Retiring from practice requires an exit strategy

A colon cancer diagnosis was not part of the business plan for ASPS member Enrique Fernandez, MD, Bradenton, Fla., particularly after having recently moved into a new building following a major office renovation that added an O.R. But in 2010, after 24 years in practice, the diagnosis forced him to step away from his practice at age 61; the side effects of his chemotherapy treatment affected his hands, which prevented him from operating. Dr. Fernandez relied on help from colleagues to cover his patient load until he closed his doors in 2012.

"I had just built the foundation of the next phase of my career – I had plans to share the practice by bringing in an associate, and I had a plan to map-out a strategy to end my career sometime down the road," Dr. Fernandez says. "I had no particular date in mind, but I knew I had a lot of years to go. I was nowhere near the peak of my career. It was a sudden, unexpected experience. Fortunately, I had four great colleagues who volunteered to come to my practice and took care of my patients and so forth on a very limited basis. We were able to keep things going for a while, but it was evident that it had to come to an end."

Dr. Fernandez had to deal with important issues simultaneously, such as closing his practice while undergoing treatment. Rolled into that were concerns about his staff's needs, his patients' medical records and how to bring about the divestment of his various assets. He says he struggled with finding information to help him transition out of his practice.

Meeting the need

Dr. Fernandez's experience eventually motivated him in 2013 to launch a business called Inspiring Effective Leadership, which is designed to help plastic surgeons create an exit strategy for a successful transition into retirement. Part of his services include teaching others how to recognize their "Who" (cores, morals and values); their "Why" (their purpose); and their "What" (their career and what they do).

"My colleagues are reaching out for help and can't find any information – I've had the same experience. That's why there's such a need for this type of help," says Dr. Fernandez. "Certain transitions you can prepare for... such as becoming a plastic surgeon. While we look forward to beginning our careers, there are life transitions you haven't prepared for – the challenging ones such as divorce, bereavement or end of career – which make you dig deep into the core of your being.

"This effort I've put together addresses the lack of preparation that exists for a major event in a plastic surgeon's career. I've created a new career based on who I am and my 'Why' (purpose). I'm still the same person – my 'Why' is to help people and to make life better for other people, whether that's through being a surgeon, educator, consultant or mentor. The new 'What' of my career is being the founder and president of my company."

A study published in the journal Plastic and Reconstructive Surgery reported that more than half of all currently active plastic surgeons in the United States are older than 50 and likely to retire in the next 10-20 years ("Plastic Surgeons Over 50: Practice Patterns, Satisfaction and Retirement Plans," April 2008). This study is nearly 10 years old, making today a relevant time for plastic surgeons to plan for their retirement.

There is not a one-size-fits all retirement plan for plastic surgeons, as age, lifestyle, health, family and personal goals can all affect a surgeon's decision to retire. While some may plan to travel the world after they sell their practice, others may set their sights on volunteering – or starting a second career. Regardless of future plans or reasons for retiring, early preparation and a clear exit strategy are essential to ensure a successful transition into retirement – one that will provide financial independence and create more excitement than anxiety about this life event.

Now what?

Although his career in plastic surgery ended abruptly and unexpectedly, Dr. Fernandez discovered a new passion and started a second career. Today, Dr. Fernandez consults and mentors plastic surgeons who need assistance to transition from their medical practice at the end of their career. He says he discovered that many physicians are not prepared for this major life event and often struggle with the loss of identity and "What do I do now?" Whether leaving a medical group or finding an associate to take over a practice, the transition affects the surgeon personally, Dr. Fernandez points out.

"What I find is that who you are as an individual – your values and character – are very closely tied to what you do as a professional, but the problem arises when end-of-career comes and that role no longer exists," he says. "One colleague told me he would never retire because the loss of identity is devastating. That summarizes how it affects many people well in advance.

"I discovered when it was time to ask myself 'now what?', my immediate reaction was 'I'm a plastic surgeon.' Because of the limitations I had with operating after treatment, my reaction shifted quickly and I thought: That's not who I am. That's what I did. Who I am is Enrique Fernandez, and my 'Why' is to help people and make a better life for others. Who you are and what you did for your career are not the same thing."

Planning with the end in mind

It's not always an unexpected event that leaves physicians unprepared to retire. Changes in financial situations through divorce, shifts in the economy or other circumstances can also leave plastic surgeons unprepared for the end-of-career. Maryann Czarnota, CPA, and partner at The Abrix Group LP, a health-care business management and accounting firm, encourages plastic surgeons to plan ahead and create measurable goals.

