Don’t Buy Based on ROI
The decision to purchase practice technology based solely on financial returns could cause irreparable damage.
WALTER CHOATE, O.D., F.A.A.O., GOODLETTSVILLE, TENN.
For years, it has been established that the choice to invest in new equipment is contingent on ROI. Determining ROI starts with pricing the equipment, identifying the interest rate or lease factor and assessing the contract length to arrive at the total cost and monthly payment. Following that is a discussion about the one-time Section 179 tax deduction and an analysis of all the possible CPT codes that provide a justification for the instrument use. Next is a determination of how many procedures are possible in a month to help defray the instrument’s cost and, perhaps, some assumptions about how to make money on above that. Last is a calculation of how long it will take to pay the instrument off based upon its cost and projected number of times the doctor will use it.
It may be strange to read this in an optometric business magazine, but the decision to purchase new equipment should not be based on ROI alone. Here, I explain why.
ROI tempts audits and missed diagnoses.
Far too much temptation exists to over-utilize a piece of equipment when a purchase has been made based solely on ROI. This often results in the auditing of patient records by managed care and missed diagnoses.
If found guilty of over-using an instrument or instruments during an audit, you face steep fines, possible jail time and a damaged reputation, all of which can cause irreparable financial damage to your practice.
Using devices that screen for conditions can and will lead, in time, to missed diagnoses, as you may come to rely too heavily on “normal” data generated from an instrument, vs. acquiring a proper history and review of systems. The latter should provide a road map for proper patient evaluation.
Several years ago, I heard George Spaeth, M.D., of Wills Eye, discuss how residents would many times miss a glaucoma diagnosis more when given programmed test results before seeing the patient. He said that more accurate medical decisions were made when residents were given a blank piece of paper and asked to let the patient’s chief complaint, history and review of systems lead the exam.
Once you make a diagnosis, these instruments are helpful in monitoring treatment strategies, disease progression and treatment modification. Technology cannot make you a great clinician; rather it makes a good, insightful clinician better.
The bottom line: When the decision to buy a new instrument is made solely on potential income production, rising above the temptation to over-utilize the technology is difficult. I teach my staff to always make recommendations to a patient as if everything we do is free. Following this approach, you put our patients’ best interests first.
Other criteria play a role.
The ROI for the “right” equipment purchase is almost always well beyond billable income. To determine whether an equipment purchase is “right,” you should answer, “yes” to the following five questions:
1. Does the technology give me better, usable information vs. seeing a patient without it?
2. Is it clear how the information derived will assist in making a diagnosis or formulating a better treatment strategy?
3. Does the technology fit with other technologies and patient flow in my office?
4. If I cannot make a penny with the technology, can I afford it, and does the improvement in patient care justify the purchase alone?
5. Do I really need the technology?
Most large volume independent optometry practices have maintained their dominant market positions by continued reinvestment in the “right” equipment, facilities and staff. When each addition makes sense for your practice type and scientifically adds to diagnosis and management, you create patient loyalty and referrals, which boosts revenue. In fact, many practice management experts recommend that every returning patient see at least one new piece of technology (that meets the aforementioned criteria) in one’s practice each year. The reason: Very few practices can truly successfully compete with the big box retailers on price and convenience. So, the biggest revenue from your equipment purchases may be that your practice is technologically superior to your competition — something significant considering Internet and social media endorsements and criticism.
Resisting the temptation
I do expect technology to pay for itself. But, I resist the temptation to buy it based on screening revenue that can be routinely applied to all patients. Remember, in medicine, diagnosis drives testing and treatment, and not the other way around. This is the only solid approach that you should take. OM
|Dr. Choate is in private practice and vice president of Market Development of Optometric Medical Solutions, which seeks to promote the medical model in optometry. Also, he is an adjunct professor at Southern College of Optometry, the University of Missouri - St. Louis School of Optometry, and the University of Alabama Birmingham School of Optometry. In addition, he is an FDA investigator and consultant for contact lens-related products and equipment, a fellow of the American Academy of Optometry and a charter member of the American Optometric Association’s Contact Lens Section. E-mail him at email@example.com, or send comments to firstname.lastname@example.org.|