Preparing for the Worst

Planning for Untimely Death Is Vital 

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Practice Management Feature – April 2013 

Tex Med. 2013;109(4):51-55.

By Crystal Zuzek 
Associate Editor 

Tragedy struck the El Paso medical community last spring when 57-year-old obstetrician-gynecologist Christopher Johnston Powers, MD, died unexpectedly after a cycling accident. He lingered on life support for 30 days before finally passing.

During that difficult time and after his death, Christine Brandl, MD, and her partner, Christina De Santos, MD, stepped in to see Dr. Powers' patients. Dr. Brandl's office manager and husband, Rich Sifuentes, ran the solo medical practice. They hope what they learned throughout the process of operating and eventually closing Dr. Powers' practice will compel physicians to make important personal and professional legal arrangements now.  

"I heard about Dr. Powers' accident the day it happened, May 27. My husband and I met with Dr. Powers' accountant and two staff members the next day to arrange to take over the practice," Dr. Brandl said. "I signed legal documents the following day that allowed me and my medical partner to see the patients and my husband to manage the office. We ran the office as though Dr. Powers would return," she said.

Drs. Brandl and De Santos saw Dr. Powers' 1,800 patients during lunch breaks and on Fridays. The physicians cared for his patients in addition to their own 4,500 patients while Dr. Powers was hospitalized. Dr. Brandl explains Dr. Powers' patients had to sign medical release forms allowing her and Dr. De Santos to treat them. She says it was essential Dr. Powers' practice continue collecting revenue to pay the bills and employees.

"We made sure the patients were cared for the way Dr. Powers would have cared for them. We gave them the same amount of time and the same type of treatment he would have. We weren't going to allow anything to ruin his good name or his quality of care," she said.

After Dr. Powers died, Drs. Brandl and De Santos continued to care for his patients in emergency situations and sent letters notifying them they would need to find another doctor. They directed patients to the El Paso County Medical Society for a list of physicians they could contact.

Unexpected deaths profoundly impact those left behind. And in the case of physicians, their deaths have financial and business implications they must address in advance.

Dr. Powers purchased life and disability insurance and had a will, says Dr. Brandl. Unfortunately, he didn't share his business arrangements with others.

Since her experience running and closing Dr. Powers' practice, Dr. Brandl made changes she hopes will allow others to manage her business easily in the event of her untimely death.

"I have color-coded files that contain all of my insurance and vendor contracts, as well as my receipts. The information is organized, and my back office and front office manager know where all the documents and pass codes are. I have a medical partner, so patient care would fall to her," she said.

Dr. Brandl stresses the importance of trusting someone with important passwords for electronic health records (EHRs), bank accounts, phone systems, and other practice management systems.

"If you're a solo physician, make sure you have a list of people to call to take over your patients in case of emergency," she said.

While no one likes to dwell on the thought of their death, Dr. Brandl encourages physicians to think of the chaos they could leave behind by failing to prepare.

"A physician of any age could inadvertently destroy his or her family. If you really care about your family, you'll ensure the business side of your practice is very well organized and transparent," she said.

Step In 

"When I went to the hospital to see Dr. Powers, I could barely get in. Many, many people had gathered to pray for him. Everyone was devastated. His life was taken too early," Dr. Brandl said

Dr. Powers was an attorney before attending Texas Tech University Health Sciences Center (TTUHSC) in El Paso at age 40 to pursue his dream of becoming a physician. He completed his residency in 2002 and took a faculty position at TTUHSC. He opened a solo practice in 2009.

"Dr. Powers was the ideal physician. He was kind and compassionate and always put patients first. He'd drop everything to help someone in need. We worked right next door to each other for years, and I turned to him a lot for advice and guidance" Dr. Brandl said.

For Dr. Brandl, taking care of Dr. Powers' patient load was the easy part. The hard part, she says, was closing his practice.

"It takes months or even years to start a practice. When you close it, you have to move backward through that arduous process. My husband and I closed Dr. Powers' practice in six months," she said.

The saving grace, Dr. Brandl says, was her husband's ability to leave his management responsibilities at her practice for six months to tend to Dr. Powers' practice.

"It was very challenging. The employees were emotionally devastated and had to start looking for new jobs. My husband had to learn Dr. Powers' EHR and billing systems. He also had to become versed in the practice's policies and procedures," she said.

On top of the administrative learning curve, Dr. Brandl and her husband discovered they had only 90 days to bill for services Dr. Powers had rendered. (See "Helping Physicians in Times of Need.")

