Physicians Delaying Retirement Because of Recent Recession

August 08, 2011

August 8, 2011 — Many physicians who had planned to retire and see more of their grandkids are still seeing patients, according to a survey released last week by the healthcare recruiting firm Jackson & Coker.

The number 1 reason why physicians are delaying retirement is the recession of 2008-2009, which wreaked havoc on their investment portfolios and net worth, the survey states.

"I will never be able to retire," one physician said in his survey response. Another lamented that his IRA was performing dismally and that "the amount of funds that I can deposit has decreased since my spending power has fallen (no raise in 5-6 years)."

Of 522 physicians who completed the online survey, 52% said their retirement plans had changed since the onset of the recession. Of this group, which included physicians of all ages, 70% said they planned to work longer so they could make up for the downturn's pernicious effects on their investments.

The story is much the same for a subset of physicians who, just before the recession, had planned to hang up their stethoscope within 6 years, according to the Jackson & Coker survey. Fifty-five percent of them are postponing retirement on account of shrunken nest eggs. Another 4% who are working longer cite family or personal reasons, and 2% blame healthcare reform.

"Most of Them Are as Mad as Hell"

Keith Borglum

Keith Borglum, a medical practice consultant, appraiser, and broker in Santa Rosa, California, told Medscape Medical News that the retirement survey findings are right on the money.

"I've had physician clients who retired in their late 60s before the recession and came back to work afterwards because of the (recession's) impact," said Borglum. "Most of them are as mad as hell."

In addition to investment losses and stagnant income, physicians nearing their golden years have been hammered by a depressed housing market, Borglum said.

"A lot of physicians got overextended buying retirement homes," he said. Many have ended up underwater on them, owing more on the mortgage than the house is worth. Meanwhile, they cannot find a buyer for their primary residence.

Mike La Penna

The need to postpone retirement is stirring up trouble in group practices with mandatory retirement ages, notes practice management consultant Mike La Penna, president of The La Penna Group in Grand Rapids, Michigan.

"Physicians agree to a retirement age coming into the group," La Penna told Medscape Medical News. "When they ask if they can work past it, the partners may not always let them. The younger doctors joined assuming that the older guys will leave at a set time.

"This situation creates tremendous internal pressure."

Job Opportunities Abound in Physician-Shortage Era

However, physicians who must extend their careers because of tough economic times need not worry about job opportunities, experts say. After all, physicians are in short supply.

Roughly one third of the retirement postponers plan to take part-time positions or work periodically as a locum tenens, according to the Jackson & Coker survey. "A locum tenens might work 2 weeks, and take the next 2 weeks off," said Edward McEachern, vice president of marketing at Jackson & Coker.

Healthcare reform, notes Keith Borglum, is creating spots for older physicians who want to keep practicing medicine, but not at the furious pace they are accustomed to. The law, he explains, calls for the formation of accountable care organizations (ACOs), usually consisting of hospitals and physicians, that can earn Medicare bonuses for coordinating patient care while meeting quality standards.

Hospitals are buying or creating large group practices to compete in the ACO world, said Borglum, and these groups offer older physicians far more flexibility with hours and call schedule than they would have in solo practices.

Work plans may change for a generation of senior physicians, however, if the economy rebounds and investment portfolios fatten up. A recovery may set off an enormous wave of physician retirements, said Edward McEachern at Jackson & Coker, and that is a worrisome prospect from a public health point of view.

"The physician shortage you've heard about it will be dramatic," McEachern said.

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