter requirements for handling and transfer of that information.
It is advisable to obtain expert advice around medical management and also contact your professional medical indemnity insurer to make sure you are taking the correct actions so that you do not inadvertently breach your insurance policy.
In general, a practice should:
• Keep and maintain a list of all patients for whom they hold health records (Patient Health Record); and
• Note for each Patient Health Record that is transferred:
◦ when and where those records have gone (recording the date and whether the records have gone to the patient or another practice); and
◦ whether the original records or copies of the Patient Health Record were sent;
• Note where the Patient Health Records remaining with the practice are stored and how future access can be granted.
When you shut your practice, you must inform patients about how they can access their records after the practice closes (there are legislative requirements requiring you to retain the records for a number of years that vary between states and territories in Australia) and have a contact for a period after closure when patients can make contact to arrange transfer of their Patient Health Record to a new practice.
Any remaining Patient Health Records will need to be stored for the time required by law and in doing so, the confidentiality and security of those records must be protected.
Item 3 – People: managing your practice team members
Closing your practice can often mean your loyal employees are suddenly out of a job. It is crucial you manage this aspect of your practice carefully, noting you will need many if not all of these employees for a smooth transition to close your practice, but you will also will need to give them adequate notice to find new positions and allow them some flexibility around the start of those new positions.
You also have obligations under the Fair Work Act 2009 (Cth) in relation to payment of wages and leave entitlements for employees where a practice is closing. Where long service leave or annual leave has accrued, these sums could be quite substantial for long standing employees and where redundancy is offered there may be additional costs.
Planning well in advance with your financial and legal advisers in relation to staff entitlements and notice periods or redundancies is recommended.
Item 4 – Practice: dealing with business registrations and dissolving your business entity
Speak with your accountant about how to retain your business records and entities and the timing of any tax returns post practice closure.
You will also need to consider the legal entity that your medical practice trades under and obtain legal and accounting advice around:
• how and when this is to be dissolved; and
• how and when any associated registrations at the Australian Tax Office (ATO) for your ABN, GST and PAYG need to be ended.
Item 5 – Property and premises: sorting out your assets and lease agreements
Proper disposal or wrapping up of assets such as medical equipment and lease agreements, is an essential aspect of closing a practice. Not to mention disposing of pharmaceuticals and sharps and needles. Below we focus on the equipment and property aspects.
Sale or Transfer of Equipment
We suggest you take an audit of all your medical equipment and other practice equipment and, if there are any remaining hire purchase or lease arrangements that relate to the equipment, you should pay any existing liabilities out or arrange for payment schedules to ensure nothing is missed. The last thing you want is an ongoing debt that gets missed in the closure of your practice.
Note that your computer, IT and other office equipment such as a photocopier could have a hard drive memory and include hidden sensitive patient information – ensure that steps are taken to clean hard drives of these items so that your privacy obligations are not breached.
Premises Lease
Review your premises lease agreement well before your planned closure date and make sure that you can exit the premises and comply with the terms for early termination if applicable.
This may include negotiating with your landlord, looking for another party to assign the lease to and could also include significant make good of the premises to bring it back to the state it was in prior to your lease and fit out of the premises.
This can be a very costly and time consuming exercise and we suggest you review your lease at least 6 to 12 months before your planned closure date to ensure you can meet all requirements smoothly.
Next Steps
When you decide to close a medical practice in Australia, it requires careful planning and attention to detail. By understanding the legal, financial, and professional responsibilities involved, and by following a structured checklist, you can ensure a smooth and compliant transition. As a bonus you can find our checklist here.
Get in touch with us to discuss your needs.
Our team has extensive experience in providing advice and insights into best practices for closing your practice. We have assisted in many practice shutdown. To discuss your potential next steps, contact our team here, and we will put you in touch with the best professional for your needs.
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What you need to know about selling your practice: https://youlegal.com.au/you-legal-blogs/what-you-need-to-know-about-selling-your-practice