fix this practice
This O.D. is looking for a change. See what others did when the urge
hit them and what was involved.
Q I'm an independent
O.D. who's worked next to an optician for 12 years. I'm not happy with the arrangement and I need some options. What can you suggest?
A: This situation is common for any
O.D. working as Dr. McGee is or in a large corporate setting next to an optical. Dr. McGee had no contract with the optician, who was planning to retire.
Dr. McGee has the option of taking his records and opening up an office of his own across the street or purchasing the optician's business and incorporating it into his own practice. Because he's never operated a retail business (optical), he needs a consulting program to teach him proper inventory control, fee presentation, insurance issues, staffing and finances. Take the following two cases for example.
Dr. Rubin craves a change
Dr. Rubin was in a situation similar to Dr. McGee's. In his case, the optician's business was grossing $420,000 and his asking price was $400,000. Also, the optician owned the clinical equipment, and all of the instrumentation was at least 20 years old. He only had one lane of equipment with no automated instruments.
Comparing business values
The value of an optician's business is based on hard asset value, inventory and goodwill. In the optometric practice, goodwill is usually the greatest value. Conversely, the goodwill value in an optician's business is usually low because of the fact that opticians generally don't demand the patient loyalty, retention and insurance provider lists that optometrists do.
Dr. Rubin hired me to evaluate the optician's business, which was 24 years old. Because the larger goodwill value belonged to Dr. Rubin's practice it wasn't part of my calculations. The fair market value was $126,000. Dr. Rubin hired me as the negotiator to develop a buy-sell agreement.
After we completed the deal, I contracted the optician to become an employee of Dr. Rubin for 1 year with options for additional years. Dr. Rubin retained my consulting company to teach him business techniques for operating a retail business, add optometric specialties and maximize major medical services.
In all three doctor's cases, none of them are actual practice owners and therefore don't have experience doing payroll, hiring employees, firing employees or handling the business aspect of a practice. The following is another analogy from the corporate level.
Dr. Snyder had worked in a corporate setting for 10 years and wanted to enter the independent world of optometry. He'd never employed staff, operated a retail optical, billed major medical, or co-managed with
M.D.s. His salary was $110,000. Dr. Snyder hired my company for a "start-up consultation service." His second year gross as an independent
O.D. was $470,000 with a net of $188,000 and growing.
Doctors invest large sums of money in starting practices and there's a lot of risk involved. It's critical to add the proper consultation and management services to your budget to save you money and to ensure proper practice development without business errors (e.g., hiring, training, inventory management, fee structures, billing and reimbursement).
DR. KATTOUF IS IN PRIVATE PRACTICE IN WARREN, OHIO, AND HE'S PRESIDENT AND FOUNDER OF TWO MANAGEMENT AND CONSULTING COMPANIES. FOR INFORMATION, CALL (800) 745-EYES OR E-MAIL HIM AT
ADVANCEDEYECARE@HOTMAIL.COM. THE INFORMATION IN THIS COLUMN IS BASED ON ACTUAL CONSULTING CASE FILES.
Optometric Management, Issue: June 2002