Medical Practice Management
Feb 01

Physician slowing down – compensation issues

How many physician employment contracts contemplate reduced duties prior to retirement? Believe it or not, not as many you might think. The key is that exercising the slow down provision essentially is the physician’s notice of his intent to fully retire within a year or two. Once the physician is no longer bearing a full burden of the work/call, he or she should sell his or her ownership interest and also take a significant pay reduction at the same time.  I have found for example that if the overhead rate is 40% for a general surgery practice, then the physician slowing down should probably paying 50% or 60% effective overhead by the time he or she fully retires.  Years ago I worked with an OB/GYN practice with a 55% overhead rate and a senior guy during his last two years was paying a 70%-75% overhead rate….he was ready to leave by then!

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →