Optometric Management Tip # 237   -   Wednesday, August 02, 2006
Jump-start Your Practice: Part 3

Many doctors believe they are doing a good job in practice management by keeping expenses down. To a point, we all should watch expenses and reduce financial waste, but we also must be mindful of creating a cycle-down effect. You cannot cut your way to prosperity! You must spend money to make money!

A cycle-down effect occurs when cost-saving measures reduce services, and they almost always do. A hypothetical optometrist looking to increase her net income decides to not hire more staff and to not spend money on equipment or inventory. In turn, service is not quite as good as the competitive eye care practices in the area, but the doctor rationalizes that no one will notice. Actually, patients donít complain but they arenít overly impressed either. They are gradually pulled to other providers who they hear about from enthusiastic friends. Net income for our doctor remains flat or declines a bit, so she cuts expenses a little more. Service drops off further and the downward cycle continues. Eventually, the only patients remaining are the ones on the very worst vision plans.

Deciding to not invest in the practice is virtually the same thing as cutting expenses. Practices that are stagnant will lose ground to other practices which are improving. On the other hand, practice owners who invest every year create a cycle-up effect. Patients and staff can see that the practice is on the cutting edge of technology and that customer service is a priority. There is something exciting to talk about in the office and outside in the real world.

Jump-start #3: Buy or lease a new instrument now

A new high-tech clinical instrument can jump-start your practice. I believe in investing in at least one major item every year, even if you have to borrow the money or lease it. New equipment can do great things. Instrument priority list

Deciding on what instrument to invest in next is a very individual decision. It depends on what your practice already has, your practice specialty and your goals. Here are few ideas to get you started.
Best wishes for continued success,

Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management