Closing a Practice

Closing a private practice is a major transition for any psychologist. Whether relocating, making a career change, taking a new position, or winding down for retirement, the process involves far more than simply shutting the doors. Psychologists carry unique ethical and legal responsibilities—ensuring patient welfare, safeguarding sensitive information, and meeting professional standards. Thoughtful planning can make this transition smoother, reduce stress, and minimize the likelihood of unforeseen difficulties. This article outlines key considerations and practical steps to help psychologists wind down a practice responsibly and effectively.

First, establish the legal and financial framework for the closure process. Start by consulting with your attorney, accountant, and professional liability insurer for guidance on legal, financial, and ethical considerations before you begin telling patients you’re closing your practice. These deliberations may include:

• Consideration about whether to sell the practice versus close down the business. A business broker is often a helpful professional in this process. Be aware of the ethical implications of selling a practice and carefully consider whether a prospective buyer has the:
  • Professional qualifications to uphold patient confidentiality and custody obligations in the transfer of patient records
  • Competence and appropriate licensure to serve the patient population
  • Appropriate reputation, practice philosophy, and business management skills
• Specialized requirements based on the practice’s legal structure
  • The closure process varies based on its legal entity type (e.g., corporation, LLC, or sole proprietorship).
• Tax planning and financial reconciliation
• Partnership and ownership transitions
• Post-closure financial planning
• Record-keeping requirements
• Required notifications, including licensing board, referral sources, and professional contacts
• Professional liability considerations, including tail coverage and unresolved complaints
• Creation or update of your professional willopens in new window
• Designation of a professional executor/records custodian to manage record requests after closure

Create a task list. Begin with this checklist (PDF, 44KB)opens in new window and tailor it to fit your practice. Set a timeframe for completing each task, balancing your needs with those of your patients and staff when establishing the timeline. This helps ensure that neither personal nor professional obligations go unmet.

Decide when to stop taking new cases/referrals. This requires careful consideration of your current caseload, insurance contract obligations, and closure timelines.

As part of closing a practice, a primary ethical concern is avoiding patient abandonment. APA Ethics Code Standard 10.10 (Terminating Therapy) requires psychologists to provide pre-termination counseling and suggest alternative services, unless circumstances make it impossible. Plan backward from the closure date to determine when to inform current patients, allowing time for termination and referral. This conversation requires tact, sensitivity, honesty, and advance notice.

The referral process requires thoughtful preparation. Patients deserve referrals that match both their clinical and practical circumstances. Talk with the psychologists you'd like to refer patients to in order to determine whether they would be a good fit. Consider their areas of expertise and availability to accept new patients as well as:

• What insurance(s) they accept
• Their location and office hours
• Whether they provide telehealth

Speak with your patients about their needs and preferences as you work together to find and determine referrals. In addition, you should:

• Obtain informed consent
• Transfer a copy of patients’ records to other providers
• Inform your patients’ other health care professionals and keep them up-to-date on the status of closing your practice

See Transitions: Transfers & Terminations for additional guidance.

In addition to your current patients, your notification should extend to past patients, even though the therapeutic relationship has ended. Legal obligations may vary by state—some jurisdictions have specific notification requirements, while others focus primarily on ensuring access to records. Check with your state licensing board for jurisdiction-specific requirements. Nevertheless, you should attempt to notify your past patients whose files fall within your state’s record retention timeline requirements. Some approaches (and their caveats) include:

• Sending a letter
  • Mail is strongly recommended as a best practice and may be required by your state licensing board
• Email, although not strongly recommended due to risk considerations:
  • Harder to obtain proof of receipt if desired
  • HIPAA—if the notification references any treatment details, you will need to ensure the email is sent through a secure/encrypted channel, or otherwise limit the content to administrative information
  • Requires patient prior consent to electronic communication
• Placing a notice in local newspapers in the area you serve, on your website, and in other community forums. Such public notices should follow your state licensing board’s requirements and will usually include:
  • Psychologist and practice name
  • Effective date of closure
  • How to access records prior to the date of closure
  • How to access records following date of closure – name and contact information for the professional executor or custodian

Ensure patients can access their treatment records for the time period required by your state’s record-keeping rules. Regardless of the approach you take, document your notification efforts.

Proper handling of patient records is one of the most complex aspects of closing a practice. According to APA Ethics Code Standard 6.021 (Maintenance, Dissemination, and Disposal of Confidential Records of Professional and Scientific Work), psychologists maintain responsibility for protecting confidentiality when transferring records from their control to another psychologist or professional. It is essential to make arrangements for the secure storage of patient records consistent with your state’s requirements. Be sure to obtain written patient consent if your patient has requested that their records be transferred to another psychologist or mental health provider. If you are transferring your patient files to a records custodian, such as a records retention company, you do not have to obtain individual patient consent, if you have executed a Business Associate Agreement (BAA) with the custodian.

