When you or one of your partners decides it is time to retire, what is going to happen to your practice? Succession planning in ophthalmology is part of sound fiscal management. It’s something that, according to a report from Doctor’s Digest, is best addressed three to five years before the retirement takes place.
If you’re a solo practitioner planning to retire, the focus of your plan will be to find someone to buy your practice or a merger partner, the report stated. If you’re part of a group practice, a predetermined buyout agreement should be established in order to determine the compensation that you will receive for your portion of the net book value, accounts receivable and goodwill that you own upon retirement.
If you’re planning to sell or bring a partner in who will eventually take over the practice, the classic deal, the report stated, would be to begin this process three to five years in advance in order to ensure that the partner and practice are a good fit. If developing a plan where other partners are going to buy you out, time is necessary to develop a written agreement that clearly spells out the terms of the buy-sell agreement regarding not only compensation, but also the transfer of patients, the scheduling of the terms of this buyout and the subsequent ownership of the group.
Another option, upon retirement, would be to simply “close shop.” However, closing a medical practice is hardly simple. From releasing patient records, purging confidential information, informing patients that they will need a new provider, and maintaining liability insurance for a time after the closure—all of this can be very daunting. This option requires a lot of careful planning that includes a tremendous amount of time and preparation.
Without a strong succession plan in place, the relationships with those you work with and the ongoing success of the practice you’ve worked so hard to build are at risk. For more information about developing a succession plan and other fiscal management topics, contact us.