After years, or decades, of carefully building a Nephrology practice, most physicians want to be just as intentional about what will happen to their practice and your patients when it’s time to retire. Early retirement planning and open communication can help you find a buyer for your practice, ease your transition to retirement, ensure your practice thrives and still provide effective care for your patients.
Tower Physicians Solutions can help ease your worries as you begin to plan for retirement.
1) PLAN AHEAD.
By planning ahead, a retiring physician can maximize the value of the practice by selling at a premium instead of relying on the market value on the desired date of retirement. Proper planning may provide the retiring physician an income stream from the practice well into retirement. Finally, planning ahead will allow smoother transitions for patients, who may feel that they are forced to search for a new medical provider on short notice.
2) CONSIDER ALTERNATIVE EXIT PLANS.
As mentioned, the easiest exit plan for a retiring physician is to simply close the medical practice. This strategy should be the last resort for a retiring physician because it completely disregards the goodwill developed over the course of the physician's career. Ideally, the retiring physician would locate a third party buyer for the practice and sell it to the buyer at fair market value. If this is not possible, other alternatives to consider may include: sales to employees; sales or gifting to family members; or planned liquidation. Thus, planning allows for exploration of many options beyond simply closing.
One option for a physician-owner who is ready to move on is to join or sell to a large group practice. Nephrology Associates of Northern Illinois and Indiana, the parent company of Tower Physician Solutions often takes on smaller practices in need of succession assistance. Succession in a group practice, can mean a physician partner to buyout. This option may offer the benefit of maintaining the practice’s name, locations and culture. Another option is to sell the practice to a hospital or health system.
3) DO NOT ASSUME A LARGE PRACTICE GROUP MEANS NO NEED FOR SUCCESSION PLANNING.
Having a greater number of physicians in a group practice does not mean that no succession planning is needed. The succession issues of a large practice may be different from the issues of a solo practitioner, but they are still inherent. In fact, there may be more issues, due to the size of the practice. As a result, succession planning is essential. For example, if several physicians in a group practice decide to retire within a few years of one another, it very well may create a hardship on the remaining physicians. Forming a plan to transition patients from the retiring physicians to others within the group is pivotal to the continued success of the practice.
4) REVIEW EXISTING SUCCESSION PLANS PERIODICALLY.
Physicians should review and revise, as necessary, their succession plans from time to time. What may have been adequate for a small practice may no longer be appropriate when the practice has grown. Also, a physician may have intended to sell his or her practice to a certain person, such as his or her child, but the they could become an unsuitable candidate because of his or her specialty or pursuit of a different career.
Succession planning is important for the continuation of any business, but when it comes to a medical practice, it is essential to maximize the value of the practice and smoothly transition patients to new providers.