Exit strategies for retiring physicians: Closing, selling or transitioning your practice

How to close a medical practice: ©Dragonimages - stock.adobe.com

So, you're thinking of moving on from your medical practice.

Whether you plan to sell your business, transfer ownership to a partner or simply close up shop, this decision is a deeply personal one. It often represents the culmination of decades of work building your reputation and creating relationships with patients.

If approached without a clear plan, succession planning can also be a process fraught with unwanted financial surprises. Transitioning your medical practice takes careful planning, communication and the right professional support.

Here's what you can do to avoid costly missteps and ensure a smooth transition into retirement.

1. Assemble your team

Sure, you're an expert at dealing with your patients' medical needs, but you probably don't have experience with negotiating property sales or creating tax strategies for a business closure. On top of that, you might not have time for these tasks if you're operating your practice during the wind-down process.

For these aspects of your transition, it's best to work with professionals. These are some of the people who'll be key to helping you close down or sell your medical practice safely and smoothly.

Financial advisor

According to a 2023 Medical Economics survey, only about two-thirds of physicians who were looking to exit their businesses hired a financial advisor. But skipping out on this professional help can be a big mistake.

When you work with a financial advisor, you get help figuring out whether selling your medical practice, transferring it to a partner or closing it entirely will best support your retirement goals. These professionals can also guide you through the planning, execution and post-transition process.

For example, a financial advisor can help you determine how much you need to profit from a business sale in order to comfortably retire, offer you tax strategies for handling sales profits and, if you desire, help you ensure your profits are eventually transferred to your heirs.

Broker or appraiser

If you're selling your business, the law requires you to list it at fair market value. This is where a broker or appraiser comes in.

These professionals can document and prove the value of your business to help you ensure it's listed at a reasonable price. A broker also has incentives to make a sale and can handle the nuanced steps involved with closing the deal.

2. Create a transition timeline

There are many steps involved with properly transitioning out of your medical practice, and the order in which you tackle them is important. To avoid making costly mistakes, make a list of the tasks you need to complete and add them to a timeline. Depending on the complexity of your transition, that timeline could range anywhere from a few months to a year or more.

For help tackling this big task, you can refer to the American Academy of Family Physicians checklist for closing your practice. It outlines dozens of important steps you'll need to take, including:

60-90 days before closing: Inform your employees, clients and colleagues of your plans.

30-60 days before closing: Stop taking new appointments. Arrange for proper storage of patient and personnel records.

3. Understand your state's reporting requirements

A handful of states have new laws that could impact you as you make this next move with your practice. Depending on your state, you may have to give notice of your health care transaction to your state's attorney general or health agency, and you may even need to wait for them to approve the transaction.

As of 2025, the following states have such laws in place:

California, Colorado, Connecticut, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington.

On top of that, you'll need to understand your state's requirements for storing medical records, which may include informing the medical board of where the records are to be stored.

4. Cancel services

As a business owner, you've likely contracted with dozens of vendors and suppliers to help avoid equipment shortages and keep your practice running throughout the years. Now that you're winding your practice down, you'll need to inform them of your plans in advance, so you can avoid paying for services after you close your doors. These might include:

• Canceling future orders from suppliers
• Terminating your lease
• Canceling automatic vendor payments
• Opting not to renew contracts
• Canceling software subscriptions
• Notifying utilities and vendors of your last day of service
• Canceling insurance policies

5. Coordinate mail forwarding

Your practice is likely to continue receiving important mail even after the transition. For example, you might receive medical records requests or final insurance payments.

If you sold your practice, you may be able to set up an agreement with the new owners to make sure you get important documents. However, to ensure you don't miss anything (or if you closed your business), visit the U.S. Postal Service website and set up a mail-forwarding address. Then, inform the insurance companies you contract with as to how they can forward remaining payments.

As you can see, an effective exit strategy for your medical practice involves more than just shutting off the electricity and handing over keys.

If reading through these steps leaves you feeling weary, remember that you don't have to navigate the process alone. In addition to staying organized, working with qualified professionals will help ensure you preserve your legacy and walk away from your practice in a better position to enjoy your next stage of life.

Sarah Brady is a freelance writer and credit expert who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written about personal and business finance for Forbes Advisor, Yahoo Finance, ValuePenguin and more. Before becoming a writer, Sarah worked as an NFCC-Certified Credit Counselor, a HUD-Certified Housing Counselor and she taught financial education workshops for the San Francisco Mayor's Office of Housing. You can reach her at LinkedIn.