How Physicians Can Leave a Hospital System and Start Their Own Practice
Venturing out of a hospital system and into your own private practice is a major professional opportunity. But this transition requires careful planning and consideration of a range of key details long before you provide notice to your current employer.
You must first understand restrictions in your existing employment agreement, plan your business infrastructure, and take steps to protect patient continuity. Learn how physicians can leave a hospital system and start their own practice, then seek legal guidance before moving forward.
Review Your Employment Agreement First
Your employment agreement may have restrictions about how and when you can leave your employment and start your own practice. Review this agreement closely with an attorney to ensure that you do not violate any terms and put yourself at financial risk before you have even launched your new practice.
Specifically, look for:
- Notice requirements: Understand how much advance notice you need to give before ending your employment, as this may affect your transition planning as well as remaining financial compensation from the hospital.
- Restrictive covenants: Look for any non-compete restrictions, geographic or time limitations, and patient-solicitation restrictions that may impact what, where and when you can practice once you leave your current employer.
- Tail coverage: This insurance coverage would protect you against malpractice claims made by patients from your current practice after you leave. Check your agreement to see whether it applies.
- Repayment obligations: Your agreement may include provisions that require you to repay bonuses, relocation assistance, or loans if you leave the practice within a certain period.
Understanding all of these terms will help you avoid surprises that could delay the start of your private medical practice.
Build Your Business Infrastructure
Planning your private practice infrastructure well before you give notice to your current employer will allow you to overcome obstacles before they become time-sensitive. Plan for each of these processes to effectively leave your hospital system and start your own practice:
- Practice formation: Determine the appropriate legal entity for your practice (generally either a LLC or a PC) and ensure ownership of the entity complies with state laws and regulations.
- Licensing and credentialing: Update your licenses, complete payer enrollment, and determine whether you need to be credentialed with a local hospital.
- Malpractice coverage: Start a new malpractice policy that coordinates with any existing tail coverage that may be in place from your current employer.
- Operational systems: Make decisions about where to set up your practice, how many staff to initially hire, how to manage billing, which EHR system to use, and other operational tasks.
- Compliance program: Establish a compliance program that includes formal policies and procedures for privacy and security, patient safety and quality of care, and billing and coding.
These processes often take longer than physicians expect, so starting them early is important. You can begin completing them while you are still under the safety net of your current employer.
Protect Patient Continuity and Avoid Potential Issues
Building a successful private practice after hospital employment hinges on staying compliant and maintaining professionalism. You need to ensure continuity of care for the patients who will follow you to your new practice while adhering to regulatory restrictions. You also need to effectively communicate with those who will not be able to follow you and will now need to find a new provider.
It is important to avoid common mistakes surrounding compliance, such as:
- Using proprietary hospital information or systems
- Violating regulations around patient referrals
- Recruiting staff too aggressively
- Failing to protect patient records during the transition
Proper legal and financial planning for physician-owned practices is essential to reduce your risk of liability or privacy violations before you can even begin practicing.
Work With Experienced Legal Counsel for a Successful Transition
Because the process of starting a private medical practice after leaving a hospital requires attention to a range of variables, hiring legal counsel is key to promoting a successful transition. While leaving a hospital is a beneficial career move for many physicians, it is also a complex legal and operational business transition that must be treated as such.
An experienced healthcare attorney can help you identify legal risks early in the process and take steps to mitigate them. They can review your employment agreements and ensure your adherence to all relevant terms while maximizing your freedom within those conditions. They can also assist you with the process of opening the new practice and set you up for long-term success in this endeavor.
Speak With Empower Healthcare & Legal Solutions PLLC
Understanding how physicians can leave a hospital system and start their own practice is the first step in approaching this process effectively. At Empower Healthcare & Legal Solutions PLLC, I provide personalized legal counsel to physicians navigating the maze of regulatory requirements and practice formation. Reach out today at 845-286-9002 for a consultation.