Easing into retirement: It could take longer than you think

When the number of doctors increased dramatically in the 1970s and 1980s, young physicians were plentiful, and older doctors less so. Today the situation is very different. Much like the population as a whole, the average physician has aged, and by comparison there are fewer younger doctors about.

According to the American Medical Association, there were 38,146 physicians 65 and older in 1970. This demographic grew 408.6% to 194,014 in 2008 while the total number of physicians grew by only 188.4%, from 330,824 to 954,224.

Many of these older doctors are still in practice, either by choice or circumstance. About 40% of doctors 65 and older were in active practice in 2008, according to the 2010 edition of the AMA's Physician Characteristics and Distribution in the U.S. And while this number is down from previous years, there is some data suggesting it may be going back up.

A bumpy economy and changes in the health care system have many physicians balancing the priorities of the latter part of a career with a desire or need to stay in practice long after people in most other professions retire. In many cases, declining reimbursements have put retirement plans on hold.

"Physicians are reacting like the rest of the nation in terms of responding to the recession," said Edward Salsberg, director of the Center for Workforce Studies at the Assn. of American Medical Colleges.

Speed bumps

Paul Kovalcik, MD, of Chesapeake, Va., is finding his road to retirement to be longer and busier than expected, in part because he is having trouble selling his solo practice.

"Solo practice is not as attractive. Most seem to want to join a group. I'm hoping I can find the right match for the both us, but I'm getting less optimistic as time goes on," he said. The colorectal surgeon, who is approaching his 67th birthday, has listed his practice in publications relevant to his specialty but has garnered only one call that didn't result in a sale.

He says, "with hospitals buying practices right and left" he now plans to approach those local to him. "I could work for them for a year or two, maybe, but I would not want a really long-term contract."

Retiring, experts say, means taking control of the process early, by as much as 10 to 12 years before you actually want to stop or slow down your workload. It might entail selling your office building and your practice, or making arrangements so you can practice in a state of semi-retirement with fewer administrative tasks.

"A lot of physicians don't really want to retire. They want to cut back and have a better lifestyle than they have had," said Kathleen Murray, senior director of recruitment partnerships at physician search firm, Cejka Search, based in St. Louis. "People are working longer than they thought they would, but they are working a different way."

There also are advantages to finding a way to continue practicing rather than exiting and attempting to come back in.

"For some reason, once a physician retires, they have a stigma. It doesn't mean they cannot come back, but, if they have been out two or three years, it's hard to get back in," said Kurt Mosley, vice president of strategic alliances at Merritt Hawkins & Associates.

Reviving a license that has been allowed to lapse can be challenging. Doctors may not have kept up with continuing medical education requirements. And even if they have, they will still need to fight the perception that they are out of date.

Staying current is easier if a doctor stays in practice, even if that practice is scaled back some.

"Physicians are a scarce and precious resource, and with age comes wisdom, expertise and experience," said Betsy Williams, PhD, MPH, clinical program director of the Professional Renewal Center in Lawrence, Kan. Williams advises on issues such as physician burnout and has presented at meetings of the AMA's Senior Physicians Group.

Only 12% of physicians were 65 and older in 1970, but in 2008 the number was 20%. In contrast, the proportion of physicians younger than age 35 decreased from 27% in 1970 to 15% in 2008.

On the road to retirement

Winding down without actually retiring completely can involve selling a medical office building. Employed physicians will want to speak with their supervisors about foregoing call, giving up surgery, cutting back on hours or offloading some administrative tasks. Those in partnership with other physicians need to read their contracts to determine the effect of reducing their hours. Experts suggest sitting down with your partners to discuss what changing your status will mean for the practice.

For some doctors the first decision is deciding what to do with a medical office building if a physician owns one. Commercial real estate has been hit hard in the recent recession, although medical office buildings have taken less of a knock. Still, buildings with tenants are more valuable than those without, and it may make sense for a physician to sell a building and lease it back.

"If they own their own building, they should plan on selling the building 10 to 12 years prior to the date they want to stop working" said Tom Dalcolma, a partner in Street Sotheby's Medical Realty Advisors in Columbus, Ohio. "Investors don't like to buy empty buildings. If a physician makes his building available 10 to 12 years prior to retirement and signs a 10- to 12-year lease, now that building is very attractive to an investor."

If the practice itself needs to be sold, experts suggest starting that process three to four years out.

"That's the time to begin talking about it," said Kenneth Hertz, a principal in the Medical Group Management Assn.'s Health Care Consulting Group. "You have got to start the discussions early."

Getting a jump on the process also gives the doctor more opportunities to reach physicians just completing residencies.

Aside from selling to another doctor, a retiring physician can opt to sell to a hospital. A practice has more value if it comes with a physician, and selling to this kind of buyer may allow a doctor to continuing practicing while foregoing some of the more onerous administrative tasks of running a practice.

Physicians nearing retirement may find an advantage in the current physician shortage and a renewed interest on the part of hospitals in the wake of health system reform to buy or otherwise align with medical practices, experts said.

Becoming part of a larger system can make it easier to cut hours, but the arrangement might result in a possible loss of independence. Larger organizations also may be able to provide health information technology and reduce the burden of liability insurance.

Many agreements allow a transition period and the possibility for the seller to stay on.

"The practices that are able to do this successfully are the ones that realize that it is not business as usual and are creative. There has to be a way to structure this so that it is beneficial for everybody," said MGMA's Hertz. "A 65-year-old physician can have a lot of respect in the community and bring in a lot of patients. He or she can also be a great mentor to the younger doctors."

A survey published Nov. 18, 2008, by the Physicians Foundation found that patient relationships rated highest on the things physicians found satisfying about medicine. Reimbursement and managed care issues ranked highest as a source of dissatisfaction.

"If physicians are in a situation where they can actually practice medicine without worrying about all that other stuff, that can bring back some of the joy they may have lost," Salsberg said.

Employed physicians

Doctors who work directly for a hospital or large health system may find it easier to downshift. These organizations find value in keeping older physicians on staff. For example, Fred Whitehouse, MD, division head emeritus of endocrinology, diabetes and bone and mineral diseases with Henry Ford Medical Group in Detroit, recently cut down to three days a week after working full time for 55 years.

"I take home more work than I used to. It's not easy to work part time. You have to play catch-up on the first day," Dr. Whitehouse said.

The Henry Ford Health System does not have an age at which physicians have to retire, although many who are getting older have various work arrangements with the organization.

"If you want to formerly retire, we can still hire you back for a mutually beneficial role," said Mark A. Kelley, MD, CEO of the Henry Ford Medical Group and executive vice president for Henry Ford Health System. "The bigger the organization, the more room there is for that. And part-timers are not a bad deal."

Experts said working locum tenens also can be a possibility for some physicians who aren't quite ready to retire. Making it more attractive for some physicians is that the locum tenens organization covers the cost of liability insurance.

Whatever road the latter part of a physician's career takes, those who have successfully delayed retirement say the key is to find ways to continue to enjoy medicine.

"In order to keep working, you have to really like it," said Janet Wolter, MD, an oncologist and cancer researcher at Rush University Medical Center in Chicago.

She never thought about cutting back on her 50-plus-hour-a-week schedule until she hit 75. Then her fellow physicians told her she no longer had to come in on weekends.

"I had been doing that for so long that it was sort of second nature," Dr. Wolter said. "They thought of that, and it turned out I liked it."

Now 83 and officially retired because of vision problems after nearly 60 years of practice, she still handles about four to six hours of administrative work for Rush researchers.

"I would still be there if I could," she said.