Convincing a parent to retire

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DHolliday
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Convincing a parent to retire

Post by DHolliday » Fri May 23, 2014 10:42 pm

I know this is a strange question, but here it goes.

My father is in his early 70s and is a dentist. He has had a very successful career and practice (that he built over 30 years from scratch), but his health is declining - so much so that he is increasingly lacking the stamina to put in a full day of work a this office.

The problem with that is that he continues to run his office with a full staff, for the last two or three years, his practice has been in the red, due in large part to his physical inability to work the hours he used to, so he often has to cancel appointments depleting his revenue stream. I know he has a large nest egg that he can live off of, but I also know that he is tapping into it to keep his office going.

Now with this in mind, I've urged him to hire a younger dentist who can do the work that he can no longer do, this would allow him to continue to reap the fruits of the practice he built. I've also tried to get him to sell his office or just mothball it (I'm not sure how realistic this option is, I'm not a dentist). One complicating factor is that my younger sister is in dental school, but she has 3 years before she will finish, and I suspect part of the reason my father is holding out is so she can take over the practice (hence my idea of mothballing it).

Obviously, my efforts are falling on deaf ears. Have any of you been in a similar scenario? My father is an immigrant and he basically lives to work, he was very sick a few years ago and after recovering, his first thought was to go back to work.

I am concerned that he will gradually deplete all the money he saved up - and waste it in the name of running his office just to run it for his ego, or so that he has something to do. If that comes to pass, I am not sure what he will do.

lululu
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Re: Convincing a parent to retire

Post by lululu » Fri May 23, 2014 10:49 pm

Does your sister want to take over the practice? Sounds like the family has to come to a consensus and plan.

What about your Dad just having part-time office hours, say three or two days a week, and letting some staff go? If the practice is mothballed. there will be no patient base when your sister is ready to join the practice, and the value of the practice will also be much less if it is sold then, I assume.

As to the practicality of part time staff, I know some of the hygienists at my previous dentist's office worked part time at his practice and part time at another one. Also, I imagine working part time would appeal to someone with young kids or an older person. If the staff has been there a long time and is older themselves, they might prefer part time.

freebeer
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Re: Convincing a parent to retire

Post by freebeer » Sat May 24, 2014 12:11 am

I don't think mothballing is realistic, the goodwill (patient list) would be lost and dental tech is evolving so even equipment value would likely be lowered.

Does your Dad own the building? My dentist bought his practice from an older dentist who retained ownership of the building. I see the retired dentist from time to time... when he's mowing the lawn. Seriously though being a landlord could be a transition job for your Dad (as apparently it still is for my dentist's predecessor).

donall
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Re: Convincing a parent to retire

Post by donall » Sat May 24, 2014 7:28 am

It would be best if your dad could keep the practice going with a dentist he has hired until your sister steps in. Three years is a long time for a practicing dentist in their 70s, so I think there should be a range of contingency plans. The goodwill of the practice is worth a lot, so if dad cannot sustain the practice on a part-time basis or with another dentist, then often it is best to sell the practice as it will essentially become worthless. Patients leave a practice if they cannot receive expected services. Patients also leave a practice when the practitioner ages, often leaving patients in the practice who are the same age as the practitioner. There has been a lot of consolidation and purchasing of practices the last few years and the business model of a sole practitioner may be evolving. If your sister has the same last name and this is a small community she will have some built in goodwill with the name recognition.

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SnapShots
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Re: Convincing a parent to retire

Post by SnapShots » Sat May 24, 2014 8:14 am

Does your sister want to go into your father's practice or move back home? If she has other expectations, this may be key in getting dad to work part-time or close his practice. If you father cannot hang on for three years: Perhaps she should say she's not coming home, even if she might think she is.

My experience in observing dentists, they typically are very good businessmen/women; atypical for medical doctors, I might add. (Disclaimer: have worked and been married to medicine my whole life :wink: )

I would chat with another dentist to gain insight into the profession such as: How does another dentist see your father's situation? What are some options: working part-time to selling the practice. How hard is it to sell dental practice? Does dad have enough patient base that he could sell his practice? Value of his office and dental equipment?

Is your dad keeping all his staff, due to loyalty because be does not want to hurt them financially by letting them go or reducing their salaries to part-time?

After your armed with lots of information, perhaps a dentist friend can help by talking with dad, with or without you.

