Senior Part-Time Partners: To Be or Not to Be

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.

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.