Starting a Practice from the Ground Up
Starting a Practice from the Ground Up
This optometrist started her own practice — cold — shortly after optometry school. Learn about the initial steps she took and consider if you're up for the same challenge.
By Gina Wesley, O.D., M.S., F.A.A.O., Medina, Minn.
This article is the first in a series about how to start your own private practice. Gina Wesley, O.D., M.S., F.A.A.O., a 2006 graduate of The Ohio State University College of Optometry, will discuss how to search for office space, research demographic information, secure financing, apply for medical insurance credentials and negotiate a lease agreement. She'll also discuss how to develop a timeline, design office space, choose equipment, implement office systems, hire the right staff and prepare for opening day. Sounds like a huge undertaking, but if you walk through the process one step at a time, Dr. Wesley says you can definitely accomplish your goal.
|Dr. Wesley practices at Complete Eye Care of Medina and Crystal Vision Clinic in Minnesota. You can reach her at email@example.com.|
WHEN I WAS A STUDENT in optometry school, I was fortunate to have a business course series as part of my academic track. The course covered everything: basic outlines of different types of practices, setting personal goals, even presenting a mock business proposal to investors. One key message throughout warned of the risks of opening a practice cold. Despite this warning, I kept thinking that some optometrists must have taken this chance, or there'd be no private practices.
Granted, opening a new practice from scratch is a massive undertaking for a new O.D. But if you do your homework, you can launch a successful career early on, which might be the best time in your life to do so. Your energy and motivation may wane as the years go by, but if you embrace the enthusiasm and drive you have now as a new O.D., you can make the dream of starting your own practice a reality—sooner rather than later.
In this article, I'll discuss the initial steps I took to open my own practice that you can take as well.
Location, Location, Location
First, consider if there's a need for primary or specialty eye care in a given region. I was living in an outlying suburb that had no optometric care for many miles. I hadn't planned on pursuing my dream of opening my own practice less than 2 years after graduation, but I recognized a golden opportunity. I figured if I didn't seize the opportunity, some other optometrist would, and I'd regret hesitating later on. Once you identify a need for eye care in your community, you'll want to take the following three steps:
1. Search for space and read existing data. Look for office space that real estate developers are leasing in an area in which you'd like to work, and take the grand tour. There were several vacant offices available in my area. And although some weren't conducive to an optometric practice or were just too expensive, I reviewed the demographic research the leasing companies had posted on their Web sites. These spaces were within a mile or two of where I wanted my practice to be located, so the research was useful. I figured I could use it to support the need for my optometric practice when I spoke to potential lenders. The data was particularly valuable in my case, because I'm leasing from a family-owned office building. It wasn't commercially developed, so the building owners had no demographic or economic data. Some of the data available from leasing companies and developers, include the number of cars that pass by the area each day, the average household income within a 5-mile radius and the number of residents between the ages of 25 and 40.
2. Seek data online. You also can search for data online at census.gov or on county or city Web sites. These sites usually provide information on population projections, housing data and economic indicators. One of the key bits of information to consider is the age of the population you'd be serving. Is the population young? Is the population elderly, yielding more medical visits now but less patient numbers in later years? Does the community have a large commuting population, which may be better served by later office hours? Is the area brimming with industry, indicating a need for prescriptions for safety glasses? Is there a large pediatric patient base? The answers to these questions will help you decide if the area is right for you and the type of practice you want to open.
3. Think convenience and community. Consider living in close proximity to your office. It's been easier to get my practice up and running and serve my patients in emergency situations because I have a short commute. If you live near your practice, you'll also have that sense of belonging in the community. It's much easier for patients to connect with you on a personal level when you and your family are part of their neighborhood.
|Opening a new practice from scratch is a massive undertaking for a new O.D. But if you do your homework, you can launch a successful career early on.|
Long before you open your own practice, you'll need to develop a solid financial plan and apply for financing. Developing a financial plan is the first of many steps toward success. You may need to speak with one or more financial advisors and meet with lenders from various institutions. Here's what you'll need to do:
- Maintain continuous cash flow. The lenders I met with all had one key question for me up front: "How will you support yourself during your first year or two in practice?" Business generally is slow for a new start-up, because it takes time to get your name out there and develop a patient base. Realistically, you'll need to maintain some form of steady income while you get your practice off the ground. In my case, I was able to keep my part-time job at another practice.
