How to retire and keep your medical practice independent

A 2007 study by MassMutual found that 46% of business owners who expected to retire within five years had not found a suitable successor, while almost one-third of respondents had no plans to retire, ever. The reality is that succession planning can take years. Because of this, selling to a larger health system can be the most appealing and easiest option for practice owners who are thinking about retiring and don’t have a concrete plan for their business.

It doesn’t have to be that way, though.

There’s a way to retire and keep your business in good hands — it just takes some planning. Meroka helps independent medical practices stay independent by empowering physicians to choose ownership over employment.

Read on for ways to plan for retirement while keeping the practice you worked so hard to build independent.

1. Define what retirement looks like for you

It’s never too early to start having conversations about succession planning. In fact, starting earlier and allowing for a gradual transition can mitigate risk and will set everyone, from you, your staff to your patients, up for success.

What does your ideal retirement look like? Do you want to stop practicing medicine but maintain some involvement with the practice, or do you hope to be fully removed from the business?

In how many years do you want to retire? Is it five years away or 15 years away?

Clarifying what you want from retirement will allow you to more easily work backward and execute a smooth succession plan.

2. Find trusted advisors

There are a lot of bad actors out there — people who will promise the moon without any regard for the nuance of your practice. 

If you know of other doctors in your area who have transitioned ownership of their practice, talk to them to understand what their priorities were, what the process was like for them, who they worked with, and anything they would have done differently in hindsight. Aim to have at least six such conversations to develop a fuller picture of what succession can look like.

These conversations should point you toward lawyers, accountants, and financial advisors who can help you develop a realistic succession plan for your business.

3. Think about a successor

Who takes over your business is an essential piece of the succession planning puzzle. Because your ideal scenario may not play out, it can be helpful to define your first-choice and second-choice outcomes. Below are some common approaches to finding a successor:

1. Look internally

Depending on the size of your organization, there may be a more junior doctor who has leadership skills and is interested in taking  over the business. In doing so, assess their degree of readiness and any related timing considerations — will they be ready to take over the business in 12 months? Are there any responsibilities they can take over now? What will be the hardest things for them to learn? This will help you identify gaps in their knowledge and experience and, if needed, hire additional support to ensure a smoother transition.

2. Look to local practices

Joining forces with another local, independent practice can be a very appealing succession option. Doing so can maintain the quality of care your patients have grown accustomed to and also gives the practice leverage when negotiating with payors.

3. Look to regional networks

Contact any regional or national specialist organizations that prioritize independent practices. Meroka is one such example, as is the newly formed American Independent Medical Practice Association (AIMPA). Doctors within those networks may be able to provide recommendations for navigating succession planning without compromising your practice’s independence.

4. Access wealth from your life’s work

If you just sign your medical practice over to a more junior doctor without any formal sale, you’re leaving money on the table. An employee share ownership plan (ESOP) is an underutilized and very appealing tool that allows for business owners to generate wealth while ensuring the continued independence of their business. It allows you to earn money from selling your practice, facilitate an internal transition, and make your practice employee-owned without disrupting its day-to-day operations or compromising on your values.

At Meroka, we’re helping independent physicians push back against industry consolidation by helping doctors sell their business to an ESOP, supporting physicians, patients, and local communities alike, so you can do right by your practice.