Practice Economics
When a Partner Goes Part-Time
The arrangement must be fair for the doctor and the practice.

What happens when a partner in your practice reaches the point where he desires more leisure time and a less-intense schedule? Your practice will need to decide how to compensate this physician for a limited workload and how to handle his partnership status.

In this article, I'll explain how you can provide such a doctor with a reduced income though a partial-retirement arrangement, yet still have him function as an integral member of the practice.

HAVE A SET POLICY

Your ophthalmology practice needs these senior physicians for their clinical expertise, to mentor young associates, and to maintain patient and referring doctor satisfaction. Having a plan in place that enables an older partner to accept a formalized "semi-retired" status that benefits both the doctor and the practice is a good way to meet everyone's needs.

It's in the best interests of your practice to prepare for a partial-retirement request ahead of time by having a formal policy. The guidelines should be customized to reflect your practice's present and future situation. When you adopt such a policy, incorporate it in the practice's corporate and inter-doctor agreements, and keep it regularly updated.

Once the partners have decided to allow partial retirement, you need to decide on who's eligible for this status. Should a partner under 55 be entitled to partial-retirement status at all? Must he have a minimum number of years of service with the practice to qualify? Many groups set this number at 15 years.

You must also consider the possibility of a partner cutting his workload due to a health problem before being qualified in age and years of service. You may want to allow partial retirement for health reasons if the partner has met a lesser eligibility standard, such as 10 years of service.

It's almost impossible to determine a lower pay level that will exactly reflect a doctor's reduced activities. Your practice may decide that compensation should directly correspond to productivity, whether it's gross charges, net charges, or actual collections. Be aware that a productivity payment may fail to recognize a senior partner's overall value to the practice once he's no longer fully active. These physicians can still offer valuable leadership and "rainmaking" skills that exceed straightforward dollar production.

A partner must inform the practice of his intentions to scale back his activities ahead of time. It's generally a good idea to require a physician seeking partial retirement to apply in writing from 6 to 12 months before the effective date. Unless your practice's policy on semi-retirement has an automatic compensation formula, the request should also indicate a proposed salary reduction.

HANDLING PARTNERSHIP STATUS

A crucial part of a partial-retirement policy is the issue of partnership. A semi-retired physician must cease to be a partner. This individual must sell back his interest in the corporation or partnership and any other related properties. If a physician isn't fully involved in all aspects of the practice, he can't be permitted to participate in decisions that affect it, nor can he take part in the risks and rewards that come from full involvement.

Partial-retirement issues can create disputes and difficult problems, even for group practices that are generally compatible. But if your practice has a formal method of handling partial-retirement requests and a partner desires to limit his schedule, you'll find it much easier to resolve any problems that may arise.

MAKE IT EASY FOR EVERYONE

You and your partners have worked diligently to build and maintain a successful medical practice, and each partner has an obligation to honor each of his colleague's special needs, as long as they don't disrupt the practice. Update your partial-retirement policy regularly, and enforce it universally and fairly. 

Mark E. Kropiewnicki, J.D., LL.M., is a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., in Plymouth Meeting, Pa. He regularly advises physicians and practices on their contracting matters and business law obligations. He can be reached at (800) 473-0032.