In this series, Review of Optometry takes a close look at the dilemmas, decisions and life changes at each stage of an optometrists careerfrom optometry school to active practice to retirement. In each installment, we talk with optometrists in that career stage, as well as consultants who have relevant expertise and insight.


In the two years since optometrist Stephen Hess graduated from Pennsylvania College of Optometry, hes worked for a commercial optometry practice, a large ophthalmic group practice and a solo M.D. in King of Prussia, Pa.; but his ultimate goal is to be the one in charge.

Its always appealed to me to be my own boss, Dr. Hess says. I hope to be in that position within five years of graduation. I think Ill enjoy the challenge. Plus, as an owner, its up to you to make the practice as profitable as you can. When youre just an employee, your earning potential is limited. 

Dr. Hess has already passed up one ownership opportunity. When the practice in which he worked went up for sale just a few months into his new job, it seemed like a dream come true. But the seller wanted four times the appraised value, and negotiating a dollar figure that would satisfy both parties proved impossible.  

I think its important to find the right private-practice opportunity because the rewards may not be worth the risk. Im optimistic that the next one to come along will have more potential, he says. 

Dr. Hess is already investigating a new opportunity, but while he bides his time, he actively networks and reads up on practice-management issues. Hes even considering taking some business courses to make sure hes ready when the time is right.

 

Getting Ready

Thats the right approach, according to professional appraiser and optometric consultant Marilee Blackwell, M.B.A. There is so much information out there, she says. Just start reading about topics like marketing, managing people and other general business advice. 

If you arent a risk-taker, if you arent comfortable managing staff, networking, and making decisions for the good of the practice, ownership may not be the best route.

There are actually several introductory steps that an optometrist who yearns to be in private practice can take, well before the right opportunity comes along. Being a practice owner demands a different mentality than being an employee, says Ms. Blackwell, who is president of Blackwell Consulting, in Saint Augustine, Fla.

She cautions would-be practice owners to first do some soul searching. Sure, there are rewards, but there are also risks, she says. If you arent a risk-taker, if you arent comfortable managing staff, networking, and making decisions for the good of the practice, ownership may not be the best route.

Other early steps include preparing a solid business plan, identifying consultants who can help launch a practice, and making sure youre financially prepared to get loans. The more you can do to make sure your credit is in good shape, the better off youll be, Ms. Blackwell says. 

Bethany Fishbein, O.D., agrees that a good credit history can make the difference between getting a critical loan and walking away empty-handed. She and husband Jonathan, also an optometrist, took on about $250,000 in debt for equipment and start-up capital when they launched their practice, Somerset Eye Care, in Somerset, N.J., a few years ago. It was scary to take on that much debt, especially on top of our student loans and mortgage, Dr. Fishbein says.

The more you can do to make sure your credit is in good shape, the better off youll be.

They learned some things about lending that at first seemed counterintuitive. For example, the couples previous purchase of a house was very important. All of our business loans were secured by our house, so even though at times it has seemed daunting to have a mortgage and business debt, we would have had a tough time getting the loans if we were renting, she says. 

Dr. Fishbein also was surprised to learn that her goal of paying off student loans as quickly as possible wasnt the best strategy. Student loans carry the lowest interest rates were ever going to get, so it actually makes sense to pay those off more slowly and spend our cash on living expenses or paying down higher-interest debt instead, she says. Besides, bankers dont really care whether you have $80,000 or $108,000 in student debt; it all rounds out the same to them.

 

Buying Your Freedom

For many optometrists, buying an existing practice from a retiring O.D. is an easier road to practice ownership. There are certainly fewer operational snags because the optical shop, clinical facilities, equipment and some of the staff are already in place, Ms. Blackwell says. Even if you hope to make lots of changes, at least you have a revenue stream and a patient base that allows you to hit the ground running.

However, there are risks in buying a practice that doesnt have enough income potential. This is where an appraisal is important. A good appraiser, Ms. Blackwell says, will look at practice financials, local demographics and other factors to assess potential for future success. 

Sales fall through when one or both of the parties isnt willing to be realistic about the true value of the practice, she adds. 

Realistic expectations are equally important for the young associate who hopes to buy into a practice as a partner. Ms. Blackwell says it is critical for the associate to make an effort to network in the community, learn the business side of the practice, and be a team player. 

You have to help build the practice from the beginning, Ms. Blackwell says. Show the owners that you have the personal motivation to become a partner. This will help them feel more confident that you will be a great business partner.

One obstacle to negotiating a final deal in partnership arrangements is deciding on the valuation date. A buyer who has worked in the practice for several years may be reluctant to pay for value he feels he has created during his time as an associate, while the seller feels it is the associates job to build the practice during that time. Establishing the valuation date early in the process reduces misunderstandings when the buyer and seller are ready to start negotiating a deal. 

 

The Partnership Track

Kristy Robinson, O.D., found a unique partnership opportunity with Shannon Compton & Associates, in rural Madison Heights, Va. Dr. Robinson had actually worked there twice before she became a partner in 2005. The first time, she was a 17-year-old high-school student shadowing Dr. Compton through a local mentorship program that inspired her to become an optometrist. Later, she went back as an optometry school extern. 

