This may sound high, but a practice that collected $1.5 million the year previous can afford to pay for this loan. You'll have to form a business budget and make sure that this is manageable. One way to view it: let's say the retiring doctor employs 1 optometrist and 5 office staff, collected $1.5 million, and paid himself/herself $350,000.
You may see a 10% or higher reduction in patients when the physician retires (so it's more ideal to have a physician who is willing to stay on as an employee part-time to assist in the transition). Let's assume the doc leaves and your patient flow is decreased by 10% and you collect $1.35. You'll have to budget your practice to now absorb $100K/year loan payment. Thus, you may only be able to pay yourself ~$100K for the first year until you increase the traffic or reduce costs in your new practice.
I would respectfully disagree with that for a couple of reasons:
First of all, I'm not a fan of a doctor staying on for more than at most, a couple of weeks. As long as the old doctor is around, patients will tend to gravitate towards them.
I've seen every kind of scenario played out....a lengthy transition, a short transition, and the one in which the old doc vanishes like a fart in the wind.
In my opinion, the better scenario is to have the old doctor just vanish. No ads in the newspaper, no letters sent, nothing. When patients phone for appointments, the staff informs them that Dr. Old retired and that the new doctor is Doctor New who was handpicked by Dr. Old to replace him.
Fact is, the records are there, it's the same staff, and the verbal endorsement is more than enough for 99% of patients. If Dr. Old is retired, then patients need a new doctor anyways, so it might as well be Dr. New.
A small handful of patients will be annoyed that they weren't "personally notified."
You calmly explain to them that Dr. Old didn't want to make a big fuss and he specifically requested that no formal announcements be made. Patients almost universally accept that.
This is how I did it with my practice purchase and it worked WONDERFULLY. I purchased a practice from a doctor who was in the practice for 40 years and was/is a local legend in the local service clubs, etc. etc. The number of patients who defected I can count on one hand. Those were limited to people who used to come to the office, moved away, and used to come back "once a year" to see the old guy. Now that I was there, there was no reason for them to come all the distance.
Another couple of patients got bitter and left because they somehow felt that by leaving, they were punishing the old doctor for retiring. But the fact is, these people would have left anyways even if the old guy hung around.
I also disagree with the numbers put forth regarding salary. The scenario described is a 10% reduction in gross but a 60% reduction in salary. Unless the practice is operating the absolute thinnest of margins, that is a virtual impossibility. A 10% reduction in gross almost surely results in at least some reduction of overhead. You can reduce staff hours if need be. There's all kinds of ways of handling a drop in gross, but if you play your cards right, there shouldn't be ANY drop in gross. In fact, you should have a GAIN. I did. I know plenty of other ODs and ophthalmologists who did too.
