By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD
Nov. 20, 2019
With many ODs opting to sell to private-equity-backed buyers, there is still something to be said for the choice to remain independent. Here are the top benefits, not just for you and your patients, but for your community, of remaining independent.
It’s our belief that when it is all said and done, private equity (PE) will represent no more than 15 percent of the profession. PE is not looking to purchase every practice in a given market. In fact, they are not even looking to purchase the majority of practices in any given market.
We understand why people are making the decision to sell to PE. The two primary reasons are:
(1) the owner does not want to manage the practice, or (2) the owner thinks they can make more money selling to PE than to another independent optometrist. PE is capitalizing on this by telling doctors, you can just come to work and see patients while we take care of the business of the practice.
For those of us who like dealing with the business of the practice, that message is water off a duck’s back. Here are five reasons to remain an independent owner:
As an owner, there is no one to fire you. Most employee doctors are on 30-day contracts. The employee contract may say that it renews annually, but when you read the contract carefully most of them state that you can be terminated for any reason with a 30-day notice (and immediately for cause). As an employee you have zero job security.
Here’s a story you should know. A doctor sold his practice to a PE group. Shortly after the sale the doctor told staff, “I want to go to my child’s soccer game this Friday. Book me out of the office so I can do that.” The doctor continued his day by going into the exam room to see the next patient.
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When he came out of the exam room, he could tell something was wrong. He asked what was wrong. Staff informed him that the corporate office said he was already scheduled to see patients on Friday afternoon and could not book out of the office. It was at that moment he realized he was no longer the owner and the implications for life flexibility.
Do you have an interest in adding something new to the practice? The owner can make the decision today to make that happen. The employee must send requests to the corporate office. As an owner, do you want to change days the practice is open? How about times? What about new equipment? As the owner, you can do that – and you can do that today.
As an employee of a practice, your gross income will be approximately 15-17 percent of your gross revenue produced. An owner who is a good manager of the practice, and who is working in the practice as an optometrist, can expect to generate a revenue of 30-40 percent of the gross revenue of the practice.
In a $1 million gross-revenue-collected practice that is the difference between $150,000 and $400,000. The employee will never be paid what the owner is paid.
Another financial benefit of ownership are the tax advantages given to the owner. The U.S. tax system is built for the entrepreneur and penalizes the employee. The owner can take advantage of a full dollar where the employee has to make all life purchases at 50 cents on the dollar. That’s the difference between pre-tax and post-tax purchases.
Job satisfaction can be measured at both the global level (whether or not the individual is satisfied with the job overall) or at the facet level (whether or not the individual is satisfied with different aspects of the job. Spector lists 14 common job facets: Appreciation, Communication, Coworkers, Fringe benefits, Job conditions, Nature of the work, Organization, Personal growth, Policies and procedures, Promotion opportunities, Recognition, Security and Supervision.i
While an employee can achieve job satisfaction, only an owner has the power to manage all facets of the job in order to create the ideal workplace, and, therefore, maximum job satisfaction. Owners create the environment and culture of the practice. Because the owner directly impacts all facets of the job, the sophisticated owner enjoys both global and complete facet job satisfaction.
The advantage of independent ownership to your patients is that no one is limiting the services or materials you utilize to help your patients maximize their life. As an employee, your patients may only have access to lab materials from labs chosen by the corporate office or the services you can offer are limited by corporate decision.
We should also talk about the future of our shared profession. What do you want to happen to the profession of optometry? Do you want it to become an employed profession much like what has happened to the profession of pharmacy? For employees, the future is what others decide that it is going to be. What is your picture of the future – is it one where optometry remains an independent profession in charge of its own future? From our perspective, ownership keeps our profession moving in the best direction.
A beautiful thing about our profession is that each person can decide to be either an owner or an employee. And change that decision at any time as life moves forward. Many of you will change from employees to owners. We are happy to help any of you that decide that ownership is the way to go.
i. Spector, P.E. (1997). Job satisfaction: Application, assessment, causes and consequences. Thousand Oaks, CA: SAGE.