fix this practice
Merging Made Easy
Not sure if merging your practice is a
good idea? Read these tips to find out.
Richard S. Kattouf, O.D.
I'm an independent O.D. and am considering merging practices with another O.D.
Is this a good idea? What do we need to do to commence this project?
Dr. S. A. Riley, via e-mail
Merging independent practices is a great idea, but there's one large potential
negative issue that's difficult to project. I'll cover the pros and the cons.
Go ahead and merge
Here's why merging your practice with another
optometric practice is a good idea:
- Lower cost of goods. One frame and contact
lens inventory for two doctors costs less than two separate inventories.
- Lower cost of employees (percent of salaries
to gross). The merger will result in a smaller overall staff size.
- Lower cost of rent for each doctor (or both
could share in cost of owning a building). Either way is cheaper than going
- Better schedules for each doctor. Each O.D.
can reduce her patient-interaction hours and her availability for
- Each O.D. has more time to develop an
- Rather than having the sole responsibility for
administrative tasks, you get to share them with the other doctor.
- Sharing the cost of telephone, electric and
gas lowers the cost of operation for each doctor.
- You also get to share equipment costs, which
lowers each O.D.'s investment.
- It's easier to take time for continuing
education or a vacation because the other doctor can cover the office.
ILLUSTRATION BY GREG
Rethinking your decision
There's only one risk to merging your practice
with another O.D.'s practice, but it's significant: The chemistry between the
doctors is a big unknown. You're entering into a professional marriage. Egos,
personalities, mode of practice, spouse's attitude, medical problems and
peculiarities may not raise their ugly head until the two of you complete the
To begin the merger, you should have a
professional appraise each practice. If one practice has a higher value, then
make an agreement for the owner of the lesser-valued practice to pay the
difference in value or to work it off. The doctor who owns the lower-valued
practice can agree to a work-equity concept in which he'll work more hours for
lesser financial compensation until he pays off the other doctor.
When entering into a potential merger, consider
hiring a consultant who has experience in these ventures. When two parties
attempt to do this on their own, it often leads to significant adversarial
posturing. Most attorneys and accountants have no experience in optometric or
A consultant will develop a merger agreement and
act as the negotiator. Once both parties agree to the points of the merger, give
the document to an attorney to put it into a legal document. This process will
save you and your potential partner time, money and stress.
Merging makes sense
You want to join practices with little stress.
That's why I suggest involving a consultant when considering merging your
practice with another. The managed care environment we find ourselves in makes
it difficult to maintain a high net income. Mergers are one answer to lower cost
of operations and raising net profit.
Dr. Kattouf is president and founder of two
management and consulting companies. For information, call (800) 745-EYES
or e-mail him at firstname.lastname@example.org.
The information in this column is based on actual consulting files.
Optometric Management, Issue: March 2004