Dissolution of a Medical Practice in Texas

The dissolution of a business is always difficult, but this is especially true when one or more physicians walk away from a group medical practice. Not only must doctors handle interpersonal issues with their partners, but they must also follow the law when it comes to leaving a practice.

Unfortunately, many group practices are breaking up in Texas and elsewhere because physicians feel that they will fare better in the economy by striking out on their own. Office space, overhead costs and other concerns are eating up profits, and doctors must make difficult decisions about their futures.

It is important, however, for physicians to understand what happens during the dissolution of a medical practice and what they will need to do to protect themselves.

For example, according to the Texas Medical Association, the dissolution of a medical practice in Texas requires physicians to notify both the Drug Enforcement Administration and the Texas Department of Transportation of the address of the new practice. There are also separate rules to follow if a doctor is retiring rather than starting over.

One of the main issues encountered in the dissolution of a medical practice is the existence of non-compete agreements. This document is usually drawn up when doctors form a practice together, and it restricts each partner from walking away and starting a new practice that competes with the old one. If a non-compete agreement is in effect, it can seriously jeopardize the doctor's ability to earn a living.

Doctors will also have to decide how the assets of the practice are divided upon dissolution and how to deal with things like medicinal inventory and patient records. It is a good idea for physicians to retain an attorney to help them draw up a binding dissolution agreement, which will set out the ways in which all aspects of the dissolution will be handled.

Physicians must also determine how to transfer care of patients during dissolution. This is especially true for long-standing doctors whose patients rely on them for care and treatment.

If a non-compete agreement exists, the physician leaving the practice might not have the right to take his patients with him. This can be a major cause of conflict between the partners and may lead to legal battles if the partners do not handle it amicably between themselves.

One way for partners to avoid discord during the dissolution of their medical practice is to write down an exit strategy when they first open their doors. It should define the interests of each of the partners and describe what happens if one decides to leave the practice. This eliminates the need for difficult conversations later.