What should be considered for succession planning or retirement in ophthalmology?
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Have a plan and know financial numbers
As the founder of a practice, I went through the transition of succession planning, and it was successful for us.
The first thing you need to do is to start early. The plan we executed was a 10-year plan. Way too many people wait too long to decide how they are going to bring in new doctors into the practice and also how they are going to transition to retirement. The 10-year plan worked out perfect for us, and 5 years is almost too short. People need to think about their overall plan, get everybody’s input and then make sure they are all on board.
The second thing you need to have a firm grasp of is your financial numbers. This is a huge weakness for physicians in general and specifically for ophthalmologists. You need to know how to read your financial statements, including your income statement, your balance sheet and your cash flow statement. Your transition is going to be a business transition, and you need to understand that.
This is something we did successfully at Durrie Vision. I wanted to have a good transition for me, and I wanted a good transition for the younger partners. I wanted to ensure the plan was fair for both groups. When I sold to my younger partners, we had an understanding of what the practice’s value actually was. To do this, you need to know your EBITDA, or earnings before interest, taxes, depreciation and amortization. After that, you need to decide on a multiple of EBITDA that is affordable to your partners. This allows the younger partners to go to a bank and borrow against future growth to buy the practice, rather than having to dip into their paychecks.
I sold my practice 6 years before I retired. After the sale, my goal was to ensure that everyone at my practice was ready for when I retired. That meant slowly cutting back my days in the office and shifting responsibilities until I was no longer the lead producer for the practice. As I transitioned out of that job, somebody else transitioned into it.
We do not get business 101 in medical school or in residency, but you can learn it. There are a lot of people who can teach it to you. I participated in the Kellogg Physician CEO program and would highly recommend a program like this to surgeons thinking about these major transitions.
Daniel S. Durrie, MD, is OSN Refractive Surgery Editor Emeritus and the founder of Durrie Vision in Overland Park, Kansas.
Life after private practice
Retirement is generally a multifaceted decision.
After spending years in training and practicing while restoring or maintaining vision, a career in ophthalmology is usually so satisfying that it is difficult to leave. The thought of walking away from the kudos one receives while seeing an often-immediate return of vision with cataract surgery and our other procedures is difficult. Yet, as all things must end, so it goes in ophthalmology.
Unlike some colleagues, I did not sell to private equity. I had created a multispecialty anterior segment referral practice. Having two other glaucoma specialists in the group helped resolve the problem of managing my patients after my departure. My health is good; I had no problems seeing patients in the clinic or performing surgery. I always had a strong desire when the time came to retire on my terms and not because of any medical issues.
For me, it was not a financial decision. I had saved and invested sufficiently over the years. Also, I planned to continue consulting with industry as I had done throughout my career. Thus, in some ways, I was not truly leaving ophthalmology; I was simply giving up direct patient care. Yet, it kept me involved in the new technology and innovations that have sustained ophthalmology over the years.
What did it come down to? It had been 43 years since graduating medical school. I wanted to have time in my good health to explore other opportunities without the direct responsibility and commitment to patient care. Seven months into it, I have no regrets.
Richard A. Lewis, MD, is an OSN Glaucoma Board Member and chief medical officer at Aerie Pharmaceuticals.