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When physician owners part ways, three things decide how clean the split is: who keeps the patient records, what happens to payer contracts and Medicare enrollments, and who still owes the practice’s debt. Each one is shaped by documents you already signed and by deadlines that run from the date of a reportable change.
The sections below cover each problem in the order owners usually run into them, then the facts to gather before you talk to a co-owner, a payer, or a lender.
Who Keeps the Patient Records When Physician Owners Split?
The answer turns on who the “records owner” is, and that is a contract question before it is a statutory one. Under section 456.057, a practitioner who creates a record by examining or treating a patient is a records owner. A physician who receives records from a previous owner is also a records owner, and a group practice joins that category only when the physician’s employment contract or agreement designates the group. If your agreements are silent or conflict, settle who owns and holds the records before anyone announces a departure.
The statute also adds notice duties. A records owner who is terminating practice, retiring, or relocating, and will no longer be available to patients, must either advertise in the local newspaper or notify patients in writing, and must offer patients a copy of their record. That owner must also notify the appropriate board office, naming the new records owner and where the records can be found.
Whether your split triggers those duties depends on who the records owner is and whether that physician stays available to patients. Put the patient communication plan in writing, including who sends the notice and what it says about where patients can continue care.
Can a Departing Owner Take Patients and Referral Relationships?
Possibly, and a signed restrictive covenant is the first place to look. Under section 542.335, a restrictive covenant must be in a writing signed by the person it is enforced against, and the party enforcing it must plead and prove a legitimate business interest and that the restraint is reasonably necessary to protect it. The statute lists substantial relationships with specific patients, and patient goodwill, among those interests.
Our post on non-competes, referral sources, and patient lists and our non-compete and non-solicitation agreements page explain how those covenants are enforced.
What Happens to Payer Contracts When One Physician Leaves?
Commercial payer contracts turn on their own terms, and Medicare enrollment carries fixed reporting duties of its own. Start by identifying who signed each contract, the group or the individual physician, and read its assignment, change-of-ownership, and notice clauses. Commercial payers set their own notice and termination terms, so the contract text controls. Ask each payer in writing which contracts and provider numbers a departure would affect, and keep the replies.
Medicare adds fixed clocks. Under 42 C.F.R. 424.516, physicians and physician practices must report a change of ownership, or a change, addition, or deletion of a practice location, within 30 days. All other enrollment changes are due within 90 days.
Reassignment matters too. Medicare generally does not send a physician’s payments to anyone else, with exceptions for an employer and for an entity under a contractual arrangement. The group that receives the payment is treated as the supplier of those services. Section 424.80 says that when payments go to an entity under a contractual arrangement, the entity and the physician are jointly and severally responsible for any Medicare overpayment to that entity. The physician also has unrestricted access to claims the entity submitted for that physician’s services.
That cuts both ways. A departing physician should secure claims data for their own services before the relationship turns adversarial. The remaining owners should know that where a physician’s payments go to the group under a contractual arrangement, an overpayment to the group is not the group’s problem alone.
Jimerson Birr’s healthcare billing, reimbursement, audits, and appeals page notes that an audit can turn into a demand to repay money billed and collected years ago.
Who Owes the Practice’s Debt After Physician Owners Part Ways?
Leaving does not erase what you owed before you left. For a practice organized as an LLC, section 605.0603 provides that dissociation alone does not release a member from debts or obligations to the company or the other members that were incurred while a member. Debt owed to banks, lenders, and landlords is a separate question, answered by the loan, lease, or guaranty itself.
If your practice is a professional association, that statute is not the end of the analysis, because other provisions and your agreements apply. In either case, check each of these:
- Bank loans and lines of credit: who signed, and whether any owner gave a personal guaranty.
- Equipment financing and the office lease: whether a departing owner is a guarantor, and whether the lender or landlord must consent to a change in ownership.
- Money owed to the company or the other owners: member loans or unpaid capital contributions.
A buyout agreement can allocate these debts between the owners in writing. Your lender and landlord answer to their own contracts, so ask each for a written release or consent when the buyout closes.
Should Physician Owners Buy Out, Sell, or Dissolve?
The choice shapes everything above, and the first split is between ending the company and changing who owns it. Dissolution ends the company. A business divorce keeps the company alive and changes who owns it. If the practice must keep seeing patients and billing payers during the split, the exit structure matters, not only the price.
Our post on business divorce versus dissolution compares the two exits, and our buyout valuation post covers how price gets set. A buyout needs numbers, so a departing owner should know how to inspect the company’s records. Owners with equal stakes can read about deadlock-breaking mechanisms in LLCs.
If talks fail, the dispute can end up in court. Jimerson Birr handles these conflicts through its shareholder disputes and derivative litigation and business litigation practices, and attorney Charles Jimerson lists partnership dissolution and shareholder derivative matters in his profile. For the legal framework, see our pages on dissolution of corporations, LLCs, and partnerships, LLC member rights, and partner rights.
What Should You Check Before You Decide How to Split?
These facts change the answer for your practice:
- How the practice is organized, and what the operating or shareholder agreement says about buyouts, valuation, and deadlock.
- Whether each physician’s employment agreement designates the group as records owner, and what any signed restrictive covenant says about patients.
- Which payer contracts and Medicare enrollments name the group and which name individual physicians, plus each contract’s assignment and notice terms.
- Whether each physician’s Medicare payments are reassigned to the practice through employment or through a contractual arrangement.
- Every loan, lease, and personal guaranty, with who signed and who must consent to a change.
These facts decide the outcome, and an attorney needs to review them before you notify a payer, a lender, or your patients.
Are you and a co-owner already talking about parting ways? Talk with a Jimerson Birr business divorce attorney before you sign anything or send any notice to a payer, lender, patient, or board.
How Can Jimerson Birr Help When Physician Owners Part Ways?
If you are splitting up a medical practice and need to sort out patients, payer contracts, and debt, Jimerson Birr’s business divorce attorneys represent shareholders, LLC members, and partners across Florida on both sides of the table: the owner who wants out and the owner who wants to keep the business. Call (904) 389-0050 or request a free consultation. Waiting costs time: once an ownership or practice location change takes effect, Medicare gives physicians and physician practices 30 days to report it.