"Two months after Dr. Powers died, we had to comb through the claims and get billers to work weekends to ensure payment," she said.

Once they'd addressed claims payment, Dr. Brandl and her husband learned the lease for Dr. Powers' office didn't contain a death or disability clause allowing it to be terminated after giving notice.

"The only option we had was to get someone else to assume the lease. Dr. Powers' family was going to owe a lot of money in penalties, and we didn't want to burden them with that expense," Dr. Brandl said.

Luckily, another El Paso solo physician happened to be looking for office space just in time.

"She assumed the lease and purchased all of the medical equipment and supplies in the practice," Dr. Brandl said.

Dr. Brandl says Dr. Powers' family will soon receive the profits from the claims she and her husband helped to process after Dr. Powers' death. The family asked Dr. Brandl to deduct expenses associated with running the practice.

Have a Plan 

Last fall, Austin attorney and certified public accountant Michael Stern conducted a presentation on pre-death and post-death personal and professional planning for the El Paso County Medical Society, at the request of Executive Director Patsy Slaughter.  

"After hearing about the impact Dr. Powers' death had on his business and on the physicians who stepped in to help run his practice, several of our members voiced concern about being prepared if something unexpectedly happened to them," Ms. Slaughter said.  

Mr. Stern says more than 60 county medical society members attended the nearly three-hour presentation. He says about 40 percent of attendees had done personal estate planning, but most didn't really understand the interrelationship between the personal side and the business side of planning.

"My message to the physicians was if something happens to you, what would your family be able to do when they walk into your office the next day?"

Ms. Slaughter says many physicians who attended Mr. Stern's presentation immediately began preparing for handling of their personal and professional matters in the event of their deaths.

Mr. Stern says personal estate planning helps alleviate time-consuming estate administration after a physician's death. He says appropriate estate planning requires a: 

  • Will or trust, which, if properly drafted, can substantially reduce the expense, time, and burden of the probate process and designate who gets property, who will manage an estate, who will be guardian of the children, and more. Mr. Stern says trusts are usually more expensive and cumbersome to draft than wills.
  • Durable power of attorney to help physicians ensure someone they trust manages their finances after they're gone. 

Other common estate planning documents that physicians should consider include: 

  • Medical power of attorney so they can designate someone to act as an agent with authority to make health care decisions on their behalf if they're incapacitated.
  • Directive to physicians, also known as a living will, to instruct physicians of a patient's wishes if he or she is unable to make medical decisions. Mr. Stern says a living will ensures life-or-death decisions are in accordance with a person's wishes and that loved ones will not bear the financial or emotional burdens of making such decisions.
  • Declaration of guardian, which not only ensures the court will appoint a physician's choice of guardian, but also may exclude certain people from becoming a guardian. 

In the event of a death of a physician in private practice, Mr. Stern says the probate process should commence immediately, starting with admitting the will to probate and having the probate court appoint an executor or administrator to manage the estate.

Professional planning allows physicians to address call coverage, management, and administration of the medical practice and helps ensure the orderly continuation of practice operations. To protect against the unwanted transfer of ownership in multi-owner practices, physicians may enter into buy-sell agreements, Mr. Stern says. These agreements are contracts among medical practice owners they can customize to fit their needs and desires. In single- and multi-owner practices, the buy-sell agreement can be structured to provide for the purchase of the practice for a predetermined amount or can be based on a formula or calculation.

After a physician's death, notify other physicians immediately to ensure that patient care continues. In there is no coverage arrangement, the estate administrator should contact physicians in the community to make arrangements, Mr. Stern says. A designated person should immediately take control to safeguard financial records and investigate the practice's financial situation. If the physician has not made appropriate arrangements for access to business accounts and financial records, Mr. Stern advises hiring legal counsel to determine the appropriate steps to take.

After a physician dies, the practice needs to continue running. The physician's surviving family members should contact the designated person to inquire about management safeguards. Mr. Stern says protections need to be in place to prevent potential theft or financial loss in the practice.

In the absence of a buy-sell agreement, Mr. Stern says the remaining physicians in the practice will need to reach an amicable agreement with the survivors of the deceased physician on a mutually acceptable price and payment terms.

It's a good idea to establish a buy-sell agreement before death because the inability of physicians and survivors to agree on a reasonable purchase price can result in protracted litigation between the parties, he warns.

Mr. Stern also says it's particularly important for physicians in solo practice to plan ahead.