Your dad has a life long, comfortable, routine. He may not know what he would do if he didn't go to work.
Last edited by SnapShots on Sun May 25, 2014 9:51 am, edited 1 time in total.
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davegreen10
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Re: Convincing a parent to retire

Post by davegreen10 » Sat May 24, 2014 9:46 am

Mothballing is definitely not an option. Once patients depart they rarely return. The biggest factors in determine a practice's sale price are the size of the active patient base and the doctor's net income. The purchasing doctor will pay some multiple of the net income. He is purchasing a revenue stream. Other factors such as location, facility condition, equipment, etc. matter but only as secondary factors. Concern-if he is struggling to work now, will he last three more years until his daughter is ready? Often a dentist fresh out of school is not ready to run a practice; they just want to improve their clinical skills. If this is the plan, that's fine. But there should be a contingency plan should he need to retire earlier. Find out if the practice has been appraised. It costs about $2500 and then about $400 every two years to keep updated. Why? It's as important as life insurance for protecting your heirs. If a dentist dies, the practice loses about 10% value a week as the patient base slowly moves elsewhere. Without a current appraisal the process is slowed down by several weeks. The good news is that it's a sellers market for dental practices. There are two interested buyers for every seller (even higher if you happen to be in CA). Even if there is no net income, there may be a large potential for someone who could work more or right size the staffing for the current business volume.

DHolliday
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Re: Convincing a parent to retire

Post by DHolliday » Mon May 26, 2014 3:15 pm

Thank for all the wonderful replies; I wasn't very familiar with the idea of "mothballing" so I am glad that several respondents have explained how it isn't a good idea.

My father does own the property, and I think my sister would be willing to take it over since she is aware of all the high-startup costs a new dentist can face and she wants to pay off her loans as quickly as possible (I've even encouraged my father to sell the property to my sister and pay her "rent" to help her in building some equity), that said, three years is indeed a lot of time and I don't see my father's health getting any better. He has several friends from his country of origin who are in the same business so I think it's best for me to try get some of them to repeat my concern and try to convince my father to put it up for sale before it becomes totally worthless due to attrition of patients or him just being unable to continue.

RunningRad
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Re: Convincing a parent to retire

Post by RunningRad » Mon May 26, 2014 3:38 pm

I like the idea of hiring a young dentist to maintain the practice, with an incentive to build the practice so that he has the possibility of staying on when your sister is ready to join. It sounds like your father is destroying both his practice and his nest egg and really needs to move on in some fashion.

FWIW, my father (82) is also a dentist/orthodontist and still works full time (!) in an administrative role in public dental health. He is talking about retiring this fall. If your father wants to keep his hands in dentistry, perhaps there is an opportunity to do so in this or similar capacity, as an employee.
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution

Retread
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Re: Convincing a parent to retire

Post by Retread » Mon May 26, 2014 3:43 pm

DHolliday wrote:Have any of you been in a similar scenario? My father is an immigrant and he basically lives to work, he was very sick a few years ago and after recovering, his first thought was to go back to work.
I probably can't help, but your story certainly resonates with me. My father was a general practice physician who had very few interests other than his medical practice. He loved his patients and they loved him. Throughout his 60's he suffered with COPD and had difficulty making it through the day at the office, but he pushed on until age 69 when he had no choice but to close up his practice. He told the newspapers in our small town he was retiring because of the "malpractice insurance mess" but the real reason was his inability to continue. He died the following year and my mother then spent 33 years as a widow. All of his family felt he never got to enjoy the fruits of his hard work, but I guess Dad's reward was the satisfaction he received from the love of his patients. His example was probably the reason I never entered medicine. Some people simply love nothing more than their work and, while it's hard for the rest of us to understand, your father seems much the same as mine.
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dm200
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Re: Convincing a parent to retire

Post by dm200 » Tue May 27, 2014 10:47 am

Difficult situation, in several respects -

Just "retiring" may not be in his best interest, either financially, health-wise or emotionally.

For the short-term, at least, are there things that might be done to assist him in keeping him better functioning on the job? Health/medical issues? Assistance with other aspects of life? Someone in his office that might make better use of his availability and skills?

I don't know, but the situation you describe makes keeping a qualified staff in his office much more of a challenge. If aspects of his practice decline (older/outdate equipment, fewer/less qualified staff, etc.), his patients may start to go away.

Good Luck and I wish you well.