"Selling your business is really a process, not a single event that happens right away. It takes planning," says Czarnota, who has advised numerous plastic surgeons through the retirement process. "In preparing, it could take months to gather all information we need to do the evaluation or supply it to the prospective buyer. It can be as simple as having those financial statements and business information available, such as leases. Physicians don't always know about their building lease or what records they need.

"I've found through working with physicians that they're not prepared financially when it comes to selling their practice," she adds. "Sometimes the process can take years. Have these conversations early – even two or three years out. Start talking to your trusted advisors about it, whether it be your CPA, financial planner or lawyer. Put a team in place."

ASPS Board Vice President of Finance and Treasurer Richard Greco, MD, says he started planning for his retirement during his residency. As a 25-year-old plastic surgery resident, husband and father of four, Dr. Greco committed himself to setting aside 5 percent of his $20,000 annual income so that he could retire at a younger age. He says his decision was not considered "financially feasible" for his family back then, but in hindsight it's definitely one that has paid off 30 years later.

Although Dr. Greco says he loves his work and can see himself practicing until he's 70, he admits that he could retire today, thanks to the exit strategy he created at the beginning of his career.

"You can't put off planning," he says. "The reality is that the smartest way to run a business is to plan for the end at the beginning. Plastic surgeons should start planning for their retirement during their residency. The sooner you start planning and investing in your retirement, the more you'll be able to afford to retire. People's exit strategy depends upon how well they've done in their life."

Dr. Greco, who presented his "Planning Your Exit" session at Plastic Surgery The Meeting last year in Boston, places plastic surgeons into the following three groups for retirement:

• Those who are young, have a successful practice and can afford to retire early
• Those who have done well and are comfortable financially but need to work until they retire
• Those who are not prepared and must work hard to maximize their financial exit

"If you have more than enough money, your exit strategy is obviously much simpler: Either hand your business over to a young physician or other partners, sell your practice to a hospital – perhaps you could practice there for a period – or close your doors and exit," Dr. Greco says. "You're not really worried about what you're going to get out of it financially, you're just worried about having someone take care of your patients. If you've been very successful, this is the ideal scenario."

Dr. Greco describes the worst-case scenario as physicians who need every nickel when they sell their practice because they haven't done well throughout their career.

"The problem with this scenario is that this practice is probably the least valuable practice to sell, because if you weren't able to make a great living out of it, the next physician probably won't be able to either," he says. "Take an inventory of what you have to sell. Do you own the building or equipment that you practice in? Do you have a large staff or a spa? Each has a specific value that can be sold or transitioned to someone else."

Dr. Greco encourages plastic surgeons concerned about retirement to join a medical group with a diverse age range of physicians – a valuable lesson he learned early on in his career. He says his current practice has two plastic surgeons in every age group (30s, 40s, 50s) to avoid everyone retiring at the same time.

"When you've just come out of your residency, you want to take call and build your practice, but when you're 55, you don't want to take call – you probably want to do more cosmetic surgery and less reconstructive surgery," Dr. Greco says. "Design a practice with physicians who fit every one of those needs and have a succession plan built in. You want to have different age groups so that people's practices will transition and you won't have any huge hiccups in your life. If you're a younger surgeon and you join a group of four surgeons who are all 60 and they all retire around the same time, what will you do with all of that work?

"The best way to plan your retirement and career is to make those thought processes while you're planning your current practice. It may sound like it's too soon to think about what you're going to do with your practice, but you'll have less problems if you plan ahead," he says.

Moving forward

Dr. Fernandez breaks down the retirement process into three phases: the preparation, the transition and the aftermath. He emphasizes the importance of planning ahead and recommends that plastic surgeons prepare for retirement at least three years prior to their projected end-of-career date. If you don't have anyone in your practice and you plan to pass your practice on to someone else, it will take longer, he adds. Age is not always the deciding factor.

"We tend to think we are going to end our career, close our practice and then we're done," Dr. Fernandez says. "We don't realize what's involved. There's an underlying anxiety for surgeons who anticipate retirement but aren't prepared for it. One of the biggest benefits about helping physicians prepare for the end of their career is dissipating their worry and concerns so that they can look forward to the transition."

Dr. Fernandez says he's thankful to be fully cured of cancer and excited to have a second career to help other plastic surgeons with their retirement transition.

"This is a huge need. I've spent my entire career helping people, leading and educating in various forms," Dr. Fernandez says. "For me, to be able to do this now and continue to express my 'who' and 'why' in a different 'what' (which is my new endeavor) is enormously gratifying and a privilege. To be trusted by my colleagues and to help them with something so important is a real privilege. I'm really grateful for that."