Orderly succession: The best way to plan

Preparing in advance for a physician's retirement can help ensure the longevity of the practice and a smooth transition.

By Mike Norbut, AMNews staff. Sept. 5, 2005.

Ask physicians about their financial goals, and almost all of them will list a comfortable retirement among their top priorities. Many even have a specific age in mind for when they will leave practice, based on the income they're earning and the money they have saved.

Even with that advance notice, however, many groups are still blindsided when a senior partner announces it's time to slow down and begin the trek toward retirement.

Without written policies for how to ratchet down a physician's activity in the practice and how to structure a retirement compensation plan, a harmonious group can quickly morph into a hotbed of political infighting, consultants said. Physicians who have a personal stake in the situation are not likely to agree with other partners' decisions regarding a retirement package, which could lead to a splintered practice and production losses.

Groups that coordinate succession planning before anyone is ready to retire, though, can provide for a smooth transition for both the physician and the practice, consultants said. The doctor will know exactly what to expect and the practice will not have to scramble to decide how to deal with a physician who decides it's time to hang up the lab coat.

"A good transition plan is like a good compensation plan. No one will be completely happy," said Bruce Johnson, a Denver attorney and principal with the Medical Group Management Assn. Health Care Consulting Group. "You want to have, if possible, a consistent set of rules applied uniformly."