Shutting Down: How to close your practice

Jeff Zimmerman, PhD, ABPP, is an independent practitioner and co-founder of The Practice Institute. With over 35 years of professional experience, Zimmerman has been in independent practice virtually his entire career. Jeff began in solo practice and was a founding and managing partner in a group practice with at one time seven offices and 20 professional staff. He co-administered a managed care contract with over 200 affiliated professionals and has developed niche practices out of managed care (divorce specialty and organizational consulting). He consults on practice development and management and building niche practices. He also provides training in divorce mediation and co-parenting with high conflict divorcing parents. His co-authored book "The Co-parenting Survival Guide" has sold over 30,000 copies to date and is a resource for divorce professionals and their clients. Jeff is also active in many professional organizations, and in 2017 he was president of APA Division 29, Society for the Advancement of Psychotherapy. He currently serves as editor for the Division of Independent Practice, American Psychological Association journal, Practice Innovations.

Zimmerman received his doctorate in clinical psychology from the University of Mississippi (1980).  He interned at the West Virginia University Medical Center, Department of Behavioral Medicine and Psychiatry (1979-1980).

Cindy Ward Sandler, PhD, is a licensed psychologist who earned her master’s and PhD from the University of Maryland College Park. She is currently on a leave of absence from her private practice while she is writing a book to help those who have experienced cancer or other medical crisis. The book is a combination of personal essays, experiences of others and a professional look into what happens in the brain that cause common reactions. Sandler co-hosts a radio show on WOLB 1010AM, serves on the board of Camp Attaway, a local therapeutic day camp for children with behavior and emotional disorders and volunteers within the community.

Jewel Edwards-Ashman: At the start of your career, especially if you’re building a new practice, you’re probably not too focused on retirement or how to go about shutting down your business. But all psychologists eventually come to a point where they have to scale back or stop practicing completely, for one reason or another. The process can be daunting if you’re not prepared.

Jeff Zimmerman: What many of our colleagues do as I hear it is they just kind of stumble one foot in front of the other and then when they get in trouble they reach out. As opposed to really thinking about the closing of the practice and a real intentional planful manner, so that they’ve thought about it as a personal and a business decision. They’re often thinking about it I think as a personal decision, “Oh this is what I’m going to do” and they just do it as if they were kind of resigning from a job, where they gave two weeks notice and they leave. The idea is to really give it a lot of thought how am I going to do it. To carefully consider the ethical responsibilities and how that relates to the process of closing the practice.

Jewel Edwards-Ashman: I’m Jewel Edwards-Ashman, and for this episode of Progress Notes, I talked to two psychologists who share their tips on the best way to close your practice when the time comes.

Jeff Zimmerman: So, I’m Jeff Zimmerman. I’m a licensed psychologist. I’ve been in practice since 1981 and I started with a solo practice, and then expanded it to a group practice back in about 1985, which I ran growing it from a practice with two principles to five principles and a total of 20 mental health providers in the practice, having seven offices throughout Connecticut. I did that for about 22 years and then decided to leave that practice that I formed and go back, kind of completing what I like to say is the “zen circle” and go back into solo practice.

Jewel Edwards-Ashman: Dr. Zimmerman is editor of the APA journal “Practice Innovations” and co-founder of the Practice Institute. He’s co-authored and edited two books that speak to some of the complexities involved with closing a mental health practice and the situations that might lead a psychologist to make that decision.

Jeff Zimmerman: I really was tired in my own career trajectory of doing the management and the administration, dealing with profit sharing plans, office leasing, health insurance for everybody. And all the issues that come up when you’re running, for this kind of practice, a rather large organization.

I really wanted to follow where my passion was and in my heart which was in doing the work rather than managing the work.

Some people move. They can move their practice to open anew as I did, or they may move out of the region. There may be other family issues that lead them to move. People leave the area and they are going to close this practice. They may have difficulty dealing with the financial side of the practice, so they close the practice in order to work in a different setting where they’ll have a salary. Or they leave to go to a group practice, if they are in a solo practice, where they might feel like they will have some certainty in terms of referrals even if they are not bringing in the same income per hour of service.

Some people close practices unfortunately there have been major ethical issues that have occurred, and they are just leaving the field. And some close the practice because of stress, compassion fatigue, being sometimes hounded by attorneys in forensic cases or divorce cases. And you can kind of pile all of those into the category of they leave or self care. That in order to take care of themselves they are leaving their own practice.