"It's likely that in a multiphysician group others can pick up the slack when one of the physicians dies or becomes disabled. But when a solo physician dies, the situation quickly escalates to an emergency in which family members are trying to sort out what to do with the practice and whom to call to see the patients," he said.

Failure to make professional arrangements before a physician's death can have legal implications.

"From the estate planning perspective, if a physician hasn't planned appropriately, there won't be a designated person to take control of the business. From a liability perspective, it could be argued that the estate of a physician who died and didn't make proper arrangements for patient care could be negligent. A claim could be filed if a patient was under that doctor's care and suffered an adverse outcome due to abandonment. I've not heard of that happening, but it could," Mr. Stern said.

Providing for the proper handling and disposition of medical records is important after a physician's death. Texas Medical Board (TMB) rules require retaining medical and financial records for adults for seven years from the date of the last treatment by the physician. Records for minors younger than 18 must be retained until the patient reaches 21 or seven years from the last treatment date, whichever is longer.

For more information on retention guidelines, disposal of medical records, records release guidelines, dealing with subpoenas, transfer and custody of medical records, and buy-sell agreements, consult the TMA publication Closing or Selling Your Medical Practice: Legal and Financial Considerations, written by Mr. Stern.

Ensuring a physician's practice will continue running in the event of his or her death is an extension of quality patient care.

"Physicians see to it that their patients receive the best care, and that shouldn't change once they've died," Mr. Stern said.

Get Covered 

Texas Medical Association Insurance Trust (TMAIT) Insurance Advisor John Isgitt says life insurance provides these benefits to survivors of physicians who have died:

  • Mortgage protection: Term life insurance provides protection so a physician's spouse or significant other doesn't lose the home or have to struggle to make the mortgage payment. Term life insurance can pay off an outstanding mortgage balance. Mr. Isgitt says physicians should select a term that matches the length of their mortgage payment period.
  • Income replacement: Life insurance can replace lost income so the surviving spouse or partner can maintain the same standard of living.
  • Final expense coverage: Life insurance covers funeral expenses, burial costs, and medical bills that can add up to a hefty amount.
  • College funding: If a physician has children who have not yet graduated from college, this coverage is important. Life insurance can help fund a college education.
  • Business expense coverage: A life insurance policy can provide income to settle business loans, buy-sell agreements, or other business expenses. 

The sudden death of a physician can result in unfulfilled financial obligations, Mr. Isgitt says.

"These obligations can include dependents to support, a mortgage to be paid off, or children to educate. Additional expenses may be incurred because of funeral costs, medical bills, probate and estate settlement costs, and estate and inheritance taxes for larger estates."

He urges physicians to purchase life insurance early in their careers.

"A young physician may save money by purchasing life insurance. Young people are typically healthy, and life insurance rates are based, in part, on age and health history. Applying for a policy while young may result in a lower premium," he said.

TMA created TMAIT to serve member physicians with their insurance needs. TMAIT can help physicians determine the amount and the type of life insurance coverage that suits their needs. For assistance, call (800) 880-8181. 

Crystal Zuzek can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email. 

RELATED STORY 

Helping Physicians in Times of Need 

Blue Cross and Blue Shield of Texas (BCBSTX) offers its Seasons of Life for Physicians program to medical practices that are experiencing loss through the death of a physician. Eduardo Sanchez, MD, BCBSTX vice president and chief medical officer, says the program's objective is to provide unrivaled, concierge-class customer service to alleviate any unnecessary obstacles that might arise while addressing claims and payment matters following a physician's death.

To ensure all claims are closed, BCBSTX dedicates a provider advocate specialist to each physician's office. Dr. Sanchez says the program creates a one-stop shop that communicates directly with offices. The provider advocate specialist does the following:  

  • Addresses outstanding or open claims,
  • Initiates a claims report for the past six months,
  • Identifies inconsistencies during claims adjudication,
  • Intercepts unresolved claims to facilitate quick resolution,
  • Contacts appropriate medical staff directly for claims involving medical decisions,
  • Coordinates with applicable departments to help finalize claims, and
  • Generates a completion report once it has been determined that all claims have been closed.  

The Seasons of Life for Physicians program also includes assisting retiring physicians with finalizing claims in a timely fashion to ease the closing of their practice. Physicians do not need to be members of BCBSTX networks to receive assistance. For more information about the Seasons of Life for Physicians program or to request help, call the BCBSTX Office of Physician Advocacy project coordinator at (972) 766-8823.

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