Here are five steps for spine practices to prepare for surgeon retirement.
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1. Starting to plan early. Ideally, orthopedic practices will have a succession plan written from inception and every surgeon who becomes a partner agrees to the plan at that time. However, this doesn't hold true in many cases, especially for small groups or single physician practices. If a plan wasn't created at the onset, orthopedic surgeons should begin succession planning at least five years before they plan on retiring because the transition can easily take two or more years to complete.
"In my experience, physicians are often unprepared for the final moment when they move on," says Glenn Molin, DC, MBA, a senior business intermediary at CI Harvest in Columbia, Md. "Hopefully, their financials are in order and they have a team in place that was there from the onset enabling them to create a practice that runs like a business because there will be issues and consideration with taxes, Stark laws and liability. If you deal with it early upfront and allow the plan to be fluid and flexible, it will be much easier when the transition occurs because you'll know exactly what you need."
The succession process includes several steps:
• Writing an agreement for succession planning between the surgeon and the practice
• Locating a successor for the practice
• Performing valuation of the practice
• Initiating and completing the financial transaction
• Transitioning patients to the new surgeon
Surgeons can either look internally or externally for the surgeon who will succeed them. If the practice is large enough, the senior partner can recruit a junior partner to take on the shares after retirement. If the group will need to recruit another physician to buy-in to the practice, looking externally might be the best option. Often, surgeons coming right out of medical school and training are the most available for recruitment, but they aren't in the best position to fully purchase shares of the senior physician's practice, which can lead to financing issues.
"If you look at Apple, they had succession planning in place so even though they lost their founder, they could still operate," says Wayne J. Miller, Esq., a healthcare transaction and regulatory attorney and founding partner of Compliance Law Group in Los Angeles, Calif. "It works the same way in medical practices and particularly in orthopedics because that's still a field where there is a physician shortage. The problem is there is a lot of need for new orthopedists, but not a lot of experienced owner physicians for retiring surgeons to sell their practice to. The thought about 'what is going to happen if we aren't here' is an exercise that senior surgeons need to get involved in as soon as they can."
2. Conduct an exit interview. As employers we conduct initial interviews when hiring a candidate as well as annual or bi-annual reviews after the employee has been hired, says Nicola Hawkinson, DNP, RN, RNFA, CEO of SpineSearch. However, exit interviews tend to be forgotten and can be influential in your practice’s success. Conducting an exit interview will allow your practice to review honest and open feedback. Exit interviews are beneficial towards making organizational changes that will improve your practice.
"Find out what motivated a surgeon to look for another job," says Ms. Hawkinson. "Some reasons may be out of your control: a surgeon retiring, or their spouse being relocated to another state for work. Other reasons may highlight changes that need to be made in the practice like a negative work culture, poor compensation structure or decreased workflow etc. During the exit interview, ask the surgeon what he or she thinks is the practice’s greatest strengths and weaknesses."
Feedback like this will let you know what employees are excelling at and what needs to be worked on. This will provide valuable insight and will help when interviewing new candidates. Keep in mind with every exit interview you will get different feedback because every employee has experienced something different. You should conduct exit interviews for all employees that leave your practice, both voluntarily and involuntarily.
3. Create a new compensation structure. Take the time to analyze your current compensation structure. Research to make sure that the compensation you are offering is competitive in the current market.
Use resources such as the Medical Group Management Association (MGMA), the American Medical Association (AMA) and the American Medical Group Association (AMGA) that offer benchmarking tools on their websites. You can select geographic location, speciality and years of experience to help you to learn standard compensation levels.
"Be competitive in the salary market in order to attract the best talent to your practice," says Ms. Hawkinson. "Using a performance based compensation structure may also prove to be beneficial. Incentives will motive surgeons to strive for a full case load and to be readily available for on call needs."
4. Identify new leaders. Depending on the practice or group situation, there are several ways to identify a successor for a retiring surgeon. Like other small businesses, some surgeons might be able to sell their family practice to a son or daughter trained in orthopedics or spine surgery. If family members aren't available, recruiting a surgeon fresh out of training or promoting a junior surgeon to senior-level might be a more feasible option.
For larger groups that may have their pick of junior surgeons to fill a senior surgeon's shoes, making the right promotion can be tricky. Look at the practice to realize where the gaps in leadership or success are and identify the person or type of person who would best fulfill those needs. An ideal leader would have both business experience and an outstanding clinical reputation.
"When you are selecting or promoting a surgeon from within, there is education that takes place in helping them understand the differences between being an individual contributor and moving them into a leader of the practice," says Scott Kiefer, vice president of PI Worldwide Member firm, the Oliver Group, a company focused on providing solutions to manage change including succession planning.. "There are differences between having patients and making sure their needs are met and meeting with staff members to make sure their needs are met."
Mr. Kiefer suggests a few key steps to make sure the transition into a leadership position is smooth and positive:
• Give the new leader access to an executive coach to develop new leadership skills
• Provide a forum for feedback from staff and patients
• Enact operational changes to encourage a slow incorporation of new responsibilities
• Have the exiting owner or senior partner sponsor the new leader into that role
"It's a fundamental mindset shift when a surgeon goes from being an individual contributor to leader of the pack," says Mr. Kiefer. "If there is a large group of owners, this should be a facilitated transition to minimize egos when sponsoring a new leader into that role."
5. Transition patients to a new provider. Begin the physician recruitment process to bring in a new specialist to the practice. Once you've found the right specialist, senior partners should introduce him or her to referring physicians in the area as well as the retired physician's patients. It's important for these patients to feel comfortable with your new specialist and return to see your new partner.
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