Is succession on your mind? No, not the HBO show that aired its finale last year (although who hasn’t continued to wonder what Kendall Roy did next after staring, despondent, into the Hudson River or how exactly Tom Wambsgan adjusted to fatherhood).

This succession is much more important to plan for and should be far less dramatic.

If you run a private medical practice and are looking at your future, you might be overwhelmed thinking about what your business will look like without you. You might be eager to start planning but not know all the critical steps to implement for a successful succession plan.

What’s best for you, your staff, and your patients? How do you achieve the right balance of communication, planning, and strategy execution? And how do you do it without a Roy-worthy struggle?

What is succession planning?

Broadly speaking, succession planning is the deliberate process of facilitating leadership and management transition. Your succession plan can be part of your overall business plan, but it requires distinct considerations such as:

• Development of successors 
• Integration with organizational goals 
• Knowledge transfer 
• Risk management 

For medical practice owners, however, succession planning is about more than preparing for the inevitable retirement of key physicians and practitioners.

It should be a thoughtful strategy to identify, hire, retain, and develop leaders at all levels of the practice to ensure that no single practitioner can disrupt the continuity of operations and patient care. It should also be a commitment to long-term excellence goals and can even be a tool for recruitment and staff engagement.

However, because succession planning should be thoughtful, it requires more than an agreement or even a single written document.

Private practice succession plans can take years to craft and implement. There are several steps to consider as you establish your plan. Likewise, you should collaborate with stakeholders, legal counsel, and other experienced professionals who can ensure your practice’s future is secure.

Key steps to an effective succession plan for medical practices

Be proactive and set goals

A comprehensive succession plan can address short-term and long-term needs and goals for smooth transitions, regardless of circumstance.

In the short term, outline what should happen in the event of a key physician’s unexpected departure due to illness or sudden retirement. You may want to include temporary staffing solutions, redistribution of patient care responsibilities, and communication tactics to reassure both patients and staff that operations and care will not be interrupted.

In the long term, your focus will be on the gradual transition of leadership and ownership.

This can be a phased approach for a physician leader, where the retiring physician gradually reduces their hours and responsibilities while their chosen successor takes on more leadership duties. This approach allows for a smooth transition and gives the successor a head start on building strong relationships with patients and staff.

You may also want a general succession plan for physicians at any level, depending on the size of your practice. This plan can help minimize disruption to the health and growth of your practice if any physician departs.

Select a designated successor

Relationships between physicians and their patients are often personal and long-standing, especially in private practice, so selecting a designated successor may seem daunting. Patients may be worried about the continuity of care when their trusted physician retires, and staff can feel anxious about a change in leadership.

A well-executed succession plan will help alleviate these concerns by ensuring that patients continue receiving the same level of care from a new physician already familiar with their medical history and needs.

For private practice owners, succession planning is also about preserving the practice’s legacy. No matter what course of action you choose, the goal is to ensure that the practice continues to thrive and that patients receive the highest standard of care.

Consider your team’s future

The next step in succession planning is identifying other individuals and positions within the practice that are essential for its continued success.

This includes the other physicians if your practice has them and key administrative and managerial roles. Your staff is crucial for the day-to-day operation of your practice and for ensuring patient care remains uninterrupted during the transition period.

For individual physicians, identifying a successor may seem like the bulk of the plan, but you should also identify the other players who can support your successor through the transition. Before the change, you may be mentoring, training, and working alongside potential successors to ensure they are prepared ​​to lead the practice. Your staff will have an active role in that process, too.

Even if your successor is already within the practice, such as a junior partner or an associate physician who has demonstrated the potential for leadership, your team will be thinking about their individual futures and potential culture changes at the practice under the new physician’s leadership.

Supplement with leadership training

It is not enough to identify a qualified successor and communicate your plan. Your successor should also be equipped to lead your practice effectively. 

Leadership training ensures your successor can handle all the challenges of running a practice, from managing operations to navigating changing healthcare regulations.

For your long-term plan, training can begin well before your transition. This allows your successor to gradually take on more responsibilities while under the mentorship of the current practice owner. Leadership training can include formal education, such as practice management or healthcare administration courses, and practical hands-on experience working alongside the staff and current leader.

Consider all excess capital

A well-structured plan includes financial considerations and should ensure that the retiring physician receives fair compensation for their years of service—but it should also protect your practice’s financial stability.

When planning, consider important issues like the practice’s valuation, the terms for buying in or buying out ownership shares, and your comfort with the source of the capital involved. Also, consider how changes in practice leadership might affect the practice’s cash flow.

You can address these concerns by discussing them with internal stakeholders or seeking guidance from financial experts to help you navigate these financial decisions.

Choose a planning attorney you trust to oversee the process

During your planning, key legal considerations must be addressed to ensure a smooth transition. These may include:

• Drafting agreements for the transfer of ownership
• Creating employment contracts for the incoming physician
• Implementing non-compete clauses to protect your practice

It’s essential to work with an attorney experienced in these legal complexities. Your attorney can ensure all agreements are legally sound while protecting the interests of both the outgoing physician and the practice while protecting your practice’s legacy at the same time. 

Learn more from our Texas succession planning attorneys

The attorneys at The Law Offices of Shann M. Chaudhry, ESQ., work alongside practice owners to safeguard and preserve the medical business they’ve dedicated years to building.

We understand the unique challenges of passing on your practice to the next generation, and our team is dedicated to protecting your assets and the standard of patient care. 

Reach out to us to explore your succession planning options and schedule a consultation to secure the future of your practice, your patients, and your hard-earned legacy.