DHolliday
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Re: Convincing a parent to retire

Post by DHolliday » Tue May 27, 2014 8:02 pm

Retread wrote:
DHolliday wrote:Have any of you been in a similar scenario? My father is an immigrant and he basically lives to work, he was very sick a few years ago and after recovering, his first thought was to go back to work.
I probably can't help, but your story certainly resonates with me. My father was a general practice physician who had very few interests other than his medical practice. He loved his patients and they loved him. Throughout his 60's he suffered with COPD and had difficulty making it through the day at the office, but he pushed on until age 69 when he had no choice but to close up his practice. He told the newspapers in our small town he was retiring because of the "malpractice insurance mess" but the real reason was his inability to continue. He died the following year and my mother then spent 33 years as a widow. All of his family felt he never got to enjoy the fruits of his hard work, but I guess Dad's reward was the satisfaction he received from the love of his patients. His example was probably the reason I never entered medicine. Some people simply love nothing more than their work and, while it's hard for the rest of us to understand, your father seems much the same as mine.
Bruce
Thanks for sharing this, it resonates with me, because while I want my father to retire in order to preserve all the fruits of his labor, I am logically convinced that he will not live long if he were to retire. I felt like when he recovered from his serious medical issue a few years back, the promise of going back to the office is what kept him alive and fighting through all the treatment.

LeeMKE
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Re: Convincing a parent to retire

Post by LeeMKE » Tue May 27, 2014 8:09 pm

Here's an idea I haven't seen yet.

Ask him if he knows another older dentist who might be struggling in the same way. An older dentist could come in and work part-time while your father kicks back to part-time plus a bit for admin of the office staff.

This could be a holding pattern until your sister is ready. And I'd get a commitment from her now, so everyone isn't going to all kinds of trouble to avoid reducing the client base if she isn't interested.

I would not hire a younger dentist as they won't be looking for an opportunity to keep the seat warm for your sister.

You may find this idea crazy, but we are finding in my husband's business, that this method is working great. We are finding older folks who retired early and now want something to keep themselves occupied on a part-time basis. In your case, you may also find older dentists who are in similar trouble and can't cover the expenses for a full time practice but don't want to completely retire just yet.
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archbish99
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Re: Convincing a parent to retire

Post by archbish99 » Tue May 27, 2014 8:26 pm

The orthodontist who did my braces as a teenager has staged retirement this way: He hired a younger orthodontist into the practice, and dropped to 4 days a week, and dropped another day the next year. Then the younger orthodontist bought the practice, and he became an employee working two days per week, then one, then totally retired. This multi-year handoff was negotiated as part of the younger guy's hiring, so he had two years to save a down payment and arrange financing of the rest.

My dentist took a more abrupt approach, sending out a mass letting saying that so-and-so would be taking over the practice. While I wish him the best, I didn't really care for that approach as a patient.
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inbox788
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Re: Convincing a parent to retire

Post by inbox788 » Tue May 27, 2014 10:14 pm

I don't think anyone has brought up the issue of liability from malpractice. Just like dealing with the question of older drivers. The worst thing that could happen is if there is a mistake that costs the practice, and with the current discussion, someone qualified (i.e. not the dentist himself, and not family members) needs to assess if the dentist should continue to practice. Unfortunately, as most folks age, and facilities decay, it's only going to get tougher. The only real options at the moment seem to be to sell the practice or bring in help, either hiring a dentist or adding a partner.

jollystomper
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Re: Convincing a parent to retire

Post by jollystomper » Wed May 28, 2014 7:32 am

DHolliday wrote:He has several friends from his country of origin who are in the same business so I think it's best for me to try get some of them to repeat my concern and try to convince my father to put it up for sale before it becomes totally worthless due to attrition of patients or him just being unable to continue.
Could they possibly help by making a deal to cover the office and he works part time until your sister (if interested) can join the practice? My dentist did this when he was recovering from an injury and couldn't work full time. He had dentist friends who help staff his office and cover the appointments as much as possible. He likely still had to trim back some appointments, and of course shared the revenue with the other dentists, but it minimized the impact to the customer base until we has able to get back full time. Soon after that he brought in another young dentist who will eventually take over.

MrManlyMister
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Re: Convincing a parent to retire

Post by MrManlyMister » Wed May 28, 2014 7:55 am

DHolliday wrote:The problem with that is that he continues to run his office with a full staff, for the last two or three years, his practice has been in the red, due in large part to his physical inability to work the hours he used to, so he often has to cancel appointments depleting his revenue stream. I know he has a large nest egg that he can live off of, but I also know that he is tapping into it to keep his office going.

Now with this in mind, I've urged him to hire a younger dentist who can do the work that he can no longer do, this would allow him to continue to reap the fruits of the practice he built. I've also tried to get him to sell his office or just mothball it (I'm not sure how realistic this option is, I'm not a dentist). One complicating factor is that my younger sister is in dental school, but she has 3 years before she will finish, and I suspect part of the reason my father is holding out is so she can take over the practice (hence my idea of mothballing it).

Obviously, my efforts are falling on deaf ears. Have any of you been in a similar scenario? My father is an immigrant and he basically lives to work, he was very sick a few years ago and after recovering, his first thought was to go back to work.

