An exit strategy was never part of the plan.
In March of 2022, I received a life-altering diagnosis. Although, in hindsight, the signs had been there for some time, the moment I heard the news felt like a fly ball had come out of nowhere and knocked me off my feet.
Up to that point, I had poured so much of myself into launching and growing a pediatric Direct Primary Care (DPC) practice. Since opening the doors in 2018, my energy and attention had been singularly focused on making the practice a success. As anyone who’s built a medical practice from the ground up knows, it takes everything you’ve got. What I hadn’t given any thought to, however, was what would happen if I could no longer run it. There was no plan in place—no roadmap for closing it down or passing it on.
While I don’t believe in living in fear of the “what ifs,” my experience taught me this: having a succession plan isn’t about expecting the worst—it’s about being prepared for the unexpected.
Financial Considerations
When it comes to closing down a practice, there are many financial items to consider in your plan. First, many of my fellow physicians asked me about whether or not I had disability insurance. When I first started my practice, I didn’t feel like there was any way that I would be able to afford the premiums for a disability insurance plan so I did not have one in place at the time of my diagnosis. While it is something that may be helpful, you need to weigh the benefits and drawbacks of having disability insurance. There is a very narrow scope through which disability insurance would actually pay out.
Another consideration is paying the tail coverage on your malpractice policy. Saving up money to be able to pay it is something that you need to keep in mind when you are purchasing your own malpractice policy. While there are two different times of malpractice insurance, “claims made” and “occurrence,” the majority of independently practicing physicians will need to worry about how to pay tail coverage at the end of their policy. While I have heard rumors that people tell me that their malpractice carrier will pay their tail coverage when they retire, my insurance agent husband says that is simply not true. You need to be prepared to pay for the coverage after you retire or close your practice.
Paying back debt is something else that you need to keep in mind before you can close your practice. You cannot close a small business until all debts are paid off. In my case, I needed to save up the money to pay back loans that I had received during the COVID pandemic. In addition, I had also purchased a car through my business and needed to either pay it off or transfer it to my personal name in order to continue to make payments on it.
Lastly, but maybe most importantly, everyone should have life insurance. I have the benefit of being married to an insurance agent who knows the importance of life insurance. As a result of his foresight, I had a life insurance plan in place before the time of my diagnosis where I would no longer qualify for a plan. Life insurance can help your spouse or significant other have the funds to close down your practice in the event of your passing.
Selling Your Practice
Direct primary care is a fairly new concept and therefore there is not a lot of precedent when it comes to selling this type of medical practice. In general, it is difficult to sell a medical practice no matter what type of payment structure is in place. When I was considering what I could do with my practice, selling it was a top priority. I wanted to get some amount of return on my investment, allow another doctor to experience the joys of direct primary care and have somewhere for my patients to go as they grew to expect personalized care.
There are many ways to go about selling your practice. You could sell to another doctor with any already established DPC practice, sell to a doctor who is starting out or sell your practice to an investor. The last option does not follow with keeping the DPC spirit alive, but sometimes you need to do what is best for you and your family. I ended up selling my patient list to another DPC pediatrician who already had an established practice and selling my equipment and supplies to a different DPC pediatrician who was just starting out in her practice.
These are the options for selling your practice.
- Sell the patient list
- Sell all of the assets (equipment, building, etc)
- Sell the entire practice as a whole
I calculated my sales price for my patient list based on my recurring revenue. I took my average monthly membership fee income, multiplied it by my patient count and then calculated it based on 6 months of revenue and this gave me a good starting point for an asking price. I sold my equipment based on what I paid for it and the depreciation / how good of shape it was in.
Hiring someone to take over
Another option that I explored, but did not work out for me, was hiring someone to take over the practice. My plan was to hire another pediatrician and help her to establish a patient panel. After so much time, then she would have the option to take over the practice. This did not work out for me for several reasons, but is definitely an option that I have seen work for other DPC doctors.
These are questions that you should ask yourself before considering this route:
- How long before you need to move on?
- How much money do you have to invest in someone new?
- How do you pay this doctor while still paying yourself?
Closing Your Practice
In some cases, it may be necessary to simply just close the practice without selling it. This was something that I considered as I exhausted my options for selling the practice. There is no shame in moving on in this way. You need to do what is best for your own health and family.
There are a couple of things to keep in mind no matter which route you choose. You need to have a plan to notify your patients of the changes in your practice. I was able to give my patient families 60 days notice that the practice was closing down. I sent out an email to my current patient list with the information in it as well as posted a letter on my website.
Lastly, you need to have a plan in place to keep medical records. If you sell the entire patient list to someone, they become responsible for the medical records. Just make sure that your legal agreement states that. In my case, only part of my patient panel continued on with the new pediatrician so I needed to have a plan to keep the records. Check your state’s medical board website to see what the requirements for how long to keep records for. If you are a pediatrician, be prepared to keep those records for many years.
I downloaded everyone’s records from my EMR and have kept them in a secure cloud server on my Google Drive. This way, I didn’t have to keep paying the EMR’s monthly fee and could close my account with them. In addition, I made printable copies of all of the records of the patients who were current in the practice at the time that I closed it down. I was able to email those records to parents who requested them. Since I got rid of my EMR, I set up a free fax line through Doximity through which I could send medical records to other providers in the community as needed.
A Time to Quit
Even though I was diagnosed with Multiple Sclerosis in 2022, I had planned to continue practicing for as long as possible. After the initial shock of the diagnosis and recovery from the initial flare of the disease, I was able to get into somewhat of a steady state where I continued to manage my practice and my patients. It wasn’t until the summer of 2024 where it became more apparent to me and my husband that it might be time to move on from practicing medicine.
We spent the month of July in the mountains at a VRBO and thought through what the future would look like if we continued down our current path. During that period of time, my husband and I both read the book Quit by Annie Duke. Reading the book and discussing it with my husband were pivotal in my ability to make a plan to move on from my practice. I highly recommend reading it if you are ever in a similar situation or you are trying to quit something that you just can’t quit.
Thank you for allowing me to share my story with you. If you are just starting out in DPC, we want to be here to support you. Dr. Marina Capella developed DPC Pediatrician to give pediatricians a landing place to be able to move forward with a practice of their own. She offers many resources, including this blog, whose sole intent is to be supportive of other physicians. You can get started by downloading the free start up guide HERE.
Dr. Andrea Wadley is a retired pediatrician. She owned 127 Pediatrics from 2018-2024. Now, she works for her husband’s insurance agency and writes articles for DPC pediatrician to support other pediatricians in their pursuit of a DPC practice.
