Becoming Your Own BOSS
Becoming Your Own BOSS
Can practice ownership work for you?
LOU MANCINELLI, Philadelphia, Pa.
Facing today's economic realities, why would an optometrist consider owning a private practice? Consider that the median salary for an optometrist employed by an O.D. is $85,000, and $100,500 for an optometrist working in an M.D. practice, reports a 2007 American Optometric Association study. And according to the website Pay-scale.com, which offers free salary reports, salaries at one national optometry chain range between $78,800 and $92,200. These compensation levels don't include any of the risks and demands of practice ownership, such as the financial burden of investing in a practice.
Such salary levels provide an attractive incentive for recent graduates who face the challenge of repaying six-figure student loans. Beyond salary considerations, employed O.D.s often enjoy flexible schedules. They can devote their time solely to practicing optometry, rather than balancing books, purchasing equipment, buying/leasing real estate, optimizing inventory levels, addressing staff issues and handling scores of additional management tasks.
"It's a lot easier to go work for someone else," says Eric Stamper, O.D., a 2007 graduate from the Southern College of Optometry, in Memphis, Tenn., who opened Visionary Eyecare Center cold in Hendersonville, Tenn. in May 2008.
So, what can owning a private practice offer?
According to the optometrists interviewed for this article, purchasing a practice in an educated manner can plant the seeds for profitable long-term returns. And, private practice ownership provides optometrists with the opportunity to practice both as a clinician and a business leader.
A personal choice
"In general, it's a lifestyle choice," says Dr. Stamper. "You can be your own boss."
Despite the long hours and delayed short-term financial returns, that desire to be a leader is critical, say those doctors interviewed.
"You can run your business and practice medicine the way you think is best — not how someone else tells you to," he says.
Through the business plan he developed and executed, Dr. Stamper says he has watched his practice grow to provide care for more than 1,500 patients.
Like many recent optometry school graduates, Dr. Stamper didn't plan to jump immediately into practice ownership.
"Before I graduated, I looked for a place I could become an associate and then buy, but there weren't any (associate arrangements) that worked. I looked for a place to live, and I didn't find what I wanted except in Hendersonville. I researched the area, and there was no opportunity to join a private practice, so I opened my own."
Creating a clear vision
Gina Wesley, O.D., M.S., F.A.A.O., a 2006 graduate of The Ohio State University College of Optometry, in Columbus, (who authored this month's marketing article), says she wanted to create what she envisioned to be an ideal practice and to love where she worked.
"Opening my own practice was the way to do that," she says. "I knew I would regret it if I didn't do it."
After graduating, Dr. Wesley opened her own practice cold in April 2008. The practice, — Complete Eye Care of Medina, located in Medina, Minn. — now serves more than 2,000 patients.
To make her vision a reality, Dr. Wesley researched the area thoroughly. In looking at other optometric practices in the Twin Cities region that opened around the same time as her own, she notes that each has grown at a different rate.
"When you research an area, determine if there is a population to support your practice," says Dr. Wesley. "Not just now, but 10 to 15 years from now as well. If the area has a lot of seniors, it might be lucrative the first five years, but what about after that?"
Your research should also answer questions about residing in the community. "Ask yourself, ‘Am I going to live in this area for a long time?’" says Dr. Wesley. "Know in the end it is a leap of faith, but there is a high rate of success for optometrists who open a practice cold."
For Christine Blick, O.D., the journey to practice ownership took an unusual course. Dr. Blick decided to become an O.D. after working as an optician for 23 years. Like Dr. Wesley, she too had a clear vision of the type of practice — and location — she desired. As a single parent with two daughters and a desire to establish a practice, Dr. Blick says she wanted to practice in an upscale community and "to combine optometry with fashion."
She opened Envision Eyecare in 2007, in Celebration, Fla. Celebration is a community planned and built by the Walt Disney Company, which "offered a safe and progressive environment for my family," she says."
Your invaluable network
Opening a practice when faced with challenging economic conditions can be a daunting task, says Dr. Wesley. So, how can you learn to run a practice successfully and learn to avoid mistakes before you even look for a location? She suggests you do what she did and seek the advice of those professionals you met through optometry school.
Also, consider borrowing tips from other successful business owners and optometrists you respect, she ads.
"The interesting thing about mentors is some are open and some are tight-lipped," adds Dr. Blick. "When I see a doctor who postures themselves the way I want to posture myself, I talk to them. Sometimes I schedule an appointment with them. I take their ideas, and I personalize them."
Not only should you observe the techniques of top practices, but also consider talking to O.D.s, opticians and staff at less successful practices. Ask them how they operate, Dr. Blick advises.
