A buy–sell agreement describes the terms and conditions for the buying and selling of a withdrawing physician’s ownership interest in a medical practice. Buy–sell terms are found either as a provision of a larger agreement (e.g., shareholders’ agreement, operating agreement, or partnership agreement) or in a separate, freestanding document. Regardless of where the terms are found, they do not typically address the special needs of physicians in their later years of practice, such as the option of working less prior to complete retirement or the opportunity to develop a semiretirement arrangement.
One recommended provision provides the physician with the option to convert to semiretirement status. This enables senior physicians to remain with the practice on terms that meet their changing lifestyles. Often, such arrangements include a part-time work schedule, reduced or eliminated weekend or evening call, or additional vacation time. These benefits are frequently accompanied by compensation adjustments so that the practice’s full-time physicians do not feel that they are financing the semiretired physician’s new lifestyle. For example, a physician who previously worked five days a week and will be working a part-time schedule of three days a week going forward will receive three-fifths of his or her previous salary. Or, the semiretired physician may become an hourly employee to reflect the reduced schedule. Alternatively, the arrangement can be structured to maintain the physician’s compensation, but gradually reduce the semiretirement benefits throughout the retirement period, typically one to three years. These types of packages serve the practice by extending the professional life of the physician and serve the physician by satisfying the desire to transition toward retirement.
More Advice for Making Your Exit
Want to learn more about how to retire from your practice? The ACR’s business manual for rheumatologists, “The Business Side of Rheumatology,” has a chapter that addresses planning a temporary or permanent leave from your practice. Download the manual at www.rheumatology.org/publications under Practice Management Publications.
What’s In It for the Other Physicians?
Although a physician’s semiretirement package may appear to benefit only the physician retiring, the other physicians in the practice actually benefit as well. If a physician is granted semiretired status, the practice’s other physicians can absorb some of the retiring physician’s patient load. This helps the other physicians build their individual practices and increases the likelihood that the semiretiring physician’s patients remain with the practice. In addition, a physician who is unable to partially retire may leave the practice sooner than expected, creating a gap in managerial expertise and call coverage and putting a strain on positive relationship management with patients, hospitals, and payers.