After graduation, Dr. Robinson spent six months as an independent contractor, filling in for optometrists who were sick or on vacation, and then 18 months as an independent doctor in a practice adjacent to a commercial optical shop in the Washington area.

I got a chance to see how lots of different practices were run, and Ive tried to take the good from each of them, she says. Hoping all along to eventually be in private practice herself, she tried to learn as much as possible about keeping books, managing staff, insurance billing and the day-to-day routines of optometric practice. 

You have to help build the practice from the beginning. Show the owners that you have the personal motivation to become a partner. This will help them feel more confident that you will be a great business partner.

I had a full schedule on my first day, she says. Of course, I want to continue to grow the practice, but its nice not to have to grow it from nothing.

 

Opening Cold

The Fishbeins, who both earned their optometry degrees in 1997, found themselves starting a practice in 2001 from the ground up, almost by default. After working in other group practices, they both realized that having their own practice was the only way to achieve the flexibility and control to balance work and family the way they wanted.

Marketing a New Practice

Here are eight helpful tips for marketing a new practice:      1.   Budget for marketing. The average optometric practice spends 2% to 4% on marketing, but a new practice should allocate as much as 10%, if possible.      2.   Spend wisely. Philanthropy, gimmicks and vanity promos have their place, but a new practice should focus on branding and solid, targeted campaigns that reach a lot of eyes or ears. Avoid these five common ways of sending your marketing dollars down the tube:                       Full-page ad in the Yellow Pages.                       Gimmicks such as sports calendars,                            restaurant placements and shopping cart placards.                      Infomercial on cable television stations.                      Billboards and other secondary media.                      Charitable donations to every community group                            that approaches you.       3.   Do it right. Dont advertise on Monday just because its cheaper. Whatever medium you choose, spend the money to do it right, and give the campaign enough time to work.      4.    Track everything. If your calls dont reflect a decent return on investment, change tactics.      5.    Plug into your community. Dont launch an ad campaign the week the local team goes to the playoffs. But, dont miss opportunities to piggyback on local happenings.      6.    Train staff early and often. Marketing wont matter if your staff cant convert phone calls to appointments. Every employee should be able to deliver an educational message, answer questions and close the deal by making a sale or an appointment.      7.    Network purposefully. Budget time to get out there and meet new patients, local influencers and good advisors.      8.    Get in the Yellow Pages. Find out when the local Yellow Pages go to press, and make sure you have a phone number and a listing before the deadlineeven if your practice isnt quite up and running yet. Source: Donna Suter, Suter Consulting Group

Their dedication has paid off. Somerset Eye Care is profitable, growing 30% to 40% a year. The staff has grown to eight full- and part-time employees, and the Fishbeins are considering a move to a larger office. Looking back, they say there have been plenty of challenges, especially when managing staff, but that they were lucky to have made some good decisions along the way.

Chief among these, perhaps, was assembling the right team (see Building the Right Team, below). They worked with practice-management consultant Gary Gerber, O.D., to identify a location and establish goals and a practical blueprint for getting started. They also worked with Eye Designs, LLC, to design the office layout and choose the optical shop displays.

Dr. Gerber probably helped us avoid thousands of mistakes. One of things he encouraged us to do was to think about the practice we wanted to have in 20 years and then market to that, Dr. Fishbein says.

Based on the Fishbeins vision for the practice, which they put in writing, Bethany decided to eschew coupons and discounts in favor of a high-end approach. She spent a lot of money on upgraded interior design, high-end frames, the latest equipment and targeted direct mail.

They also hired an individual who had significant optical experience as their first employee and had her start before the practice opened. She helped them meet with frame reps and select the frame lines they would offer.

Building the Right Team

Even going solo rarely means going it alone. Whether you are buying a practice, buying into a partnership or starting a practice cold, the right team of specialists can be worth their weight in gold. Heres what most optometrists need to hit the ground running:         An accountant to help identify the best form of business                (e.g., S or C corporation, LLC, or sole proprietorship)               and set up accounting and tax records.         An attorney to review leases and buyout or partnership               contracts. An attorney also can advise you about                liability ramifications of the business structure.         A marketing and/or management consultant to develop a               business plan and strategy for opening the practice. The               consultant can help a new practice break even faster and               avoid costly mistakes.         An appraiser to appraise the value of a practice when buying               outright or buying into a practice as a partner. The appraiser               may also work with both parties to negotiate the terms of the               sale or partnership arrangement.         Employees, preferably those who have skills you lack. An office               manager or administrator may be needed to run the office for                a practice owner with limited interest in the business aspects               of practice.   Source: Marilee Blackwell, Blackwell Consulting

Although she didnt expect to make the jump into practice ownership as early as she did, Bethany Fishbein says the journey has been a lot of fun. Ive been surprised to discover that I enjoy the entrepreneurial aspects of running a business as much as I do the optometry, she says. Its really gratifying to see that a marketing campaign I did affected peoples decision to come to our practice. I also love that were building something that has value. Our lives and work are so intertwined that the practice really feels like an extension of our family.

Next in the series: In September, well look at optometrists getting more established during practice years five to 15.