By John Carruthers, staff writer, November 01, 2012
The decision to leave practice comes for a variety of reasons, and isn’t always an easy one. For every dermatologist who makes the transition, there are a number of key steps to consider, both administrative and emotional, before ending the current phase of a career in dermatology.
Whether the reason is age, other professional interests, or a general feeling of burnout, the key to a successful post-practice transition is to understand one’s motivations and intentions for leaving practice. Often, according to recently retired dermatologist Steven Shama, MD, it’s the aggregation of a number of small issues over the years.
“I’m a dinosaur, like many other physicians might consider themselves. They just want to see patients, have a conversation, and wish them a good day. The expense of running a business and dealing with increasing regulations was too much for me. There were too many things getting in the way of the doctor/patient relationship,” he said. “I realized that I didn’t want to die on the job. I do professional speaking about enjoying your life. You don’t wake up one morning tired of dealing with regulations and business. It adds up, you just have to face it.”
University of Massachusetts dermatologist Mary Maloney, MD, said that for some dermatologists, the stated intention to retire by a certain age can sneak up much faster than the physician might think possible. [pagebreak]
“Ten years ago, I said I was going to retire at age 57. Then I said I was going to retire at 59. So you can see that I’ve already failed twice in what I said I intended to do,” Dr. Maloney said. “I want to make sure the person who steps into my job is the right person, and that I’ve done everything that I could to turn it over. Some of it is that time just plain slips by. I think that happens to all of us. If you ask me how I got to be 61, I’d have no idea. When you’re 50 getting to 60, you end up just wondering where the time went.”
Dr. Shama agreed, and said that societal norms in regard to retirement age influence the decisions of many physicians.
“What happens is that we’re told that retirement’s at 65, so you wait to even consider it until you hit 65. But then, people say “If you’re in good health, why not keep working?” Dr. Shama said. “So they push it to 67, 68 before considering again.”
Other times, dermatologists leave behind the business demands of private practice or group practice to spend time teaching in dermatology departments. Former American Academy of Dermatology President Stephen Stone, MD, began as a partner in a dermatology practice, and after two associates left for academia themselves, eventually decided that teaching was his desired career path.
“Between 1992 and 2000, I was in solo practice. I decided that after all those years in private practice, I did not enjoy solo practice. The negatives were the absence of somebody to bounce my ideas off of, the absence of coverage when I took off to go to a meeting or vacation while the overhead continued,” Dr. Stone said. “I really enjoyed working with young residents. I liked the idea of not having to do any hiring and firing, not having to get coverage when I went out of town. I elected to get out of private practice and move into academics. Now I work with the brightest young people in the world, and I really enjoy working with them every day.” [pagebreak]
In comparison to other small businesses, physician offices are especially difficult to shutter on an administrative level. Patient charts must be stored, employees need to be given notice, and both insurance and payer contracts have to be examined. In addition, many physicians try and get a return on their equity by selling the practice. Las Vegas dermatologist Lucius Blanchard, MD, has seen how the process works as both a buyer and a seller: His current large group practice, Las Vegas Skin and Cancer Clinics, buys practices nationwide, and he sold a multi-office practice years ago. He said that the toughest part of the transition for many dermatologists is settling on a fair valuation of one’s practice.
“The first, most important thing for dermatologists is to be realistic about the value of their practice. A solo or two doctor office does not have a sale value over three or four months gross. Do they have a realistic expectation based on contracts, revenue, and location?” Dr. Blanchard said. “Some doctors think that their practice is worth millions of dollars because they have a big income, but there is a limit to what a practice is worth. I’ve had people saying they want a million dollars for their practice. Maybe they’re grossing that, but a lot of times, you could go next door and open a practice for $200,000. Why is a potential buyer going to pay a million for nearly the same thing?”
