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Are you mentally ready to retire?

Successful retirements can hinge on whether physicians know what they want to do with all the time freed up from no longer practicing.

By — Posted Oct. 8, 2012

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For many physicians, financial planning for retirement begins during the first years of practice. But what about preparing for the psychological transition to retirement — that inevitable time when the practice of medicine is no longer the primary focus of your time and energy?

“Retirement — the very word conjures up drastically differing notions,” said Wayne M. Sotile, PhD, author of The Resilient Physician: Effective Emotional Management for Doctors and Their Medical Organizations. “Will it be a challenge, an opportunity or a relief? Is it an ending or an exciting new beginning?”

Some physicians make plans to leave medicine completely, eager to immerse themselves in travel, hobbies and family. Others ease into retirement by continuing to practice medicine part time, doing locum tenens or using their years of experience to work in health care administration, consulting, teaching, writing or volunteering.

An estimated 14% of practicing U.S. physicians plan to retire during the next five years, and 34% in the next decade, according to the Jackson Healthcare’s 2012 Physician Practice Trends Survey. Today, about 20% of practicing physicians are 65 or older, according to the American Medical Association. Of physicians in this age group who are practicing medicine, 56% plan to retire in the next five years.

For the physicians in that position, a scary question can be: What am I supposed to do now?

“I encourage people to think of retirement as being that stage in the journey that I am finally resourceful enough to be able to do more of what I most love doing,” Sotile said. “The surprise for many physicians is that doing so typically involves choosing to continue to work in medicine in some form.”

With “a projected shortage in medical manpower, there are many opportunities [for older physicians] to work part time or full time in medical practice, medical education or organized medicine,” said Richert Quinn Jr., MD, of Greeley, Colo., chair-elect of the AMA Senior Physicians Group. After 25 years as a general surgeon, Dr. Quinn led a medical liability prevention program in Colorado for 15 years and has served on the board of directors of North Colorado Medical Center in Greeley for 10 years.

“There’s a lot to think about” before retirement, said Norman Clemens, MD, professor emeritus of psychiatry at Case Western Reserve University and training psychoanalyst in the Cleveland Psychoanalytic Center. “You have to consider your own health and financial status, and whether you have the means to support yourself and your family and lifestyle. And then, what do you want to do with your time?”

Dr. Clemens embarked on a “planned retirement” at the age of 74 after the sudden death of a close friend and colleague who also had a solo psychiatric practice.

“Another psychiatrist-psychoanalyst and I, coping with our own shock and grief, had the task of going through our colleague’s practice records, contacting her patients and helping them deal with their reactions and ongoing care.

“I decided then that I didn’t want to inflict this on my patients. And I really wanted to quit while I was still on my game,” Dr. Clemens said. He then began to cut back slowly on his practice schedule.

Easing into retirement

Retirement doesn’t have to be an all-or-nothing proposition — either you work or you don’t. Instead, physicians can find opportunities, like Dr. Clemens, to reduce their hours gradually, rather than jump into full retirement.

“If you can work out the logistics, working part time is a great way to transition into retirement,” said Jeffrey B. Milburn of the MGMA Health Care Consulting Group, a division of MGMA-ACMPE, the entity formed by the merger of the Medical Group Management Assn. and the American College of Medical Practice Executives.

Today, many hospital systems have a structured retirement plan that allows physicians to retire all at once or transition into a part-time position, Milburn said. For a physician in a group practice, available office space, an acceptable compensation formula, and the cost of liability insurance and other expenses may need to be considered.

One option is a “shared” practice where multiple physicians work part time, Milburn said. “That can work for a couple of years,” although typically within five years, one doctor’s situation will change, altering the partnership.

A group practice physician may have the option to resign his or her partnership, and to continue to stay with the group as an employed doctor with a yearly contract.

“It is also critical that the departing physician have a good grasp of their personal financial situation for the postretirement period,” Milburn said. “When a physician doesn’t have adequate funds for his or her lifestyle or other obligations, they sometimes make unreasonable terms from the practice.”

Primary care physicians often are the most likely to continue working after age 65, Milburn said. Surgeons, however, may need to “scale back in the complexity of the surgeries they’re doing.” For example, a gastroenterologist may do only colonoscopies instead of surgeries, or “scale back on the clinical intensity of the times and complexity of procedures.”

In some specialties, the liability insurance may be so high that “it doesn’t warrant part-time practice,” although these costs vary by specialty and state, Milburn said.

When considering whether to work part time, “an awful lot depends on the specialty,” said Elizabeth Kanof, MD, a retired dermatologist from Raleigh, N.C. “Some specialties are more stressful than others. You also have to weigh the financial repercussions carefully.”

Deciding how to retire

When Dr. Clemens cut back on the number of patients he was seeing, he soon found that his expenses were not decreasing, and in fact remained only a little less than when he was seeing patients full time.

