An Exit Strategy: When the Physician Leaves a Med Spa

Posted By Kate Harper, Thursday, September 27, 2018

By Renee E. Coover, JD, ByrdAdatto

As medical spas increase in number and size throughout the country, it is not uncommon for physicians to leave one med spa to join another or open a new med spa. When a physician leaves, many questions arise: is the med spa required to notify patients of the physician's departure? Can the physician contact the patients to announce he/she is leaving the med spa? Who should take possession of the patient's medical records? These questions can be easily answered if the departing physician and the med spa negotiate an exit strategy and even execute a "separation agreement" to clarify the terms of the physician's departure.

"The goal of any separation plan should be to remove the emotional issues, which often are intertwined in a practice breakup or departure, and concentrate on the fundamental business elements to assist a smooth transition," says Brad Adatto, JD, partner at the law firm ByrdAdatto. Adatto lists ten items to help medical spa practices start thinking about shaping their separation plans including reimbursement, liability, debt, and more.

One of the questions patients frequently ask is how to find the physician once he or she has left the med spa. The med spa is required to provide that information to patients. According to the American Medical Association Code of Medical Ethics, the "patients of a physician who leaves a group practice should be notified that the physician is leaving ... and should also be informed of the physician's new address." It is unethical for the med spa to withhold this information upon request of a patient of the departing physician.

But what if the departing physician wants to contact patients to advise them of the departure? Can the departing physician get in trouble for "soliciting" patients from the med spa? This depends on whether the departing physician has signed an agreement with the med spa that includes a non-solicitation clause. In most cases, the physician will be required to sign a Non-Solicitation Agreement upon employment stating that he or she will not solicit the patients of the practice for his/her own benefit or induce patients to cancel their relationship with the practice and follow the departing physician to a new practice. If the physician contacts patients, even just to announce the departure, this could be construed as a method to solicit those patients and would constitute a breach of the Agreement. This holds true in the med spa setting, where the same rules and regulations of the medical practice apply. To avoid breaching the non-solicitation agreement, the departing physician should discuss an exit strategy with the med spa to determine how patients will be notified of the departure and put the agreement in writing. Read more about restrictive covenants in your med spa contracts here.

Another question that frequently arises when a physician leaves is what to do with patients' medical records. A patient's records may be necessary in the future for medical care, employment, insurance, or even litigation. When the physician leaves, the med spa retains the patient's records in most cases but this should also be spelled out in a separation agreement with the departing physician to avoid confusion.

For a departing physician, there are many key issues to resolve before leaving the med spa. In addition to the questions discussed herein, there are also questions of insurance coverage, severance pay, return of equipment or property and other financial issues. Having a separation agreement in place prior to the physician's departure can save both the physician and the med spa time and money. The separation agreement should detail the terms of the physician's departure and outline the answers to the important questions that affect the terms of leave.

If you have questions regarding the proper exit strategy for physicians in med spas, it is important to consult with an attorney who can advise you on the myriad issues and craft an exit strategy.

Renee E. Coover, JD, is an associate with ByrdAdatto, a law firm focusing on business, healthcare, and aesthetics. She has a unique background, blending litigation with healthcare law. A former litigator in high-stakes employment cases, Renee has extensive experience with counseling and representing businesses in employment matters, policies, and contract disputes, and defending business owners in state and federal trials. She has also served as General Counsel for the American Med Spa Association, advising health care professionals on regulatory and legal issues governing the medical spa industry.

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