In one case, he said, a close colleague died unexpectedly of a heart attack. As a gesture of goodwill, Dr. Blanchard offered to buy the man’s practice for a modest but fair $100,000. His late colleague’s brother, an attorney, rejected the offer and countered with a million-dollar valuation. A month later, Dr. Blanchard said, the practice had essentially dissolved. Soon after, Dr. Blanchard purchased the office equipment for a flat $10,000. The episode, he said, illustrates the disconnect between perceived and actual value in a dermatology practice. (The Academy offers a manual to help dermatologists address this issue, Valuing a Dermatology Practice. Visit www.aad.org/store/product/default.aspx?id=6370 to learn more.) [pagebreak]
Other important aspects of a sale include outstanding contracts with insurers, location, and the dermatologist’s planned timeline for leaving daily practice.
“If a practice has an exclusive contract with an insurer, it makes the practice more valuable. Are there a lot of dermatologists in the area? If you’re selling a practice in San Diego, where there’s a dermatology practice on every corner, it’s not going to be as valuable as a practice in West Virginia, where scarcity can make things extremely valuable,” Dr. Blanchard said. “If an owner is able to stick around, work, and help the practice make money, it gives us a lot more time to come in and transition, and bring in new doctors.”
Another large commitment, in both the physical and professional sense, is the necessity to keep patient charts safe and accessible. In Dr. Stone’s case, moving to academia meant dealing with a literal mountain of patient charts.
“My original partner in private practice was in practice since 1946, and we had all of the charts in the basement of the building. That was a lot of paper,” Dr. Stone said. “One of my disappointments was that I thought the charts were going to be stored by the medical school in perpetuity, and was told after a couple of years that it wasn’t the case.”
Liability insurance is also an important concern when leaving practice. Tail coverage must be negotiated with the insurer. The entire process, whether it’s a sale, retirement, or a handover to a dermatology department, can take months, if not years.
“People say that you can’t really sell a practice in less than a year. It takes a while to develop a relationship with someone who may be interested in your practice,” Dr. Shama said. “I’d say two years from the time you’ve made your decision is probably a reasonable period of time. It can happen more rapidly, and I’ve heard of physicians with health problems transitioning in two to three months, but two years is a reasonable time.” [pagebreak]
Texas Tech dermatologist David Butler, MD, who left private practice to teach at the university, said that while teaching is extremely fulfilling for a great many dermatologists, those physicians should be aware of the specific conditions and potential issues that come with academic employment.
“Moving to academics really relieved a great deal of stress in not having to worry about the overhead, employees quitting unexpectedly, and dealing with changing workload. To me, it was quite a bit less stressful, though not without its set of problems. When you go to an academic institution, the pay is about 30 to 40 percent less than private practice, and there’s also a little bit less work,” Dr. Butler said. “It’s somewhat of a stress reliever, but then you get involved with issues of the state. In Texas one year, there was a huge budget crunch, and the state came down with a 10 percent cut in pay that was laid on everybody. I didn’t ever anticipate that.”
Telling patients and employees
One of the most difficult aspects, according to dermatologists who have made the transition, is severing or greatly changing the relationship with employees, patients, and co-workers. Dr. Maloney, who maintains a number of interests outside of dermatology, said that many of her colleagues and patients who have managed to retire warn her about the difficulty in the loss of professional relationships.
“I saw a patient recently who had been a nurse, and she was retired. I asked her about retirement, and she said it wasn’t what it was cracked up to be,” Dr. Maloney said. “Your relationships with the people you work with are so good, and so important to you. She missed those.” [pagebreak]
David Shupp, MD, who moved somewhat unexpectedly from a large dermatology practice in east Tennessee to teach at his alma mater in Hershey, Pa., said that saying goodbye to his patients was an unexpectedly difficult part of the transition.
“Having been in practice 22 years in that location, I’d seen thousands of patients, several generations of families, and I got to know a lot of them. It was surprisingly difficult for me, saying goodbye to a lot of long-term patients who I’d become attached to, whose history and families I knew. Their kids grew up with my kids,” Dr. Shupp said. “Cutting the ties with the actual practice was pretty easy from a legal standpoint, but emotionally, I was surprised how difficult it was saying goodbye to so many patients. Some of them got emotional. I got a lot of cards and well-wishes. The whole process was much more difficult than I anticipated. It was the hardest part.”
