When it's Time to Move on
You want to buy your own practice, but where do you start? Right here.
By Richard S. Kattouf, O.D.
I'm an optometrist employed by both an independent optometrist and a corporate chain for five years, and I'm ready to branch out on my own. How do I accomplish this?
V.L. Stow, via e-mail
A: Many new practitioners worry about competition. The most important thing to do is to decide where you want to live and practice. If you do the proper things (e.g., specialize, practice medical optometry, set proper fee structures at the level of ophthalmologists in the region, maintain a unique frame inventory, stress service to the patient in spectacle and contact lens delivery) "in house," then the competition is irrelevant because you no longer compete, you beat the competition. Your options are basically: start cold or buy an existing practice. Here are some details on each.
Filling someone else's shoes
We're in a "buyer's market," which means more practices are for sale but with fewer buyers to purchase. The following circumstances indicate that purchasing an existing practice might be ideal for you:
- A practice is available in the region you choose
- The selling doctor guarantees you his patient base
- The selling doctor is willing to act as your mentor
- The practice has growth potential
- The fair market value is good
- The seller is willing to be the banker (you benefit with more affordable monthly payments).
If you think this is the right option for you, then you'll enjoy the following benefits:
- Established patient base
- Senior doctor acting as consultant or private contractor to teach buyer how to run a retail optical and clinic
- Established staff
- Practice is a provider for vision and medical insurance companies
- Some senior doctors willing to act as the "banker" and extend amortize payment schedule to make it affordable to the buyer
- Usable equipment and inventory
- Ability to access medical and specialization need of the practice
- Faster growth as compared to cold start
- Usually no need for buyer to work outside of practice.
Starting from scratch
From my own companies' experiences assisting close to 200 doctors in start-up practices, you'd need to invest between $100,000 and $150,000 to start a new practice. This initial investment includes lease hold improvements (i.e. walls, flooring [tile and carpet] and built-in cabinets), inventory and equipment. Starting cold, many doctors don't have the immediate patient base that they would if they had purchased a practice.
The following circumstances indicate that starting out cold might be ideal:
- No existing practice for sale
- O.D.s in the region are all general practitioners. They're not specialized and do little medical work
- Opticals in the area are bland and perform run-of-the-mill work
- No M.D.s within 10+ miles.
Important things to consider in deciding whether to start your own practice include:
- Patient base
- Outside employment
- Willingness to Specialize
- Willingness to practice medical optometry
- Access to floor plan experts
- Ability to retain a management consultant to ensure a fast start and few errors.
It's what's inside that counts
The bottom line in your decision to purchase or start cold is the particular circumstance that you're facing. Either way, it's what you do internally that's most critical to setting yourself apart from the competition.
Dr. Kattouf is president and founder of two
management and consulting companies. For information, call (800) 745-EYES
or e-mail him at email@example.com.
The information in this column is based on actual consulting files.
Optometric Management, Issue: May 2004