As the physicians of the baby-boomer generation approach their golden years, many have achieved career and financial success and are looking for an arrangement that will allow them to ease into retirement. While you may not be ready to hang up your white coat permanently, you may be interested in working fewer hours and taking less call. Retirement requires more than simply removing your name from the office door, however. If you are a physician nearing retirement, it is important that you plan, discuss, and make contractual agreements that will allow you to accomplish your goals and changing needs.
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Explore This IssueMarch 2012
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How Is Your Practice Structured?
The structure of your practice may determine your retirement options and the legal documents that govern these choices.
If you are the sole physician in your practice, for example, you have two options: Dissolve your practice, or sell it to another physician. If you sell your practice, you will need a purchase agreement that describes the rights, responsibilities, and liabilities (e.g., obligations to employees, accounts payable, malpractice causes of action) of the purchasing and selling parties.
If you are an employee of a medical practice, your employment agreement should outline the procedure and time frame for retirement. The agreement may provide language similar to the following: “Employee or Practice may terminate this Agreement without cause upon X days prior written notice….”; however, retirement may be addressed separately from the clauses governing termination without cause.
If you are a shareholder of a corporation, a member of a limited liability company (LLC) or a partner in a partnership, the shareholders’ agreement, LLC operating agreement, or partnership agreement, respectively, should address the rights and responsibilities of the retiring owner and the practice.
Beware of Existing Obligations
Physicians must not forget that obligations that exist under contracts and laws do not necessarily go away at retirement. Even a retiring physician may be bound, either directly or indirectly, by a contract that extends beyond the date of retirement. Is the retiring physician a party (or a guarantor) to a line of credit or a loan for an office build-out or equipment? The retiring physician must also act in accordance with laws, in particular those governing patient medical-record retention and patient notification. Even for a retiring physician, many legal and ethical obligations continue. A well-planned course of action can prevent issues from surfacing postretirement.
Your Buy–Sell Agreement
It’s important that you make contractual agreements that will allow you to accomplish your goals.