By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD
Dec. 21, 2022
There are many pressures currently on practices. Here is what you need to prepare for future challenges, including the changes and improvements you may need to make.
Moving Forward
In our last article, we looked back at what we’ve learned from evaluating practices. In this article, we want to look forward. What changes should your practice incorporate in order to be successful in the next decade?
Before starting any journey, it is important to understand very accurately the beginning place, where we are now.
Define Success
There are many definitions of success. For some, it is free time to do what you want. For others, it is the ability to live at a certain level of comfort. And for others, it is all about making the practice better – more efficient and more effective. By defining what success means to you, you can make your practice become what you want it to become. Your success is intentional, not accidental. Take a minute and write down your definition of success.
Work-Life Balance
What sacrifices are you willing to make at work and in life to achieve your definition of success? Time is your most valuable asset. Since the time you have on this planet is finite, answer this question carefully: Describe your ideal work-life balance.
Personal Money Management
An important financial concept that most people do not understand as well as they should is the time value of money. That means the time to start a plan that moves you toward retirement (or, as we like to call it – financial freedom) is day one of practice. Every year you should invest at least 15 percent of your gross income.
There are three primary investment vehicles: stock market, real estate and owning businesses. The key to these three investments is that they are putting money into your pocket, not taking it out. For example, most people think that owning their house, which is real estate, is an investment.
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A better way to think of your home is that it is a liability because it is taking money out of your pocket. In the same way, if you own a business that is taking money out of your pocket, and not putting money in, it is a liability, not an investment. After you’ve gotten good with these three, then you can branch out to other things that are bringing you passive income if you desire. But when should you start this process? Day one.
Let’s define a few terms.
ACTIVE INCOME = Money you get for going to work. If you don’t go to work, you don’t get money.
PASSIVE INCOME = Money you get from your investments. If you don’t go to work, you still get money.
EXPENSES = The total of money that you have to pay out to live (i.e.: all your bills you have to pay, such as taxes, car, house, kids’ education, insurance, vacations, etc.).
FINANCIAL FREEDOM = When your PASSIVE INCOME is greater than your EXPENSES
There are two questions you should answer every year:
- Based on my current trend, how long will it take me to achieve FINANCIAL FREEDOM?
- What changes do I need to make in my PASSIVE INCOME to achieve FINANCIAL FREEDOM within the time frame I want?
Answer these two questions every year, then based on the answers, you can intelligently adjust your financial planning.
Practice Financial Management
Here are questions you need to answer every year about your practice financial management:
- What is our financial strategy? Are we the most expensive in our market, the least expensive, or are we trying to be middle of the road? How effective is that strategy working?
- Are we leaving money on the table? We have found in every single practice that we’ve evaluated (including our own) money is left on the table. Do you reconcile your third-party reimbursement? Do you charge accurately for extras, and does each team member charge accurately? Is every write-off justified, and are your individual team members making non-policy decisions to write things off? How much money is in accounts receivable? Do you have product that has not been returned for credit?
- Are we receiving best prices from our vendors for the service and quality we are receiving?
- Does it still make sense to be a provider for each third party the practice utilizes?
- Do the practice expenses fall into the expected benchmarks for each category (e.g.: cost of goods, payroll, etc.?
Automation
One key to the future is to free up your team to deliver improved patient care rather than continuing to work ineffectively by repeating activities that can be automatized. Here are just a few areas of the practice that lend themselves to automatizing:
- Recall
- Business dashboard
- HR systems such as hiring, onboarding and team scheduling
- Frame Board Management
Make a list of the areas in your practice that need to be automatized.
Multi-Doctor Practices
There is clearly a trend away from single-doctor practices and toward multi-doctor practices. This trend will continue into the future. A multi-doctor practice offers more types of care, more hours open, coverage when a doctor goes on vacation and better decision-making (two heads are better than one).
In today’s world, there are many paths toward multi-doctor practices (i.e.: mergers, partnerships, associates, clinic without walls). It’s been interesting to us that the number one answer we get when we ask practice owners why they joined a buying group or an optometric alliance is, “We don’t like the feeling of being alone in the marketplace.”
There is value in being associated with other doctors who are going through the same struggles and opportunities that you have. Together we are, indeed, stronger.
What actions have you taken to keep from being alone in the marketplace?
Private Equity
Private equity does not bother us. PE does not want every practice in a market. They only want the most prominent and largest practices.
Here are a few observations:
- PE goes into a practice and tries to “standardize” the practice, so all practices are the same. This opens the door of opportunity for non-PE practices that stand out as different. If a PE practice opens in a town next to you, put a satellite next door that offers higher level care and a better frame selection. You’ll win every time.
- Our view is the future is bright for eyecare, but we must be diligent to manage our practices effectively. Make sure you are using your opportunities for CE by selecting courses every year that focus on third-party management, third-party billing, practice management, personnel management, and, of course, financial management. And don’t forget to keep ROB on your reading list.
A Personal Note: We’ve decided to retire from editing ROB at the end of this year. We want to thank you, our readers, for all the support you’ve given us over the years. We want to thank the management of Jobson/WebMD for giving us wonderful opportunities to collaborate with them on multiple projects. A special thanks to Al Greco, Margery Weinstein and Roger Mummert for their insights and guidance. As we leave this public phase of our lives, we believe the profession is in a good place to strongly move forward. Our desire has been to contribute in a positive way to that movement.
