Many healthcare professionals view succession planning as something to address near retirement. In reality, the strongest transitions are built years earlier through deliberate business and personal financial planning.
“Succession planning extends beyond transferring ownership of a practice,” said Judy Raffa, Head of Strategic Advisory Solutions, PNC Private Bank®. “It requires a coordinated approach throughout a career that connects business planning with personal financial strategy, helping shape practice value, future flexibility, and retirement outcomes.”
Whether operating a solo practice or part of a larger group, healthcare professionals face unique succession challenges. A practice's value is often closely tied to its owners, patient relationships, and reputation. As a result, succession planning is about more than finding a buyer. It is about protecting practice value, preparing for the unexpected, and creating flexibility to transition on the owner’s own terms.
The Business Side of Succession Planning
- Build a Strong Ownership Framework
For practices with multiple owners, clear governance is the foundation of a successful transition. Ownership structures should be documented and reviewed regularly to reflect how the practice operates today. This is especially important when ownership extends beyond the practice itself to real estate entities, management companies, or other affiliated businesses.
Just as important is a well-designed buy-sell agreement. These agreements outline how ownership will transfer when a partner leaves the practice, including how interests will be valued, who can purchase them, and how the transaction will be funded.
Raffa notes: “Many agreements become outdated as ownership changes, new partners join, or business operations evolve. Periodic reviews can help ensure agreements continue to support the needs of both the owners and the practice.”
- Plan for the Unexpected
Retirement is only one type of ownership transition. Death, disability, divorce, bankruptcy, or the loss of professional license can disrupt both operations and finances if a practice lacks a clear plan.
“Viewing succession planning through a risk-management lens can help business owners prepare for these scenarios before a crisis occurs, protecting owners, employees, patients and families,” Raffa said.
For solo practitioners, contingency planning is especially important. Because practice value is often closely tied to the individual provider, owners should consider how patient care, staffing, and business operations would continue if they were suddenly unable to practice. Establishing relationships with another provider, practice group, or potential successor may help preserve continuity and value during a transition.
- Preserve Practice Value
Even the best succession plan can fall short if valuation and liquidity have not been addressed. Establishing a valuation methodology in advance can reduce uncertainty and help avoid disputes when ownership changes occur. Some practices rely on formulas, while others use periodic third-party valuations.
A clear funding strategy is equally important. Life insurance, disability buyout coverage, installment arrangements and seller financing can all play a role in providing liquidity when ownership interests are transferred.
“Even well-structured buy-sell agreements can create challenges if liquidity has not been addressed in advance,” said Jon Kessler, Head of Credit & Cash Management Solutions, PNC Private Bank. “Funding strategies should be evaluated alongside succession plans to help ensure ownership transitions can occur without placing unnecessary strain on the practice’s operations or cash flow.”
Practice value also depends on people. Long-tenured employees often help maintain patient relationships and operational continuity during periods of change. Identifying key personnel, implementing retention strategies and maintaining appropriate risk-management protections can help strengthen a practice's long-term stability.
The Personal Side of Succession Planning
“While business planning is critical, succession outcomes are often influenced by a healthcare professional's personal financial readiness,” Raffa said. “The most effective strategies align personal finances with business objectives throughout a career.”
- Early Career: Build the Foundation
Early in a career, priorities often include managing student debt, establishing healthy financial habits and protecting earning power. Disability coverage, liability protection and thoughtful planning can create flexibility and opportunity later.
- Early- to Mid-Career: Build Wealth Beyond the Practice
As income grows, the focus often shifts toward retirement savings, investment management, and family financial planning. The goal is to build wealth independently of the practice itself. Doing so can reduce pressure to achieve a specific sale price or transaction outcome when the time comes to transition ownership.
Maximizing retirement savings and maintaining core estate-planning documents can also help strengthen long-term financial independence.
“Understanding how a future sale, buy-in, or ownership transfer may affect personal cash flow is an important part of retirement readiness,” Kessler said. “Evaluating liquidity needs well before a transaction can help owners make decisions from a position of strength rather than necessity.”
- Mid- to Late-Career: Connect the Business and Personal Plan
As retirement approaches, healthcare professionals should evaluate whether their personal resources and anticipated practice value align with their desired lifestyle and timeline. For some, the eventual sale of the practice may be central to retirement planning. For others, it may serve as an enhancement to an already secure financial future.
This stage may also involve evaluating estate-planning, asset-protection and tax strategies that support succession goals.
Raffa points out one of the most important — and simple —questions at this stage: “If the practice transitioned tomorrow, would my personal financial plan still support long-term goals? The answer can help shape both business decisions and retirement timing.”
Bringing It All Together
Effective succession planning is not a one-time event. By addressing ownership structures, transition planning, practice value, and personal financial readiness well before retirement, healthcare professionals can create more options and greater confidence about what's next.
Kessler emphasizes the importance of planning for liquidity and funding needs well before a transition occurs, noting that early preparation can provide practice owners with greater flexibility as opportunities and timelines evolve.
Raffa adds: “The practices that transition most successfully are rarely those that start planning at retirement. They are the ones that view succession planning as a lifelong strategy, integrating business and personal decisions well before an exit becomes imminent.”
