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 the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.