Partial Retirement: Yes, You Can Make It Happen!
Approaching retirement but not ready to stop practicing? You’re not alone. Many physicians struggle with going from “all” to “nothing.” But there is a middle ground: partial retirement. Slowing down, not stopping. In our last post, we discussed what partial retirement might look like, along with options for what to do next. Now, we’ll get to the how-to.
If you’re a solo practitioner who wants to retire, you simply sell your practice and negotiate an employment agreement with the new owner. If you’re in a group practice, the challenges of partial retirement are different. “The concept of partial retirement is often overlooked by groups when structuring their co-ownership agreements,” says Robert J. Landau, JD, who spoke about the logistics of partial retirement at AAO 2017. Orloff agrees. Group practices must anticipate retirement potential and have financial models that forecast monetary impact on the group, he says. “A reduction in an owner’s workload can have a significant, even substantial impact on the group’s coverage and other operations,” Landau adds.
First, does your practice have a policy regarding partial retirement? If so, what is it? Some groups like to have a written policy because it reduces the potential for disputes. They vary, but typically, they may:
- Take a “full-time or nothing” approach.
- Prohibit a partner from reducing their duties until a new physician is hired. This isn’t as common, Landau points out, because many times, partial retirement of one physician doesn’t justify hiring another full- time position.
- Allow senior physicians to partially retire only if the practice employs a minimum number of full-time physicans.
Other groups eschew a formal policy. This may seem ill-advised, but it’s actually not. It allows the practice to negotiate the terms of partial employment at the relevant time, based on the practice’s circumstances—financial and otherwise—at that time.
Finally, there’s “in between” approach, when a physician formulates his or her own partial retirement plan, sometimes within predetermined, written parameters. They present it to their partners, and the group then accepts, rejects, or modifies the plan. “The physician should include an adjusted compensation arrangement in [the] proposed plan to present for the groups consideration and approval, notes Landau.
At the least, Landau suggests that groups establish some basic eligibility guidelines for partial retirement. It might include a minimum age and a minimum number of years of service (55-60 years old and 15-20 years of service is typical, he says). Remember to include provisions for disability, time limit of phase-down, or renewal on a year-to-year basis. That gives the group frequent opportunities to assess the arrangement’s impact on the practice and adjust if necessary.
How your partial retirement affects your partners falls into four major categories:
Partial retirement comes in many varieties, which cannot be determined ahead of time. For that reason, “it is not advisable, or even possible, to predetermine what compensation adjustments may be appropriate,” according to Landau. Some practices look for volunteers within the group who want to increase both their duties and their compensation. That’s often ideal because the other physicians’ compensation arrangements remain unaffected. Other practices pay the partially-retiring physician a fixed amount regardless of productivity. And still others simply pay an hourly rate.
When adjusting compensation to reflect a reduced workload, don’t forget:
- Overhead: what is a proportionate share?
- Deferred compensation: Payment should be delayed until full retirement, Landau advises.
- Goodwill/accounts reveicables: Value these as of the day that partial retirement begins, not before.
Should a physician who is partially retiring—and eventually fully retiring—participate in decisions that increase the potential financial liabilities and risks that impact the full-time partners more significantly? Some practices say no: for example, a physician on the way to retirement could vote to buy expensive new equipment. The other physicians will be on the hook for payment long after that partner leaves. On the other hand, many practices value a more mature physician’s experience and input regarding management and administration.
Should the partially-retiring physician be forced to sell his or her ownership interest back to the practice? If so, at what point? If later, when exactly will the group value the physician’s interest? Many buyouts are partially productivity based, says Landau, and if those shares are valued at full retirement, the physician may “suffer a substantial loss in value of his or her shares.”
The impact of partial retirement on the group’s other physicians isn’t just financial. They may have to take over your management duties, and they’ll have to cover your nights, weekends, and on-call duties. “While an argument can be made that a partially-retiring physician’s reduced work schedule will likely result in increased share of income to the other physicians in the group, many established group members do not want to trade a heavier workload and increased call duties for increased compensation,” explains Landau.
Other than looking for a volunteer to take on the work for additional pay, another solution is for the group to agree on a value of the practice’s call obligations. Then, each physician receives a proportionate share of that value, based on the amount of call that they do. If the partially-retiring physician does no call duties, they get no share of the value.
But Really, How Are You Feeling?
One of the first things you ask when you meet someone is “So what do you do?” So it’s only natural for much of your identity to be “ophthalmologist.” But this can present some emotional problems when it comes to slowing down. “Physicians are as entitled as anyone else in society to retire, or at least slow down, after 35 years,” says Orloff. Its “amazing how hard it is for physicians to accept this—more than any other profession,” he says.
It can be hard on your self-esteem to realize that your skills are not as sharp as they used to be. It’s also hard—and scary—to accept that the future won’t continue infinitely, even thought you knew that all along. You may have feelings of guilt over “abandoning” patients, some of whom you’ve been treating their whole lives. They’ll start to ask whether you’re retiring soon, and this is “directly proportional to your amount of gray hair,” Orloff quips.
Keep this in mind: you may be a surgeon but you’re not only a surgeon. As an ophthalmologist, you have a valuable skill set that is relevant and will be in demand. “Work, paid or unpaid, provides a sense of purpose, being relevant, feeling connected, and needed, [all] while keeping the mind engaged,” explains Orloff.
Finally, count your blessings that you have a choice in the matter. You could have mandatory retirement date: commercial pilots must retire at age 65.
Brain Drained? Here’s Help.
You may think about your physical health every time you look in the mirror, but do you think about your brain health as much as you should? Probably not, says Dee O’Neill, MS, LPC, a brain health expert at the Center of Brain Health of UT Health and AAO 2017 panel member. Your body is important, but “when was the last time you had a brain checkup?” she asks.
If you’re suffering from brain drain, you may feel stressed, overwhelmed, or unproductive. We know that stress is bad for brain health and performance. Chronic stress dampens neural connections, increases the rate of cell aging, and causes brain changes that may contribute to anxiety, depression, and even addiction, according to Harvard Health.
But stress is not always a bad thing.
Sure, there’s distress. But here’s another kind of stress called eustress, and it’s actually good for you. Examples include the stress you may feel when receiving a promotion with increased responsibilities—think buying in as a partner, taking educational classes, and if you plan correctly, retiring.
Feeling overwhelmed is usually due to information overload or multitasking, says O’Neill. To combat constant stimuli, O’Neill suggests that you step away, unplug, and disengage for at least five minutes. She also recommends setting up your day in way that’s brain friendly. Do the tasks you’re dreading, or that take the most concentration, first, so you can allocate your prime brain time to them. Studies suggest that for most people, peak productivity occurs in the late morning.
What else can you do to maintain tip top cognitive function for as long as possible? O’Neill keeps sugar intake low to reduce inflammation in the body, takes probiotics (because there’s a brain-gut connection), and supplements with Omega-3 fish oils. But overall her motto is simple: “Eat, sleep, move your feet.”
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