- Strike a balance. It's vital, but difficult, to strike a balance between continuing your employment for financial reasons and dedicating sufficient time to build your new practice. In discussions with other optometrists, I've heard of doctors whose new practices couldn't get off the ground because they were too financially dependent on their former jobs. However, not having another source of income could reduce the amount of financial capital you'd receive from a bank—which in turn would hinder the financial success of your practice. To alleviate some of your financial burdens, you can choose to keep your older car, minimize travel and other entertainment expenses and reduce debt.
- Make projections. To determine how much it might cost you to start your practice and run it successfully, create financial statements that project anticipated revenue and expenses. These include income statements, balance sheets, cash flow statements and start-up costs. I was out of my element when it came to developing these projections and linking them together, so I sought help from financial advisors and other optometrists. Once you begin working with financial statements and understanding the numbers associated with turning a profit, you gain tremendous insight. For example, I realized that some of the properties I originally considered were far too expensive for a brand-new practice.
- Learn about lenders. Once your business plan contains the appropriate financial documentation, contact lending institutions, such as traditional banks and credit unions, and check out Small Business Administration (SBA) loans. In my research, I've discovered financial institutions that loan money specifically to health professionals. These lenders offer some advantages over others with regard to the length of the note, interest rates and other terms of the loan. I suggest exploring all avenues before deciding which lender is right for you.
- Seek special funding. Explore economic development funds, which may be available through your city or county government. These funds are set aside to spur development, and most are grants you can use toward build-out or remodeling expenses. Also, you may qualify for a reduced-interest loan when borrowing funds, because of the population you'll serve or the services you'll provide. So it's worth investigating.
Reach Out for Guidance
Many O.D.s have come before you. So use their knowledge and experience to your advantage. I wouldn't have succeeded without the resourcefulness of the many professionals I contacted. I began by reaching out to a doctor I met while in optometry school. She'd started a new practice several states away about 1 year before my endeavor. Not only did she answer some preliminary questions, she referred me to other people who could help me. I also sought the advice of a financial associate who helped me with projections. I asked my father, who happens to be a lawyer, to guide me in all things legal. Having legal counsel to review letters of intent, contracts and loan agreements is a must. Most state optometric associations provide legal counsel or can recommend a qualified attorney.
|Having legal counsel to review letters of intent, contracts and loan agreements is a must.|
The doctor who gave me guidance early on also put me in touch with an optometric consultant. Although consultants aren't for everyone, I believe I've benefited tremendously from the advice I received from him. I would've missed many small details during the planning stage, some of which were vital. Consider if using a consultant is right for you. Talk to other O.D.s, and ask who they'd recommend.
Other great sources of information were the doctors and staff at the practice where I worked. They helped me develop financial statements, plan for expenses and address smaller, but equally important, details that helped me start my practice. If you don't have this sort of relationship with your current employer, I encourage you to find a mentor to guide you through the process and help answer general practice management questions.
As soon as you know where your practice will be located, begin applying for credentials to participate in various medical insurance and vision plans. Since my office space had to be completely built-out, I had time to apply to become a provider of most major medical and vision insurance plans. Ask your current employer how it applied for its credentials and for a list of contact information for key optical insurance companies. And conduct online research. If you don't do your homework, you'll limit the number of patients eligible to see you.
Making the Decision
Once you've thoroughly researched your location, reviewed financial projections and surrounded yourself with a knowledgeable support team, making a commitment is the next step. You'll need to have patience, because opening your own practice will take time and great attention to detail. The goal, of course, is professional fulfillment, independence and—ultimately—success, so it's worth the effort. In the next issue of new O.D., I'll discuss how to negotiate a lease agreement, develop a timeline, design your office and purchase the right equipment. nOD
Optometric Management, Issue: June 2008