You have illness and sometimes you have sudden death which is why some people retire.

Jewel Edwards-Ashman: After being diagnosed with cancer, Dr. Cindy Sandler was forced to close her practice and entire early retirement, while also ending her part time work at a mental health startup company.

Cindy Sandler: I’m Dr. Cindy Ward Sandler and I had a practice in Maryland. I had a therapy practice which I closed many, many years ago to spend some more time with my children and then when I went back to work full time I started a psych testing practice. And that was the practice that I have most recently closed.

I was diagnosed with multiple myeloma which is a blood cancer. The treatment would have involved radiation, chemo and a stem cell transplant, and not something that would allow me to continue to work. So I let go of the start-up company. I had the wheels in motion to close my practice anyway, which actually was a real blessing. I had thought about scaling back but again the impact of some of the medications I was on, it was affecting my focus and my attention. So you can’t do that. When I’m testing someone it’s like I’m in their brain so when they’re saying an answer my brain is figuring out, “Whoa, where did they go in their brain to come up with that answer?” So it’s very, what I would call, brain intensive so that wasn’t really going to be an option.

Jewel Edwards-Ashman: There are several things that need to be addressed when closing your practice—the finances, any legal issues involving your business, and your ethical obligations as a clinician. Dr. Sandler said one of her top concerns was how and when to tell her practices that she was closing the practice.

Cindy Sandler: Because I was a psych testing practice, there’s a discreet end to the process. I needed to address, just ethically, and when I was going to tell people that I was ending my practice. That’s the big question that I think goes through our minds. Whether it’s a counseling practice, a consultation practice or testing, whatever kind of work we’re doing as psychologists first and foremost is what is ethical? What is in the best interest of our clients, of our patients, of those we are serving.

One of the things I was concerned about was if I let Patient A know that I’m closing my practice then the minute you tell one person other people are going to find out. It’s just the way it works within the network of how one gets referrals. I didn’t want people I had worked with before or people that were on the list that I was going to see find out from somebody else that I was closing my practice.

So that is an ethical piece in terms of how we communicate information to people and it’s, you know, not good for people to hear from someone else. So we decided that we would let everybody know all at one time. Whether they were past clients, whether they were on my calendar, whether they were referral sources. Let everybody know all at once.

Jewel Edwards-Ashman: Patients can have all types of reactions, so it’s important to have a plan in place for referring them to other providers you trust will give them the care they need. Another important ethical issue that needs to be addressed—handling patient’s health records when your practice closes.

Cindy Sandler: We have records on our clients and when we get ready to retire, what happens to those records? And this is something that needs to be looked at and you need to plan for. So, let’s say with my testing reports, or if they were client case notes, they don’t just get thrown away. We have to maintain them, and they’re standards for how long we keep them. For adults that we’ve seen the APA standard is seven years after the date that we’ve seen them. Regardless of age, if they are the age of majority, which is 18. So, anybody older than 18, let’s say who’s in therapy or has been tested, the psychologist must retain that record for seven years beyond the termination of treatment. With children we have to keep the records for three years after the child reaches the age of majority. So if I test someone at 7 years old, I’m keeping those records until that child reaches 21. So they need to be managed. They need to be, someone needs to have access to them. So, I had to make plans because I wasn’t sure what was gonna happen with all this medical stuff but even so closing my practice I had to make plans as someone needed access to those reports. It’s not uncommon for parents to get back in touch with me and say, “Could you send me a copy of so-and-so’s report? I’ve misplaced it,” type of thing. So as psychologists those ethical issues are really ones we need to think about, think about in regard to the general record-keeping but also think about in terms of the individual.

Jewel Edwards-Ashman: After considering the ethical implications, look at the legal and financial aspects, especially if you’re leaving or closing a group practice.

Jeff Zimmerman: One thing is people don’t plan from the start, especially if they are in a group practice. At the outset it’s like a new relationship and they are courting each other then a contract is offered, and people they negotiate and then sign the contract but don’t think about the ending of the contract. So many times the paperwork, if it’s even present, some people just enter the group practice with a handshake, I think there really should be contractual documents created. But those shouldn’t only talk about what happens while the individual is working in the practice or a partner in the practice. They should also speak to what happens when somebody’s leaving. And the wording needs to be very clear and unambiguous so that down the road five years, 10 years or 22 years, down the road the separation is already clear. It’s kind of like having a prenup I guess.