In your quest for information, don't overlook vendors. Sales representatives can be another great resource because you can ask them what kinds of behaviors they see at other offices —both the good and bad — she adds.
Dr. Wesley says she expanded her network beyond optometry. Her father, a lawyer, reviewed legal documents related to the practice and provided her with essential advice about her lease. She suggests asking local, city and state professional societies for educational resources, and that you research medical journals for practice management seminars, articles about starting practices and business management tips.
Do you need a consultation?
While outside resources can be valuable, also consider investing in the services of an experienced pro. Utilizing the knowledge of an optometric consultant who specializes in building practices from the ground up can open the discussion to subjects you may have otherwise overlooked.
"Knowing where to find information is critical to success," says Dr. Wesley, who sought the services of consultants. "You have to realize that you are not going to know all the answers," she says. "You have to reach out. A lot of times another person can think of something or see where you missed something about the financial resources, the building layout or the area where you may practice."
Dr. Stamper says he also sought the services of a consulting group. He says his consultants helped him compose a business plan that included expected costs, a market study that provided facts about the local demographic and projections, such as possible number of patients, expenses and expected revenue.
Securing your financing
Dr. Stamper says he borrowed upwards of $200,000 to purchase his practice. He says he secured a loan as a result of his familiarity with his business plan and another valuable business attribute — persistence. "Most lenders wanted someone with two years of experience, but I was just out of school," he says. "I kept going to banks and finance companies, and I finally found one. But in order to qualify, I did need a co-signer."
Dr. Blick says she needed $200,000 to open her practice. She spent $125,000 to start and used the remaining $75,000 to grow the business.
Starting costs include leasing space, furniture, equipment, supplies and payroll. And remember, you have to be able to eat.
"If you can borrow and make it work with cash-flow — good," says Dr. Wesley. "But you should be prepared to put in your own money." In fact, Dr. Wesley says she funded her practice by combining some of her own finances with a loan she received through a health professional lending company.
Also, be certain that you plan realistically, so you don't place undo pressure on the new practice, notes Dr. Wesley. "If you have to see a moderate to large number of patients each month — say 50 or more — to cover your expenses, including your loan payment, during that first year as a cold start, it may be a financially risky situation to get involved with," she says.
Sacrifice is also a key element when you start out, says Dr. Blick. She urges O.D.s interested in opening a practice cold to "get your personal expenses as low as possible," and "make sure you have a second stream of income" while your getting your practice off the ground.
Dr. Blick earned a second stream of income from part-time employment at another practice. This practice, however, was located 20 miles away from her practice, so as to avoid competing with herself.
Pearls for creating the successful practice
Here are a number of pearls those interviewed provide:
► Practice the fundamentals. "Success is mainly about basics. We provide a fantastic eye exam to everyone who comes in," says Dr. Stamper. "We tell them what's going on with their eyes. We offer quality frames and lenses."
► Benchmark. "We could have grown faster, but I wasn't paying attention to benchmarks that indicated how healthy the practice was. I needed to look at the numbers weekly and pay more attention to the business aspect of things," says Dr. Blick. " In the beginning, I was all about the patient's experience, but I needed to pay more attention to crunching numbers. And I would have been slower to hire and quicker to fire."
► Start with the right size facility. "I don't know if it was a mistake, but we wanted to have a beautiful practice to set us apart from other optometrists," says Dr. Stamper. "As a result, we invested in a bigger practice than we needed, and so our overhead is high. I could have given good exams without a beautiful practice and kept the overhead low and expanded to a bigger office later."
► Don't run too lean. Dr. Wesley says that if she could open her practice over again, she might have hired an additional part-time staffer to relieve some of the stress from her one full-time employee. And, "what if she got sick?" says Dr. Wesley.
► Create a team of professionals. "I think one of the keys to my success is I grounded myself with a team of professionals," says Dr. Wesley. "I hired people who already knew what they were doing. That allowed me to … promote and network."
► Try to make your loan payments as low as possible to keep your overhead low. "It's a great goal to open a practice, but be prepared to not live the big life right away," says Dr. Stamper. "It's a lot of work and not a lot of money right away, but it's worth it — and you hope over the long run you will make more money than you would have working for another O.D."
A final thought
For those considering practice ownership, Dr. Blick says it's also important to "have fun."
"If you are forward-thinking and visionary, you will grow," she says. "Life's a funny thing. "When you start focusing on something you want, all these opportunities present themselves." OM
|Mr. Mancinelli is a freelance writer based in suburban Philadelphia.|
Optometric Management, Issue: August 2010