I am concerned that he will gradually deplete all the money he saved up - and waste it in the name of running his office just to run it for his ego, or so that he has something to do. If that comes to pass, I am not sure what he will do.
Certainly, it's your Dad's business. If he decides to deplete his money that's his choice. Hopefully he makes his decision consciously and thoughtfully.

I agree that it would be smart to bring on an associate to take over at least some of the work. Associates can easily be hired on an annual basis - thus allowing for a transition to your sister, if that's your Dad's plan.

Mothballing a dental practice is not viable. Patients cannot wait around until the business comes back to life - they'll need to find a new practice and almost certainly will never return.

Selling is certainly a viable option. If your Dad chooses that path, he can work it out with the buyer to transition himself out of the business, helping to keep the patient load in place as the transition occurs. This can keep the value of the practice (and thus the sale price) higher.

It sounds like your Dad (perhaps with the help of your sister), needs to sit down and think hard about an eventual successor plan for his business. It's unfortunate that this hasn't happened sooner, but he needs to deal with the here and now. He needs to consider what role (if any) your sister gets to play in the transition, how soon he wants to be totally out of the practice, what financial considerations he has, etc, etc. Once his vision is clear in his own mind, a business broker could help with the details (at a cost of course).

It's not clear that you should be (or are welcomed to be) part of this discussion. Other than "wanting the best for Dad", I assume you don't have any stake in the business. You can offer to help or be part of the discussion, but be sensitive to his reply - don't feel offended either way.

DHolliday
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Re: Convincing a parent to retire

Post by DHolliday » Wed May 28, 2014 8:39 pm

I have no stake in the business and my concern is rooted in a fear that my father's stubbornness will lead to a serious problem down the road. I think at this point its best to push him to sell the practice, though he has been resistant to that. I sat down with my sister over the weekend and she told me that my dad's old friend (who we call/regard as an uncle) who is childless has also offered her the ability to take over his office. Considering that my uncle is located in a city and has a larger revenue stream, she and I agreed it'd be best financially for her to take up our uncle on his offer. Also my uncle is a few years younger than my father and in much better health.

Luke Duke
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Re: Convincing a parent to retire

Post by Luke Duke » Thu May 29, 2014 9:32 am

It sounds like selling makes sense. He can probably negotiate that he be hired back part time by the new owner.

scone
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Re: Convincing a parent to retire

Post by scone » Thu May 29, 2014 2:28 pm

My endocrinologist is 77 and really does not want to retire, it's a big part of his identity. He doesn't even want to talk about a succession plan. But he is easing up a bit by working only four days a week, opening at 10 a.m., and taking an hour's lunch. I expect he will cut back to three days a week at some point, but he's the sort of guy who will die with his boots on, fighting to the end.

Maybe a gradual cutback this this would work. In any case it might be much easier for all concerned to get him to agree to cut back, rather than go cold turkey.
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Raymond
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Re: Convincing a parent to retire

Post by Raymond » Thu May 29, 2014 3:24 pm

OP, it sounds like your sister has a good situation with your uncle's practice when she graduates from dental school in a few years :happy

I hope your father won't be put out by this - how set is he on your sister stepping into *his* practice?

Does he have fond hopes of putting up a new sign in front of his office in a few years: "Dr. John Holliday and Dr. Jane Holliday"?

I agree with the earlier posters - bring up the subject of selling the practice to a younger dentist, work part-time as an employee, then gradually scale back.

-----

As an aside, I was in a situation similar to your father's seven years ago, but from the employee side.

I was a PA (physician assistant) in a solo physician specialty office, and my supervising physician was in his late sixties, 25 years older than me. I had worked for him for almost ten years.

I asked him in passing one day if he was considering hiring a younger MD or DO associate (PAs do not practice independently, but always under the supervision of a physician.)

That probably was presumptuous of me, but my private concern was that he had had two medical emergencies over the past 6 months, which kept him out of action for several weeks at a time. This required the office manager to find a locum tenens doc at very short notice.

In addition, he had not stated his plans for the future to the staff - another concern of mine was that he would walk in one day, announce that he was retiring next week and moving to Pago Pago, and wish us all good luck :oops:

Well... He flew off the handle, yelled, "I'm going to be in [specialty] long after you're gone!" and stalked off.

I thought he was going to fire me right then, fortunately not. However, when an opportunity appeared several weeks later at another office closer to home and for a significant raise, I gave my notice and moved on.

The point of my rambling? I don't know what the atmosphere is like in your father's office, but there is the possibility that staff members (dental hygienists, front office staff, billing personnel) may be looking at other opportunities if things are uncertain (your father cancelling appointments, practice in the red, no succession plan).

I wish you all the best.
"Ritter, Tod und Teufel"

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