Is There Room in Private Practice for New Graduates?
Private practices will need to get creative if they hope
to accommodate the wave of "soon-to-be graduates."
BY WALTER D. WEST, O.D., F.A.A.O., Chief Optometric Editor
I have the pleasure of working with senior optometry students and residents from across the country and I constantly learn from these encounters. It's no surprise that the conversation of those soon to graduate ultimately turns to their plans after graduation or residency.
Some of the "soon-to-be graduates" plan to participate in a residency program. Others, although few, have private practice opportunities. Then there's the majority who plan to practice in what they call "commercial practice." I might add that some of these students still aren't sure what they'll do, but they're actively searching for opportunities.
Desiring private practice
In asking senior optometry students what they would prefer to do with their training after graduation, the majority respond that they would like to become involved in a private practice setting. Yet when asked what they will do after graduation, the majority respond that they will practice commercially.
It's sad to think that the majority of graduating optometrists will practice in a setting that wasn't their first choice, but the reality of the marketplace is that "commercial practice" has made a place for new graduates whereas private practice optometry, for the most part, has not.
It sounds like a good idea, but ...
One scenario that new graduates mention is that they will practice "commercially" until they pay off their loans and then they open their own practice. It sounds like a reasonable plan and I've seen it work in some cases.
However, I offer a word of caution to those who subscribe to the "commercial themselves out of debt" plan. While they pay off their student debt, new graduates typically take on more debt. Usually, this new debt is a function of needing a new car and of course, why should a grad pay rent when she can buy a house? Then there's the potential for marriage, children and the responsibilities and expenses that come with a family.
Before you know it, the new graduate has paid off student debt, but has replaced it with consumer debt. Debt makes it almost impossible for new grads to leave their "commercial" practice, turning their income flow to zero while they begin their "private" practice.
What dynamics affect the lack of "private practice" opportunities available to new graduates? Here's one: The average private practice grosses about $372,000 each year, and the average optometrist's salary is approximately $114,000 each year.
Now what do salary and practice gross have to do with opportunities for new graduates in private practice? Consider that this year, the average optometry school graduate will have in the neighborhood of $125,000 in student debt, so the average graduate needs annual earnings of $78,000 to amortize student debt and still have enough left over to live on.
Who can afford a new grad?
To make room for a new graduate at that salary, the average optometrist must be willing to reduce his or her annual salary to $36,000 per year, which isn't likely to happen.
But there might be a way for a group of average practitioners in the same community to provide an opportunity by using a new graduate one or two days each week. In return, the new graduate has an opportunity to broaden the scope of care in the existing practices, which creates the cash flow that pays the salary, rather than it being "taken away" from the existing practitioner.
Optometric Management, Issue: March 2005