Jewel Edwards-Ashman: Your contracts with the other providers should cover several areas: How to handle the finances if you owe the practice anything. How will the shift in equity in the practice be handled? What papers would need to be signed? Would you have to sign an agreement saying you won’t disparage any of the other providers in the community?

Jeff Zimmerman: I don’t know if you simply decide to close your practice if you need a lawyer. If you’re closing your practice and you’re a having a dispute with the practice, with other people in the practice, you might need a lawyer

Jewel Edwards-Ashman: And sometimes, a psychologist decides to leave their practice and sell it.

Jeff Zimmerman: Sometimes people can sell their practice. Years ago, that was often done, in my understanding, but it’s far more difficult nowadays. It’s easier to sell it if there are products, programs, transferable contracts (like an EAP contract or contracts to schools), that don’t necessarily specify that there is only one person that can be doing that job, that is you. So if there are things that you can sell, then it’s easier to sell that kind of practice. But generally, it’s difficult to sell a practice to somebody else because they’re going to argue that the price is heavily dependent on the good will you established which is not tangible and not able to transfer. So, when you say, “I need X dollars for my practice because look at my position in the community and all the patients I generate,” the response to that is, “Yeah, but you’re not going to be here. So why am I paying for that because those referrals may go elsewhere. Your tangible assets are far less than that, you know your couch and your desk, and those kinds of things are far less than that. You’re accounts receivable I’m not interested in because a lot of that might not be collectible anyway. It’s bad debt. Some of it’s bad debt. And they then argue, that it’s really…what are they buying? That they don’t really want to buy something that’s as intangible as the goodwill that you have in the community.

Cindy Sandler: What we sell essentially as psychologists is our name. In pscyh, testing essentially what I’m selling is my name, as I said. I had been in practice long enough that people expected a certain product when they came from me and the product essentially is the kind of report that I wrote. And there was, no guarantee that another psychologist would write that same kind of report and do the same style of work. And so therefore if people were coming to the new Dr. Whomever their expectation would have been, “Oh, wait, I thought I was going to get a report like Dr. Sandler. Now, maybe their report was even better, but it just isn’t what the parent in this case would have had in mind. Or the referral source in particular would have had in mind. It was false referral in a sense that they were going to get something similar or the same.

Final reason I didn’t sell is because it’s something that I might go back and do. Even though my retirement, and I never say I’m retired, because I just, I’m not really there. That’s not what my intention was. With the start up company when I was thinking I was going to do that. I was thinking well if that doesn’t work I can always go back and do testing I love it. It’s not that I was leaving because I didn’t like it. And even now I’m thinking maybe I’ll start of the practice again and see a limited number of kids. So if I sold the practice to me that takes away the option. Non-compete clauses are not legally enforceable in the state of Maryland, but there’s an intention. Like if you say you won’t open your practice within a 20-mile radius then that’s your word and so I wouldn’t have done that. And these are the kinds of things you have to think about in terms of closing the practice.

Jewel Edwards-Ashman: Dr. Zimmerman says you could reasonably close your practice in three to six months, if you have a plan in place to make sure you’ve met your clinical and ethical obligations and dealt with the financial aspects. Whether it takes you a few months or a few years to close, Dr. Zimmerman says you don’t have to go through the process alone.

Jeff Zimmerman: Reach out to mentors. Reach out to a practice consultant. If you need to reach out to an attorney. Your accountant, as well. But don’t do it alone. Other people have been here before you. Even if you’re closing a practice to open someplace else. Other people have been here before you. You don’t have to do it in a vacuum. It also is an emotional experience. We invest a tremendous amount emotionally in the work that we do, and in the walls and space and chairs that we do that work in. And it can be hard to close the door and turn the key and the lock and then turn the key into whoever the key goes to and say “I’m’ done. Or at least here I’m done,” depending on what your future path where that takes you. You don’t have to do that alone and in isolation.

Jewel Edwards-Ashman: Thanks for listening to this episode of progress notes. Look for more tips on closing your practice in this year’s issue of Practice Update, our biweekly newsletter for practitioners. You can subscribe by visiting APA.org.

This episode of Progress Notes was produced by me, with help from Hannah Calkins and Luana Bossolo and Chris Condayan. Subscribe to this podcast on iTunes or on Google Play.