Hard to believe, but only two years ago many of us were looking at our investment portfolios with smiles instead of frowns. If you had money in the stock market or real estate, you probably thought you were doing alright. Better than alright, even. Maybe you planned on an early, comfortable retirement — or maybe you actually took that step and put the working world behind you.
Many physicians, especially those over the age of 50, had accumulated a sizeable nest egg and moved away from daily or active practice to pursue other dreams. Yet with the collapse of the economy, a number of those physicians are finding they need to return to medicine.
It’s time to rethink what retirement means for you. Whether your retirement plans have been derailed or just delayed, it’s important to know what your options are for “un-retiring.”
Many roads to un-retirement
Are those monthly statements from your broker less promising than they were a couple of years ago? It may not be much comfort to you now, but it’s important to know that you’re not alone, says Kurt Mosley, vice president of business development for Merritt Hawkins & Associates, a physician recruitment firm, and Staff Care, a locum tenens staffing firm for the healthcare industry.
“We’re seeing a lot of things combining to create this extension of physicians’ careers,” says Mosley. “Part of the problem was some physicians not putting enough away in 401(k)s. We also saw a lot of doctors who invested in real estate, and that market is struggling right now. So a lot of our physicians are not able to move. In some cases they were thinking of moving, but they’re upside down [in the mortgages on] their homes.”
For a lot of specialists, there is concern not only over the current economy but also what the future may hold. “In the specialty arena, potential CMS cutbacks loom for specialists — up to 30 percent in some cases,” says Mosley. That could drastically affect a practice’s bottom line and put immediate plans on hold for those physicians who were depending on income from their final working years to fund their retirement.
Still other physicians may find their retirement delayed because of circumstances that have nothing to do with the economy. Mosley tells the story of one physician who had planned his retirement so well that he actually notified his partners years in advance of the actual date on which he would be leaving. Then the physician got divorced and remarried. “All of a sudden he had two children that came with his new wife, and he was responsible for them,” says Mosley. “That changed his plans entirely.”
There are many situations currently pushing physicians toward un-retirement, and just as many physicians who would rather be traveling in the opposite direction. In a survey conducted for The Physicians Foundation, Merritt Hawkins & Associates found that 60 percent of doctors over the age of 55 said they were planning on changing or altering their lifestyles in the near future.
So what happens when retirement is not an option for their immediate futures?
A sort-of retirement
“The good news is that there’s such a shortage of physicians that we’re going to need these doctors to work longer and longer in their careers,” says Mosley. That means more opportunities for the not-so-retired older physician.
Some of those who planned to retire can simply extend their working years. If you are a physician in private practice, it’s usually no problem to let your partners know that you’ll be sticking around for another year or two. Even if there were legal agreements in place that specified a retirement date, many partners are willing to renegotiate the date and terms of retirement — especially for a successful physician with her own patient base.
Others may find that full-time clinical work isn’t necessary. For those lucky physicians, there are a wide variety of options. The physician in private practice can work out an arrangement with partners that allows him to see patients only two or three days a week and provides an equitable split of practice profits.
For the solo practitioner, this sort of semi-retirement can present bigger obstacles. It’s all well and good to see patients twice a week, but practice employees still expect to be paid for full-time work. Nor do overhead expenses like rent, utilities, or insurance decrease just because you’ve decided to cut back your working hours. Lowered revenue and high expenses don’t add up to a successful recipe for keeping your practice in business.
One option that is worth investigating, says Mosley, is negotiating an employment arrangement with your local hospital. Under such arrangements, the hospital agrees to take over the business aspects of running your practice. “The physician says ‘I’ll bring my patients,’ and the hospital sets him up on its physician integration program, takes over the practice, and implements central billing and better overhead.”
In these employment models, the hospital also covers the cost of medical malpractice insurance, which can be a major cost savings for physicians. In return, the physician draws a set salary from the hospital.
“In some cases, the physicians may be working for ‘less money,’” says Mosley. “But since the hospital is taking care of their malpractice insurance, financially it may work out better for the doctor.”