If you are not transferring records to another party and are keeping custody of those files consistent with state requirements, it is important that the files are stored in a secure location that is not accessible by unauthorized third parties. For example, storing patient files in your attic or garage is not considered secure storage.

For records that have exceeded the retention period, develop a plan to dispose of them securely to ensure they are no longer readable or reconstructable. Consider using a professional shredding company, but first ensure the company is HIPAA-compliant, willing to sign a Business Associate Agreement, and provides a certificate of destruction.

For digital records, clear any electronic protected health information from electronic devices. Simply deleting files from your devices may not be sufficient. The HIPAA Security Ruleopens in new window establishes requirements for the storage and destruction of electronic protected health information (EPHI). Records are not limited to electronic devices like computers, laptops, or tablets; records may also be stored on office equipment. For example, photocopiers sometimes have memory storage of recently copied documents, which should be deleted.

To plan for the unexpected, APA Ethics Code Standard 3.121 advises that psychologists make reasonable efforts to facilitate the continuation of services in the event of the psychologist’s illness, death, unavailability, relocation, or retirement. This requirement applies throughout your career, including when closing your practice.

The operational aspects of closing a practice require attention and coordination. If you have partners, discuss arrangements with them.

Your professional network should also be given appropriate advance notice to allow for preparation and thoughtful consideration. Inform professional contacts and relevant entities:

• The psychology licensing board in the jurisdiction(s) where you are licensed
• Professional organizations
• Your landlord if you rent office space
• Insurance panels and other parties you contract with
  • Review all contracts carefully, as many payer/insurance contracts require 60–90 days advance written notice of agreement termination
• Your billing and answering services, and other practice consultants
• Colleagues and professionals who regularly refer patients to you, so they can redirect future referrals

Whether selling or simply closing, financial housekeeping is paramount to ensure a clean financial closure. That includes:

• Collecting any accounts receivable and pay off any outstanding debts
• Organizing financial records (e.g., financial reports, tax documentation, contracts)

Once all financial matters are resolved, close the bank accounts associated with your practice and file your final business tax return, if applicable.

Effectively closing your physical practice space also demands strategic planning and thorough management of property, equipment, and lease obligations.

Disposing of equipment goes beyond basic resale or donation; it requires inventory assessment, secure data removal, documentation for financial and legal records, and adherence to disposal protocols. Sell, donate, or dispose of office equipment, such as photocopiers, fax machines, computers, and furniture. If any equipment contains confidential information, ensure data are securely deleted consistent with the approach described in Phase 3. Use any remaining office inventory to minimize waste and maximize value recovery.

Contact the issuers of any business licenses and permits you hold, and cancel any utilities (e.g., electric, gas, water, phone, internet) for your office.

A practitioner’s digital footprint now carries equal, if not greater, operational significance than the physical office space itself, and closing a practice without a comprehensive plan for digital properties poses risks to patient confidentiality and continuity of care that parallel those long recognized for paper records and physical assets. With that in mind, practitioners should address the following digital property considerations when planning for practice closure.

• Practice website, social media accounts, email, and voicemail should be maintained by the professional executor for an appropriate period after closure to keep patients (including former patients who may not have received individual notice) informed about how to contact you and access records. Once that period has ended, they may be shut down, deactivated, or memorialized, as appropriate.
• Online directories and listings should be updated or removed, as leaving active directory listings for a closed practice risks patients attempting to schedule appointments or disclose PHI through intake forms that no one is monitoring.
• Passwords and digital access should be documented in your professional will so that the professional executor may carry out their duties.

It is important to remain accessible as you close your practice. Submit a change of address form with the post office. Depending upon your privacy concerns and where you want your professional mail delivered, consider renting a post office box for a while to make sure you do not miss any important correspondence.

Cancel or redirect any professional subscriptions or supply deliveries tied to your office address. For your office phone, either maintain your answering service for a defined period after closure or set up a voicemail message informing callers of your closure and providing instructions for contacting you or accessing records. If you have designated a professional executor, consider forwarding your office number to them after the closure date. Thoughtfully managing ongoing communication helps preserve trust, ensures compliance, and supports a smooth transition for everyone affected.

In the midst of managing patient care, business operations, and legal obligations, it’s easy to overlook your own needs during this transition. Be sure to acknowledge and address your own emotional issues related to closing your practice and to take the time to focus on self-care. Closing a practice often brings a mix of emotions, from satisfaction in the work you’ve done to grief over relationships that will no longer continue, and those feelings deserve the same attention you would encourage your own patients to give theirs.

Closing a psychology practice represents both an ending and a beginning. While the process involves numerous complex considerations—from patient care and record management to financial reconciliation and business operations—careful planning and professional guidance can make the transition manageable and ethical.