“It was then that I began to think that my day and my time are worth something to me. You don’t know how many years of good health you have. You no longer have a sense of an infinite future,” said Dr. Clemens, who no longer sees patients but keeps busy writing a regular column for the Journal of Psychiatric Practice, serving on the board of regents for the American College of Psychoanalysts, supervising residents one or two hours a week and serving on the residency education committee at University Hospitals of Cleveland.

“I think [retirement] has worked well for me,” Dr. Clemens said. “Being a psychoanalyst, a psychiatrist and physician are so much a part of my sense of self, to give it up totally would have left me feeling pretty empty. These [activities] are satisfying, but I don’t have the responsibility of direct care of patients. I’m not on call all the time. I’m also glad to be able to pick up and visit one of my sons out of town when I want to.”

“Those physicians who are happiest in their retirement are those who continue to be engaged with their colleagues who speak the language, and engaged in providing some sort of advice or medical care,” Sotile said. “To do that which you still have passion for keeps you involved in a medical community which you belong. Affiliation is important in promoting psychological well-being. Avoid, ‘I’m going to work until I stop and then I’m stopping.’ A year later, these physicians are bored, depressed and feeling aimless.”

Having strong relationships, and other interests and hobbies other than medicine, also can help ease the transition into retirement.

“In your 30s or 40s, begin to start preparing for a diverse lifestyle as a basis for self-esteem,” Sotile said. “You are going to want more of the deep and comfortable affection with people who matter to you. But you can’t get affection unless you have deep and comfortable inclusion with people. The best way to prepare yourself for a meaningful retirement is to deepen your relationships with those who matter most.”

“It’s essential that physicians develop an avocation years before they are even thinking about retirement — something that interests them deeply, something that they can give a little bit of time to while they are working,” said Dr. Kanof, who divides her time between medical and nonmedical pursuits. She serves as co-chair of the Judaic Collection, a permanent exhibit — founded by her father, a former physician — at the North Carolina Museum of Art, and serves on the board of directors of the North Carolina Medical Society Foundation. She also founded the North Carolina Medical Society Leadership College.

“If you have allowed medicine and family to become your entire life with no other interests, when retirement happens, you are going to have a very, very difficult time,” Dr. Kanof said. “When your kids are young and at home, most young physicians want to spend as much time as possible with their families. Once the kids are in middle school — with their own interests and activities — that’s the time to seriously think about that avocation.”

The AMA Senior Physicians Group offers many resources for physicians 65 and older. These include a database of volunteer opportunities and information on state licensure and liability issues, including requirements for volunteer practice. There also are opportunities for mentoring and teaching young physicians, engaging in policy development and enjoying fellowship, locally and nationally, Dr. Quinn said.

“I just think these are the golden years,” he said.

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ADDITIONAL INFORMATION

Is your practice ready for a physician to retire?

If one of the partners in your group announced his or her retirement today, is the practice prepared — financially and operationally?

“In a private smaller or medium-sized practice, when the physician starts thinking about retirement, many times they don’t tell their partners,” said Jeffrey B. Milburn of the MGMA Health Care Consulting Group. “It’s almost like a secret, although probably not intentional. The doctor is still trying to decide — do I want to retire? Should I slowly cycle out, or do I leave all at once?”

Whether or not physicians are willing to share or commit to retirement plans in advance, “the practice needs to start thinking about it,” Milburn said. There should be sufficient planning and agreements in place to ensure a smooth transition for the retiring physician, the other group partners and patients.

Ideally, a practice has a strategic plan looking ahead for many years, which is updated continually and includes specifics on how a physician buys in and out of the practice, the age of the physician partners, patient demographics, and how the market and government regulations may impact the practice in the future.

Experts say contractual agreements should exist between individual physicians and the group that outline the specifics of the partnership and address:

  • The sale of stock.
  • Treatment of accounts receivable.
  • Treatment of physician good will.
  • Specific terms governing retirement and/or termination.
  • The group practice’s liabilities, leases and pending litigation.
  • The value of real estate, office furniture and equipment.
  • Terms regarding reduction and/or cessation of patient calls.
  • The terms of a noncompete agreement (if one exists).
  • Professional liability once the physician leaves.
  • Any penalties for early retirement or incentives for continued practice.
  • Anything personal for the physician that is funded by the office.

In addition, a group practice should perform financial modeling of the current retirement or transition arrangement to determine the impact of retirement on the group.

“If you have a crowd of doctors in their 50s, will the buyout be affordable, or will the remaining owners balk?” Milburn said. Without appropriate planning, “you could have a buyout that is so onerous that the younger physicians can’t afford to buy out the senior partners.”“Ideally, that buy-sell agreement should be finalized well before a retirement occurs. It also should be updated frequently,” Milburn said.

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External links

AMA Senior Physicians Group (link)

Jackson Healthcare’s 2012 Physician Practice Trends Survey (link)

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