Key topics covered in this article:  

  • A records retention policy helps outpatient and long-term care providers manage patient, financial, compliance, and administrative records consistently, ensuring readiness for audits and surveys.
  • Policies should define retention periods, trigger events, and legal hold processes while aligning with state laws, licensure requirements, and federal regulations like HIPAA.
  • Proper retention practices reduce uncertainty, streamline operations, and safeguard privacy and financial integrity across healthcare facilities.

 

Ambulatory care providers, nursing care facilities, and behavioral health clinics generate an enormous number of records every day. For this reason, most outpatient healthcare organizations implement a records retention policy to set rules on what to keep, for how long, and where it belongs.  

When those rules are consistent across the organization, providers are better positioned to manage patient documents, financial records, and respond to audits and surveys. There is no one-size-fits-all solution, but most providers follow similar guidelines for building a new policy or updating an existing one. 

 What Is a Records Retention Policy?

A records retention policy is a written set of rules covering how records are created, stored, accessed, retained, and destroyed. The most effective policies set clear standards, assign ownership, and give staff a schedule they can follow. 

The policy also defines what counts as a record. In healthcare, that can include hundreds of document types across clinical, billing, HR, compliance, and operations. Most policies avoid listing every single document. Instead, they define records broadly and rely on a retention schedule that groups records by category and record type. 

 From there, the policy explains which systems are in scope, which system holds the official version when the same information exists in multiple places, and the trigger events that start the retention clock. It also includes a legal hold process that pauses routine destruction when litigation or an audit is pending. 

 As demand for outpatient care rises and operations scale, a records retention policy helps providers manage records consistently across locations and be prepared for what’s next.  

 Record Retention Guidance

Record retention can be organized a few different ways. These categories are a starting point, and they highlight the records that tend to drive the most questions and requests. Each healthcare facility will still need to align its schedule with state rules, licensure requirements, and contract terms, etc. It’s important to confirm the details with relevant advisors.  

Financial Records — Most providers can organize finance records into four buckets:  

1) accounts receivable 

2) accounts payable  

3) employment tax 

4) assets.  

 This generally includes invoices and vendor statements, bank deposit support, Forms 1099, payroll tax filings, and fixed asset documentation, along with the records needed to support year-end reporting. 

 Payroll belongs here, too, under employment tax. Even when managed by HR or a third-party provider, the retention policy should specify what gets retained, where it is stored, and who produces it when requested. 

State rules may vary, but these are common retention periods for key financial records: 

  • Permanently: Year-end financial statements, tax returns, depreciation schedules and fixed asset ledgers, audit reports 
  • 7 years: Accounts payable ledgers and Forms 1099, payroll records, invoices 
  • 4 years: Employment tax records, per the IRS 
  • 3 years: Bank statements, credit card receipts, sales and service records, inventory records 
  • 2 years: Bank reconciliations 

Patient Records — State law drives most patient record retention requirements, and rules vary by state and licensure setting. A retention schedule lists the retention period for common patient records, including clinical notes, diagnostic reports, and other health records stored in the EHR.  

 It’s helpful to define the trigger event that starts the retention clock, too, such as the last encounter, discharge, or last date of service. Common exceptions to general records rules include minors, deceased patients, transferred care, and facility closures.  

 For providers that submit cost reports to Centers for Medicare & Medicaid Services (CMS), records usually need to be kept for five years after closure of the cost report. For Medicare Advantage arrangements, 10 years may apply based on contract terms. 

 Compliance Records — Compliance records include policies and procedures, training records, incident documentation, internal audits, corrective action plans, and privacy and security compliance documentation. This category can also include cybersecurity and internal controls, including risk assessments, access reviews, incident response records.  

 Importantly, any HIPAA-related documentation must be retained for six years from the date of creation or the date the document was last in effect, whichever is later. Some employee exposure and occupational health records have much longer retention requirements, so facilities often coordinate retention rules across HR, employee health, and safety. 

 Administrative Records — Administrative records cover contracts, leases, vendor agreements, governance documents, insurance policies, and facility and operational documentation. Some HR records fit here as well, including personnel files and hiring documentation, while payroll and employment tax records are typically treated as financial records. 

 As a baseline, many providers keep entity formation and major governance records (like annual reports) permanently, and retain expired contracts and leases for seven years after termination.  

 Special Considerations   

  • Legal holds: Destruction pauses immediately when litigation, a significant audit, or a reimbursement dispute is pending, and the hold applies across all systems. 
  • Backups vs. archives: System backups are designed for disaster recovery, not long-term retrieval, so the policy should have a different way to archive records. 
  • Multi-state operations: When state requirements conflict, default to the longest applicable requirement for that record type and facility. 

Looking Ahead

A records retention policy is most useful when it removes uncertainty. It tells staff what the official record is, how long it needs to be kept, what starts the clock, and how destruction is handled when the time comes. For outpatient, nursing care, and behavioral health providers, it makes audits, surveys, and patient requests easier to manage, and properly documents procedures regarding privacy and financial integrity. For more information, contact the PBMares’ Healthcare team, led by Partner Jonny Rosch and Senior Manager Reid Peterson.