Jim Stroud: Warren, Averett, Kimbrough & Marino
Assuming a physician has done what is needed to prepare personally for retirement, he next must prepare the medical practice for his departure. "A physician should think of planning for his practice as a legacy," said Jim Stroud, a member of Birmingham CPA firm Warren, Averett, Kimbrough & Marino, LLC. "What are you going to leave behind for your staff, your patients, the hospital and the community?"
According to the American Medical Association, physician groups that coordinate succession planning before anyone is ready to retire can have a smooth transition for the retiring physician and the practice. A good succession plan will include policies for decreasing a physician's activity in the practice, such as cutting his or her call schedule, and how to structure a retirement buyout or compensation plan.
"In multi-physician groups, the doctors are usually close to the same age," said Mary Elliott, also a member of Warren, Averett, Kimbrough & Marino. "You need a transition plan that outlines who leaves when, and so on. You need to get all that out on the table." Elliott added that the physicians need to begin the planning several years ahead so the group can be ready to pick up the slack for the departing physician.
How well the group handles the outgoing partner's transition is a function of how well they transfer the work load. That may mean recruiting a new physician to join the practice. Finding the right person may take some time. Stroud said if the practice has time to recruit a new staff member prior to the retiring physician's departure, the older physician can help the new doctor get settled into the practice. "The senior doctor can say things about the younger doctor that the younger doctor can't say about himself," Stroud said. "He can laud him in the community and take him around and get him settled. Part of his legacy is teaching the young doctor the business."
The scenario for solo practitioners is different in that they basically have two choices, Elliott said. "They can either close the practice and walk away or they can recruit someone to take over," she said. For those who want to sell the practice, it is recommended that they begin transitioning to the succeeding physician several years ahead of retirement. That gives the new doctor time to buy the practice and also ensures that the retiring physician receives the full value for his or her practice. The retiring physician also will have sufficient time to give notice of his leaving to his staff and his patients.
Regardless of the road you take for retiring from practice, Stroud and Elliott stressed the need to get someone to help you prepare for this milestone. "Make sure you get good advice and make sure you follow it," Stroud said.