Retired No More

A surprising number of retired doctors are being forced to go back to work

In the spring of 2000, orthopedic surgeon Dewey Ervin was in a position typical among physicians nearing retirement age. After a long career with Pee Dee Orthopedic Associates in Florence, S.C., Ervin was overwhelmed by the rigors of a surgical practice and the stress of helping to manage a thriving medical group. And having assembled a retirement portfolio nicely plumped up with successful equity investments, at age 59 Ervin felt the time was right to retire before he burned out altogether.

But within months of his departure, the stock market began its rapid descent, taking much of the doctor's retirement savings with it. By the summer of 2001, just 18 months after hanging up his stethoscope, Ervin concluded a return to the working world was his most viable option.

"I had some significant losses, no question about it," he says.

Ervin naturally turned to his former practice, Pee Dee, floating the idea of returning on a part-time basis. Pee Dee for years had wanted to recruit a nonsurgical orthopedist to provide triage and nonoperative care, but according to Pee Dee's executive director Will Ginn III, such a provider "is almost impossible to find."

In this atmosphere, Ervin's suggestion looked like a dream come true, offering a way out of a difficult situation for the practice while solving the doctor's financial crisis. Still, he admits it wasn't easy to go back to work. For one thing, his wife was less than enthusiastic about the idea. And despite having worked long, hard hours for more than 25 years, getting used to a routine again would be difficult after a year-and-a-half of freedom.

Surprisingly common

Recruitment specialists, financial advisers, and administrative consultants all say that Ervin isn't alone. A surprising number of retired doctors are being forced to go back to work as a result of shrunken nest eggs. According to Sarah Lukas, a financial adviser with the Boston-based accounting firm of Carlin, Charron and Rosen LLP, many doctors have traditionally taken a "go it alone" approach to retirement investing -- and have made some serious mistakes as a result.

During the '90s boom, there was an unprecedented rush into the stock market of relatively small-time investors, Lukas says, doctors wielding investment savings among them. Tempted by double-digit annual yields, physicians, like other individual investors, chose growth-oriented mutual funds and other risky stock offerings when they should have been taking their savings to money managers oriented to the needs of the smaller investor.

"Many of these doctors thought that they were diversifying, [and] they bought a lot of different mutual funds," Lukas says. "As a result, many of them didn't know what they were holding."

In many cases they were holding equities vulnerable to the precipitous drop in market values that began in May 2000. Ervin says that, as a professional working outside a traditional company structure, going it alone in his investment approach was a matter of course for him and many other doctors.

"We don't have corporate retirement programs to bolster us up," Ervin says. "It's just what you've done on your own."

But even as a more conservative investment strategy might have limited his losses, it probably wouldn't have prevented them. According to a survey by AARP released in December 2002, 77 percent of stockowners age 50 to 70 had lost money in the market during the prior years. Of those, one in four reported having lost between a quarter and half of their investments, while another 9 percent say they lost more than half. Of those older Americans who lost money, 12 percent worry they'll have to go back to work. A third of them never stopped working.

Making it work

Despite the apparent win-win scenario of Ervin returning to Pee Dee, the practice was nervous about how significant a work commitment he was willing to make -- and for how long.

"I think there was a little uneasiness on both sides," Ervin says. "I didn't want to have to work any longer than I wanted to. They didn't want to crank this thing up and have me leave in three months."

Ginn agrees that the group saw risks in bringing on a retiree, even one as trusted and familiar as Ervin.

"We didn't want someone to come in and just try it and burn out and go away, because then we'd miss a recruiting cycle," Ginn says.

After much discussion, a tentative deal was sealed with little more than a handshake and an understanding: Ervin committed to working two-and-a-half days a week for at least a year, helping to relieve Pee Dee's glut of sprained ankles and other nonemergent, nonsurgical cases.

The now semiretired physician says he was more than willing to pick up the slack in nonsurgical work that was glutting Pee Dee, because it would eliminate the most stressful aspects of his former job. Simply not having to take responsibility for a surgical case was a huge load off his mind, Ervin says. His role in taking nonemergent cases also meant that there would be no call.