Even in selling a practice, the transition can be difficult for the office staff, many of whom must acclimate to a new owner or move on to new employment. Dr. Shama said that he took his responsibility to his employees very seriously, having a number of conversations with the new owners about how and why his employee benefit structure was conceived.
“For my employees, I told them that I’d be here to support them, and with the new owner, I’d tell them how and why I paid them what I did and try to give the new owners the philosophy. Hopefully they would be taken care of the way I had taken care of them,” Dr. Shama said. “Someone who was interested in my practice told me that I was a very generous employer. I just tried to take care of people like they were part of my family.” [pagebreak]
In handing his practice over to the Southern Illinois University School of Medicine, Dr. Stone said that some of his employees found it difficult to find a new role.
“I had 11 employees, and really wanted to help them get placed. A couple came over to the medical school. A couple had trouble finding satisfactory positions, and I felt bad about that,” Dr. Stone said. “In a private practice, everyone’s like one big family, and that was emotionally difficult to deal with.”
Finding a balance
Post-transition, there are an entirely new set of daily expectations for dermatologists, just as there are for anyone leaving a decades-long career. The key to a satisfactory conclusion, according to Dr. Shama, is embracing outside interests and identifying how to define oneself. [pagebreak]
“When you decide to retire, make sure you maintain a passion for what you’re doing. You need to have a balance. Maybe you love fishing, maybe you love riding. Whatever your outside interests are, they have to be kept in your thought process, and have to be a close second to your profession,” Dr. Shama said. “You want it to add richness to all the days of your life. When you retire, you have something to continue doing and expand. It shouldn’t be a second-tier interest; it should be right up there with what you love doing.”
In eyeing her own retirement, Dr. Maloney has cultivated a number of endeavors outside of dermatology.
“I’ve had retired people tell me that they missed having something that they had to do, someone relying on them to do something. As I think about retirement and what I need to do, I need to be sure that I have some meaningful work, whether medicine or something outside of medicine. I need to feel a sense of accomplishment,” she said. “One of the things that I started to do, I was asked to be a trustee of a small school that serves a particular population. I very much enjoy that, and feel like I’m contributing to something other than medicine.” [pagebreak]
Making the decision
Dermatologist James J. Leyden, MD, who transitioned from a dermatology professorship at the University of Pennsylvania to an emeritus role and greater time spent consulting for health care companies, shared the story of the moment he decided to undertake a career change.
“My memory of the moment I decided to do something different is crystal clear. It was one of those moments where you get a vision that says this is what I need to do right now.’ There was a woman who had been in three different hospitals with a dermatologic condition. A diagnosis of some sort of infection was made. She was on antibiotics, and was eventually released. Finally, in the third hospital, a former student at Penn who was an internist there and had some training in dermatology called me up and said this has to be pustular psoriasis. Nothing else makes any sense.’ I agreed, and asked him to transfer her to us. She was, and I was in with one of the residents, and the nurse came in and said there was a doctor on the phone who had to speak with me immediately.
I got on the phone, and it was a guy from the insurance company, and he said something to the effect of I’m sorry, but we’re going to have to terminate your patient.’ And I said you’re going to kill her?’ And he said that no, they just wanted to send her home. I asked for his name and location, and I said that I’d transfer her to them by ambulance, and they could decide what to do with her. If I sent her home, she could die. I went in and told the woman that the insurance company asked me to kill her, and she got her union involved, and they made trouble for the insurance company.
My thought at the time was that I was too old for this. Things are changing, and there’s going to be a lot of unrest and learning through new changes. But I didn’t need to be part of it anymore. For various reasons, I was entitled to become an emeritus professor, so I announced the next day that I would become emeritus and wished everybody in the department good luck. It was a very easy decision for me. I know it’s a very difficult decision for a lot of people.”