Office-based physicians seeking hospitalist positions have several good reasons to do so. Demand is high; compensation is on the rise, and, typically, the position offers a more manageable schedule and better quality of life than a solo practice can provide.
For these physicians, entering a new career chapter as a hospitalist also means closing another: namely, their practice.
To ease the transition, two SCP medical leaders, Randy Howell, chief administration officer, and Dr. Rachel George, chief medical officer, composed the following 4-part checklist, which takes into account a detailed timeline, plus absolute must-dos and creative how-tos for winding down the office.
Step 1: Determine a Timeline
The first step is to determine a reasonable timeline for closing up shop. Making that decision involves several factors, including the time remaining on the lease and any related contracts, their patients’ wellbeing, and the effect closure will have on the staff.
The lease will almost certainly be the big-ticket item in defining the correct timeline, but time with correlated contracts such as the Internet connection, phone system, and furniture lease should also be factored in.
Of greater importance in determining the timeline is the wellbeing of the patients. Physicians must decide on the best options, identifying and evaluating the transfer of care.
Two of the simplest options for this transfer would be to a trusted local group practice. If there’s an equivalent outpatient option nearby and they are willing to take on the patients by a particular date, the second piece of the timeline decision is solved.
Depending on the location, another equivalent clinic may not be available, in which case physicians will need to notify patients of their intent at least three to six months in advance, to give them time to find another provider.
Step 2: Getting the Most Out of Accounts Receivable
After setting the timeline, closing the books (i.e., accounts receivable) is the next order of business. There are two options for recouping unpaid balances: outsource to collection agencies or revenue cycle management (RCM) firms, or rely on in-house staff.
Collection agencies typically take 20 to 30 percent of the cash collections they secure. Depending on the practice’s accounts receivable amounts, revenue cycle management firms may be willing to do a work down arrangement. Usually, they charge a percentage of a collection's agreement and, sometimes, will deal with the remaining accounts receivable on a fixed basis, allowing physician-owners to establish a set value out of those remaining accounts.
One creative alternative to outsourcing can help address not only accounts receivable but also a second imperative of the “winding down” checklist: taking care of the staff.
Depending on the size of the practice, there are likely clerical and office staff, or even medical tech assistants and nurses, who will be impacted by the decision to close the office. Creating an ‘incentive program’ in which some staff continues to work down the accounts receivable, earning a percentage of what they bring in after the office closes, may help ease their transition while recouping more of the revenue that would otherwise go to an RCM or collections firm.
A rational, generous incentive package ranges between 10 and 15 percent of the collections the staff generates.
Step 3: Evaluating Malpractice Needs
Another important consideration in the wind-down process has to do with malpractice. The type of malpractice insurance, occurrence-based and claims-made, must be considered.
When solo practitioners hold occurrence-based insurance throughout their tenure, they are covered for any claim arising from an encounter that happened during the coverage period, no matter when that claim is brought forth in the future. Occurrence-based coverage costs more than other forms of coverage, but it protects physicians forever.
Claims-made insurance, while less costly than occurrence-based, is more limited in scope. In that case, physician-owners should consider purchasing “tail coverage,” which protects them after the claims-made coverage ends.
Another option -- albeit a riskier one -- is to go “bare,” forgoing tail coverage and putting all assets into a trust. In the “bare” scenario, the practitioner may be personally on the hook for a malpractice suit, but wouldn’t have the assets for a claimant to go after. Physicians considering this option must account for the cost of legal defense, even without a finding of fault.
Step 4: Dealing with Staff Equitably
Breaking the news that the practice is closing may be harder for the staff to hear than the patients. Not only can it affect their livelihood but also their self-esteem. After all, the employees take pride in their work and loyalty to their employers.
Obviously, it is a basic courtesy to let staff know of the planned closure date, so they have an appropriate amount of time to find a different position or make different arrangements. However, keep in mind that if that timeline is drawn out due to lease obligations or difficulty reassigning patients, staff may end up leaving before the office closes.
To avoid being understaffed, offer staff members a completion bonus of 5 to 10 percent of their salary or a transition pay plan, in addition to any collections bonuses for bringing down accounts receivable.
One Last Piece of Advice…
The last piece of advice for solo practitioners considering a transition to the hospitalist role is to “dip a toe into the water before jumping in headlong.”
Doctors typically have the opportunity to work on holidays or weekends or nights at the hospital they are considering. Trying out the hospitalist’s life, paying particular attention to pace, culture, and philosophy is an important step before launching into this checklist.