Rethinking Retirement

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.”

Obviously, hospitals are interested in the possible referral of patients, but keep in mind that any formal commitment about referrals is illegal and cannot be contractually specified. Nor can the hospital influence the way physicians practice medicine. “They can’t say go do these tests, but don’t do this,” says Mosley. “That’s illegal, too.”

Just getting away from the business and administrative aspects of running a practice will cut down the number of hours you have to spend in the clinic, but if you’re truly looking to work part-time, a hospital employment agreement might be the way to go. “As long as that commitment is written into the agreement, it’s fine,” explains Mosley. “We’ve seen many doctors who thought they were going to retire, but the hospital said we need one full-time equivalent. They can split that between two doctors, each working part-time.”

Besides avoiding business headaches and malpractice insurance, an employment arrangement could have other upsides. For example, a hospital that implements an EHR system in your practice can help with productivity and cut down on paperwork - yet another time saver!

Taking medicine on the road

On the other hand, maybe stepping away from your practice is precisely the reason you want to retire. If you are looking for a change of pace, you might consider locum tenens work as an option for semi-retirement.

Although it once suffered from the unfair stigma of being a place bad doctors went to get work, the truth is that the burgeoning locum tenens industry has evolved into a vital resource for secondary and rural markets that need access to physicians they might otherwise never get to see. “We have a survey that we do every year,” says Mosley. “Eighty percent of the hospitals find the doctors equal or even more capable from a quality standpoint than the doctors they have on staff.”

Currently, over 45,000 doctors - about 5 percent of all physicians in the U.S. - take advantage of locum tenens work every year - to the tune of about $3 billion annually.

One thing that locum tenens work offers is flexibility. Physicians can work as little or as much as they want. But many older physicians facing retirement see locum tenens work as an opportunity to supplement their nest egg.

“That’s where we’re having most of our success - practitioners who are saying, ‘Look, I’d like to make another X number of dollars over the next few years if I can. What if I give you three or four weeks of my 10 or 13 weeks of vacation? How much can I make?’ That becomes very appealing to them,” says Chris Rutherford, president and chief operating officer of Medfinders Physician Staffing, a physician recruitment firm that specializes in locum tenens placement.

Locum tenens physicians might find themselves working in far-flung rural locales in, say, North Dakota, but they can just as easily end up in secondary cities like Roanoke, Va. The employer not only pays the physician’s salary but also travel, housing, and living expenses. Essentially, all of the money a physician makes can go in the bank.

And just how much can a doctor expect to make during four weeks of work? “It really depends on the situation. You might have a neurosurgeon toward one end of the spectrum, and you can have an internist toward the other,” says Rutherford, who notes that earnings can range anywhere from $5,000 to $25,000 depending on the demand. “We’re finding the most demand in the supply-constrained markets such as areas of primary care and some sub-specialty areas. Emergency medicine also continues to be a robust setting.”

There may even be the possibility of some local opportunities, says Mosley. “Many physicians who have never been involved in locum tenens may find out that right next door they can work shifts at a hospital they usually admit to. Physicians usually have two or three hospitals that they deal with, and they may not be aware that a particular hospital needs their services.”

Locum tenens work can also be a good opportunity for the physician who wants to retire but doesn’t want to completely give up practice. “Many doctors have vacation homes, and a lot of doctors that we work with say they usually go to Arizona or Florida in the winter. When they go to their vacation home they want to take time off, but they pick up two or three shifts a week working locum tenens,” says Mosley. “It’s a perfect deal because they’re needed. In a lot of cases, it’s rejuvenating for these doctors because they come to town and get to be a hero, see people that maybe wouldn’t be seen otherwise.”

Yet while opportunities may exist locally, Rutherford cautions that being flexible about time and location opens up far more opportunities in locum tenens work. “If you have a practitioner who is willing to be very flexible for four weeks and says, ‘Use me as you’re able,’ that tends to be a very successful partnership.”

Coming back to work

These are good options for physicians who need to restructure or delay their coming retirements, but what about the physician who has to come out of retirement and head back to work? That situation presents more of a challenge.

“What we are actually struggling with are those physicians that may have been out of practice for two, three, or four years who come to us expecting that we can help find locum tenens opportunities,” says Rutherford. “Our standards and most of the industry’s standards require that a practitioner have no more than a six-month gap in clinical practice.”

Not only do most locum tenens companies adhere to that standard, most hospitals have similar policies regarding clinical practice. Some are even stricter, disallowing any physicians with practice gaps of more than three months. “It’s a hurdle across the industry,” acknowledges Rutherford.

The only solution is to get current clinical practice experience, and for that Rutherford suggests approaching the group or practice from which the physician retired. “It provides the best opportunity to bring your clinical orientation back up to speed. We often counsel semi-retired or retired doctors toward that,” he notes. “It’s not dissimilar, interestingly enough, to what we recommend to residents coming right out of school. Our direction to them is to get some practical, hands-on experience under their belt.”

So a physician who has been retired for six months or more may feel like she is starting over again, but Mosley believes that even older physicians who have been away from practice for a long time have good reason to be optimistic about their opportunities. “There’s no such thing in America right now as an unemployed physician. If you want to work, you can come back into the fold,” he says. “Depending on the time out, depending on certain states, you might have to do a little retraining, but you can move right back into it.”

Robert Anthony, a former associate editor for Physicians Practice, has written for the healthcare and practice management industries for more than six years. His work has appeared in Physicians Practice, Humana’s Your Practice, and Publisher’s Weekly. He can be reached via physicianspractice@cmpmedica.com.

This article originally appeared in the March 2010 issue of Physicians Practice.