Transfer of a Medical Practice

The Most Valuable Asset of a Medical Practice: Contracts with Health Insurance Companies

Establishing a new medical practice and securing contracts with health insurance companies is very difficult—it is much easier and safer to take over existing contractual relationships from someone who is transferring their practice. In other words, what is actually sold or bought when a practice is transferred is not so much the equipment or furniture, but rather the contracts with health insurance companies and the established base of insured patients. Experts in the field point out that the existence of valid contracts with health insurance companies is absolutely crucial for both parties during a practice transfer.

Previously, the preservation of these contracts during a practice transfer was uncertain. Health insurance companies were not obliged to conclude a contract with a doctor's successor if the doctor terminated their practice—they granted new contracts only on a limited basis and at their own discretion. Doctors often resorted to various workarounds (e.g., transferring the practice to a limited liability company, where the contracts "survived" the change of ownership) or had to rely on tender procedures to obtain contractual relationships. 

This changed with a legislative amendment effective from 2015, which introduced a legally enshrined procedure for transferring a practice, including its contracts with health insurance companies. The current legislation now significantly protects the continuity of patient care and the value of medical practices—however, it is necessary to meet the specified conditions.

The Law on Your Side: The Right to a Contract upon Practice Transfer

According to Section 17(8) of Act No. 48/1997 Coll., on Public Health Insurance, a new healthcare provider (the doctor taking over the practice) is entitled to conclude a contract with a health insurance company to the same extent as the original doctor, provided that the statutory conditions are met. In such a case, the health insurance company has a so-called contracting obligation—upon the new doctor's request, it must conclude a contract with them within 180 days of receiving the request. 

This obligation applies both to a planned practice transfer (when the original doctor ceases their activities) and to a situation where a doctor dies and the practice is taken over by another person (e.g., an heir with the necessary qualifications). An exception occurs only if the original provider's contract was terminated by the given insurance company—in that case, it does not have to conclude a new contract. However, the vast majority of transfers proceed without this complication.

It is also important to remember the statutory deadlines. The new doctor must submit a written request to conclude a contract with the respective health insurance company no later than 30 days from the date they obtained the authorisation to provide healthcare services (i.e., from the issuance of the regional authority's decision granting the authorisation). If they took over the practice from a deceased provider, the deadline is 30 days from the issuance of the certificate of compliance with the conditions for continuing the provision of healthcare services after the deceased. This ensures that the process is not overly delayed—the new operator must act quickly.

And what about the period between the departure of the original doctor and the signing of new contracts? Fortunately, the law also provides for a transitional period. Until a contract is concluded with the new provider, they have the right to be reimbursed for provided healthcare services under the original contract—but for a maximum of 210 days from taking over the practice. 

In other words, for a certain period, the insurance company will reimburse the healthcare that the new doctor provides to patients, even if they have not yet managed to secure their own contract. This 210-day "safety period" gives the insurance company time to conclude the contract (180 days) and guarantees the continuity of payments throughout the interim period. However, after 210 days, funding would cease without a new contract, so it is not advisable to delay this process.

How to Successfully Transfer a Medical Practice: Conditions and Procedure

To ensure that the new provider is truly guaranteed to obtain all contracts with health insurance companies, the practice transfer must be carried out carefully and in accordance with the statutory conditions. In particular, the following steps must be ensured:

1. Transfer of the entire "enterprise" (practice) – An agreement must be concluded between the original and the new doctor, transferring all property rights related to the operation of the practice. This can be a contract for the sale of the business (practice) or another type of agreement, but it is essential that its content covers a truly complete transfer of the practice to the same extent as it was operated by the original doctor. 

Only then will the law's requirement for the transfer of all property rights be met. (It is advisable to have the contract prepared by an expert—the slightest omission can lead to the transfer not being considered complete).

2. Continuity of authorisation to provide services – The original doctor must apply to the relevant authority for the revocation of their authorisation to provide healthcare services (or for the cancellation of the healthcare facility's registration), and the new doctor must obtain a new authorisation to provide healthcare services in the same field and at the same address. 

The decisions on the termination of the old authorisation and the granting of the new one must be chronologically consecutive. It is therefore advisable to transfer the practice as of the 1st day of the month of a new quarter and to coordinate the entire process with the authorities and insurance companies in advance.

3. Timely submission of applications to insurance companies – As soon as the new provider has been issued an authorisation (registration) by the regional authority, they must, within 30 days of this date, apply to all health insurance companies with which the original doctor had contracts for the conclusion of a new contract for the provision of reimbursed services. 

The application is submitted to each insurance company separately, and the required documents must be attached (typically proof of the new doctor's education and specialisation, proof of liability insurance, etc.). It is important to adhere to the 30-day deadline—after it expires, the insurance company may no longer be obliged to conclude a contract with you.

By meeting the above conditions, the new doctor acquires a statutory right to establish contracts with insurance companies to the full extent that their predecessor had. Conversely, if the practice transfer does not meet these requirements, the new doctor has no guarantee that the insurance companies will conclude contracts with them. In such a case, they would have to apply for a place in the insurance companies' network through a tender procedure—with an uncertain outcome. 

