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How to Close Your Rehab Therapy Practice the Right Way

If you ever have to close your practice, be sure to do it the right way.

Kylie McKee
5 min read
July 24, 2020
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Rehab therapy practice owners close down their businesses for many different reasons—from retirement to say, a large-scale health crisis. Whether a closure is temporary or long-term, there’s definitely a wrong way to close up shop—and as a result, leave your employees and patients high and dry. To avoid any negative ripple effects—from disrupting patient care continuity to burdening employees with undue financial hardship—consider the following guidance.

Please note: I am not an attorney, and the information in this post does not constitute legal advice. As with any major business decision, be sure to consult with your attorney before taking any action.

Give employees advance notice—if possible.

If your closure is planned—or you have a little wiggle room on your shutdown date—give your employees as much advance notice as possible so they can seek other employment opportunities and avoid a potential gap in income. If this is a planned permanent closure (one  that would prompt employees to find another job), it could be helpful to create incentives for certain team members to stay with you up until the last patient (or after).

Notify patients, too.

Your employees aren’t the only ones who will be impacted by the closure: you should also notify your patients as soon as you can—either by phone, email, or physical letter. Some states actually have anti-abandonment laws that require providers notify patients of service termination within a certain timeframe. This is why—to reiterate my point above—it’s important to consult with your attorney and check your state practice act to verify your state’s requirements. Regardless of what the law says, though, the more notice you can give, the better.

In addition to notifying employees and patients, there are a few other entities you’ll need to contact, including (per this resource from American College of Physicians [ACP]):

  • all federal and private payers you contract with;
  • state employment agencies;
  • licensing agency;
  • referral sources (e.g., physicians, surgeons, and hospitals);
  • your EMR;
  • supply vendors;
  • billing partner;
  • utility companies; and
  • your attorney.

Refer patients to an alternate provider.

According to this article from Physicians Practice, there’s no legal requirement to find your patients a new PT, OT, or SLP—but it’s definitely something worth considering. Some patients may wish to find a new provider on their own, while others would rather have your professional recommendation. If this is a temporary closure, setting patients up with a referral is also a big plus in terms of patient experience—and it’ll help strengthen your relationships with other providers in your area. So, if you can, reach out to your peers and see who is accepting new patients before you inform your patients of your impending closure.

Update your online listings.

Next, update your clinic’s online presence to reflect your plans. This includes posting information on your clinic website about how, why, and when your practice is closing up. If you’re simply relocating and not shutting down altogether, be sure to update your clinic’s address—and if applicable, your telephone number—on all of your online listings, including social media accounts, review sites, and your Google My Business page.

Obtain all patient records.

One of the biggest questions people have when it comes to closing down their practice is what to do with all of their patient documentation—and, if it is stored with a third party, how to retrieve it. Your state practice act likely has specific language surrounding this process as well as guidelines for handling documentation that contains sensitive patient information, so this is something you should defer to your attorney on. Alternatively, you can reach out to your state’s professional association (i.e., your state chapter of APTA, AOTA, or ASHA) for guidance on how to retain these records. Once you’re clear on your obligations, contact your EMR vendor. It should be able to export all of your documentation to a secure file or hard copy that you can access outside of the documentation platform.

Hang on to employment records, too.

In addition to obtaining copies of all patient records, you should hang on to tax returns, employee files, invoices, employment contracts, and other business and financial records. According to this source, you should keep these records for three years per the IRS and the Family and Medical Leave Act (FMLA); however, some states have their own mandates. As for any documents you don’t need, be sure to shred them before you throw them out—or obtain certificates of destruction if you use a professional shredding service.

Collect any outstanding A/R.

In the weeks before you close your doors, pursue outstanding balances as much as possible to reduce the need for collections after you close. Retain at least one billing staff member—or your third-party biller—to collect the last accounts receivable. In some cases, you may be able to sell the remaining A/R to a “factor” that will attempt to collect on its own account, although this is less common and should only be done as a last resort, as it can short you a hefty chunk of change.

Contact your landlord.

Your lease agreement likely has a release clause that goes into effect in the event of a business closure. If so, make sure you’re meeting all obligations, and provide your landlord with advance notice. If the closure is temporary, be sure to speak with your landlord about adjusting your rental obligations until you’re in a position to reopen.

So, there you have it: everything you need to know to close your practice the right way. Have any questions about closing up shop? Leave them in the comment section below, and we’ll do our best to get you an answer.


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