"It's a very low-pressure role compared to the full-tilt of operating and night call, so it's a much more pleasant and doable kind of deal," Ervin says.

Eighteen months later, both sides characterize the experiment as a smashing success.

"He has depressurized our group tremendously, and has done a tremendous service for us in general," says Ginn.

"I can support myself now," Ervin says. "I have income to live on from my practice at this point, rather than having to draw on my retirement."

Crucial to the doctor's job satisfaction is the fact that he made his return not as a partner, but as a part-time employee. That eliminated a host of complications and put his relationship with the practice on a firm footing.

As an employee, for example, Ervin's overhead costs are simply factored into his salary formula by Pee Dee's administrators, a process Ervin doesn't even take part in. His employee status releases him from all administrative duties.

And as for his diminished decision-making power, Ervin doesn't mind a bit. "I had my fill of [administration] when I was there," Ervin says. "So it suits me just fine to leave that end of the practice to the guys that are in it full-time."

But of all the changes from his days as a full-time surgeon, perhaps most important is that his compensation is based entirely on the number of patients he sees. If he is willing to forgo salary, he is free to take time off. This gives him flexibility and it reduces the financial risk for the practice.

At the same time, because he is providing a unique service to Pee Dee, he is free to see as many patients as he likes without threatening the patient volumes of the seven orthopedic surgeons working there. Since he is relieving them of what they see as secondary duties, there is no conflict of interest between Ervin and the other doctors.

Benefits to the practice

Yet the accommodations made for Ervin's benefit are only a few of the many arrangements that could make a retiree's return to your practice a success, according to Paul Angotti, a consultant with Management Design LLC in Monument, Colo.

A retired physician willing to return to work can be an excellent solution for practices in a pinch, since they offer clinical and practice management experience. When you can reconnect with one of your own former physicians who's already familiar with your practice style, staff, and patients, all the better.

The key is to optimize your resources based on the flexibility a retired doctor brings to the table.

For instance, your new out-of-retirement physician may allow you to extend your office hours if he is willing to work four to six hours a day beginning later in the day. You could take on more patients with little increase in overhead, and patients appreciate the additional leeway it gives them in scheduling appointments. In addition, patients loyal to a retired doctor are more satisfied if they can reconnect with that physician.

Welcoming a retired doctor or retaining him part-time can actually ease the transition to private practice for younger staff -- a crucial component of "succession planning" that practices often overlook, according to Angotti. During such a transition, a semiretired doctor willing to split time with a younger doctor still in the early stages of building up his practice can be a valuable asset.

Indeed, the fact that many retired doctors are reluctant to take call can actually work to your advantage if there are new doctors coming into the practice, Angotti says. Younger doctors need to build their patient volumes and taking call is a great way to do that.

Alternately, employing a semiretired doctor can help smooth the way for another physician who is considering retirement. Again, by splitting time between the two doctors, both enjoy while continuing to offer, between them, what amounts to one full-time physician to the practice.

"Depending on the dynamics, there are a lot of creative things you can do," Angotti says.

Plusses for physicians

In terms of his own energy levels and ability to support a robust workload, Ervin says he has had no problem seeing as many patients as the practice refers to him.

Indeed, Ervin says that one of the big benefits of returning to Pee Dee was getting to see many of his old patients and colleagues. He says: "When you retire, you lose a lot of contact with a lot of people. Going back to work put me back in contact with a bunch of people I enjoyed."

The results of this arrangement have been so positive that what began as a short-term trial has evolved to a "medium-range" commitment, with Ervin anticipating working another three to five years.

Because his relationship with Pee Dee continues to be based on that first handshake, however, keeping the lines of communication open will be key to making his second transition to retirement a smooth one, Ervin says. Each side has promised to give the other plenty of notice when either feels it's time for Ervin to move on.

In the end, he says, far from the grim prospect of a return to the daily grind driven by necessity, his re-entrance into medical practice has been a unique way to reconnect with his lifelong pursuit in a low-stress setting.

"Overall, it's good for medicine if we get some of us old guys back on the scene," he says.

Jake Carlo can be reached via

This article originally appeared in the June 2003 issue of Physicians Practice.