Such a situation poses a risk for both parties: the purchasing doctor would lose the ability to provide care to most of their patients (and thus a substantial part of their income), while the selling doctor would find that the value of their practice has significantly decreased (because the contracts have "lapsed" and the client base may disperse to competitors).

Practical tip: In practice, it is recommended to start addressing the practice transfer well in advance, at least 6 calendar months before the intended transfer. It is ideal to contact the main health insurance company (e.g., VZP) even before submitting the application and to consult on the intended procedure. The insurance company can point out any potential shortcomings and help resolve them in time so that nothing stands in the way of signing the new contract. It is also worthwhile to have an experienced lawyer on hand to oversee the correctness of contracts and deadlines, ensuring that the transfer proceeds smoothly.

Continuing a Practice After a Doctor's Death

A special case of a practice transfer is when the original doctor suddenly dies. Even in such a sad moment, the law ensures that patients are not left without care and that the practice can continue to operate. The heirs of the healthcare facility have the option to obtain a so-called certificate of compliance with the conditions for continuing the provision of healthcare services after the deceased provider and, on this basis, temporarily operate the practice. However, they must act very quickly and in a coordinated manner:

• Within 15 days of the doctor's death, the heirs must notify the regional authority in writing of their intention to continue providing healthcare services and simultaneously notify all health insurance companies. It is therefore necessary to immediately contact the authority and the insurance companies and declare that you want to continue operating the practice.

• Healthcare services must be resumed in the practice no later than 60 days after the death—either one of the heirs who is a doctor themselves will start providing them, or the heirs will arrange for a qualified substitute doctor (a professional representative). The practice must therefore be reopened for patients within 60 days, otherwise the privilege to continue is forfeited. (At the same time, inheritance formalities and agreements among the heirs as to who will operate the practice are also being resolved.)

• Once the heirs obtain the aforementioned certificate from the authority (or a new temporary authorisation to provide healthcare services), a 30-day period begins for submitting applications for contracts to the health insurance companies. Similar to a standard practice transfer, the insurance companies must conclude these contracts within 180 days, to the same extent as the deceased doctor had. During the waiting period (a maximum of 210 days from the death), the insurance companies reimburse the care provided even without a new contract, so patients have a continuous right to have their care covered.

In summary: Even in the event of a doctor's sudden death, the practice can be preserved and transferred to a new doctor if the heirs meet the above deadlines. This ensures that the contracts with insurance companies "survive" the original provider and the practice can continue smoothly (whether it is taken over directly by an heir who is a doctor or subsequently sold to another interested party). For the bereaved, this is obviously not a simple process—which is all the more reason to seek legal assistance in such a situation to ensure all formalities are completed correctly and on time, especially given the short deadlines.

Transferring a Practice with Certainty – Planning and Legal Support

Transferring a medical practice is a complex matter involving legal, administrative, and human aspects. As a doctor-client, you may be planning your retirement and want to ensure that your patients continue to receive care and that the value of the practice you have built over a lifetime is not lost. Or, you may be a doctor preparing to take over a practice and need assurance that everything with the insurance companies will be in order from day one. In both cases, thorough preparation and adherence to the rules are the keys to success.

• Plan ahead: Start addressing the transfer several months in advance. Agree on the terms and schedule of the transfer with your successor (or predecessor) in a timely manner. Leave a buffer for potential delays in official decisions, etc.

• Involve experts: Enlist the cooperation of an experienced lawyer (ideally one specializing in healthcare law). They will help you prepare a solid contract for the transfer of the practice, address all important points (from the handover of documentation to obligations towards employees), and avoid mistakes that could jeopardise the transfer. They will also oversee communication with authorities and insurance companies to ensure nothing is missed.

• Communicate with insurance companies: Major health insurance companies (e.g., VZP) have procedures for practice transfers published on their websites and often offer consultations. Do not be afraid to ask them specific questions in advance. By announcing your intention early, you can prevent potential misunderstandings and gain their cooperative support during the transfer.

• Think about the patients: Inform your patients about the planned change (of course, only when everything is certain and approved). Reassure them that the practice will continue and their care will not be interrupted. A good relationship with patients is also part of the practice's value—by handing them over to good hands, you strengthen their trust in your successor.

Therefore, do not underestimate the process of transferring a medical practice. The contracts with insurance companies that you have built over the years deserve proper attention—the future of your practice under a new doctor depends on them. However, by following the legal procedures and with the help of experts, you can hand over your practice with peace of mind, knowing that your patients will be cared for and your professional legacy will continue.

Do you need help with the transfer of your medical practice? Do not hesitate to contact our Prague-based law firm—we will be happy to provide you with all the legal support you need to ensure the practice transfer proceeds smoothly, in compliance with regulations, and without unnecessary risks. Contact us, and together we will ensure that the value of your practice is preserved for the next generation of doctors.