Legal
Buying and Selling a Physician Practice Legal considerations for parties Dr. Smith has built a successful medical practice over the last 30 years, but is ready to retire and sell the practice to another physician. Dr. Jones practices with a group in the same specialty as Dr. Smith and thinks buying Dr. Smith’s practice presents a great opportunity for him to leave his medical group and open up his own office. Dr. Smith has the practice professionally appraised for fair market value. Based on the appraisal, he and Dr. Jones agree on a purchase price. At least a month before the closing, Dr. Smith will send a letter to his active patients explaining his retirement, that Dr. Jones is taking over the practice, and recommending Dr. Jones’ services. At closing, Dr. Jones will make a down-payment and sign a two-year note for the balance of the purchase price. Dr. Smith will turn over his active patient files, office equipment, etc., to Dr. Jones and sign a two year non-compete. Dr. Jones calls his lawyer, explains the deal, and asks the
lawyer to draw up an agreement. Sounds fairly straight-forward, right? Dr. Jones’ lawyer says, “Not exactly.” Compliance with HIPAA and the federal Antikickback statute BY Sarah Charles White are just two of the legal concerns Drs. Smith and Jones should discuss with their attorney before finalizing the terms of the deal.
Transferring Medical Records Under HIPAA
Patients have the right to choose their physician. HIPAA takes both the patient’s choice and privacy into account. The physical records belong to Dr. Smith but the
protected health information in them is subject to the patient’s HIPAA privacy rights. HIPAA does not allow Dr. Smith to hand-over patient files to Dr. Jones without the patients’ written consent. Until he receives that signed consent, Dr. Smith will continue to be responsible under HIPAA and the AMA Code of Medical Ethics for maintaining the confidentiality and security of the PHI in his patient records and cannot disclose patients’ PHI to Dr. Jones.1 Dr. Jones’ best opportunity to acquire Dr. Smith’s active patients is to take custody of the records from Dr. Smith at closing. To facilitate this, Dr. Smith should enclose a patient consent form with his letter notifying patients of his retirement. The letter should ask patients to sign and return the form authorizing Dr. Smith to transfer their file to their new physician. At the closing, Dr. Smith should also have Dr. Jones sign a HIPAA business associate agreement to serve
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