A senior member in phase-down should probably give up legal co-owner status. Today's pressures on medical practices call for tough decisions about the future. "Business as usual" usually won't cut it. That's why many top advisors recommend requiring less-than-full-time partners to sell out. Hard decisions demand strong commitment and a vested interest in the future.
Often, however, a group's documents calculate a departing physician's pay-out amount based on his or her last year of production. If he or she enters a phase-down period, consider "freezing" the last full-production year as the calculation base. Then defer paying the frozen amount until full retirement.
Finally, when you amend your organizational documents to include a phase-down plan, set an absolute time limit-perhaps five years-for continuing the part-time status. At the end of that period, make full retirement mandatory. Otherwise the "end-stage" plan could drag on indefinitely and hamper the group's ability to move forward with future plans.