Question: I am doing well working in a private practice in South Carolina as an associate and also helping out an ophthalmologist once a week at his office seeing patients. I am also strongly considering opening my own practice here. I would love to have any advice on what I should do to pursue this goal.
Answer 1: That’s a big question! There are whole courses and books written on this subject. I would suggest that a good reference guide for you might be the book “Business Aspects of Optometry, Second Edition.” Having said that, let’s see if we can help you get started.
First, you’ll need to do some research. Basically, you should try to create a feasibility study to see if the community that you are considering will support an optometric practice. The Chamber of Commerce of any community is a good place to start to begin collecting demographic information. You’ll want to find out if the community is growing or shrinking? Does the population have effective buying income? Is the local economy stable? What is the local economy based upon? Are there any schools being built in the area? You need to determine an estimated ratio of the number of OD’s in the area to the number of residents. The standard ratio that is seen is 1:10,000. In other words, for every one OD, there should be 10,000 in population. However, this number can vary widely based upon whether you are looking at a rural or urban location and a wealth or poorer area.
Another great source of information is optical salespersons. These sales representatives visit lots of practices and will have lots of information about the current ophthalmic market. Generally they are a great source of information and are always willing to share. They might have information about a practice for sale in your area before it is even “listed.” You may want to consider buying a practice as it will provide for you an income stream from the first day of purchase, but if the practices are out of date, run down and over priced…do consider opening “cold.”
You did not mention how far away these two practices are or how close they are to where you are living. If you like the general area but aren’t locked in to a single community, it might be wise to broaden your horizons. Evaluate the demographics of areas in a 50-100 mile radius. The more time you spend researching the community, the more likely you are to make a wise decision for practice location. Each time you see a patient at your current locations, pay attention to the zip codes. Are the patients traveling in to obtain eye care? Is there an area or town that your current practices draw patients from? This may be an indication of an underserved area and a practice opportunity.
It will help the growth of your practice if you become part of the community it serves so consider what are your parameters of how far you are willing to commute? If you live in a community, your presence will be constant marketing for your practice. I would suggest that you visit with other health care providers in an area. Ask them how their business is going and where their patients are coming from. Not only will you gain valuable information from these visits, but you will begin to form working relationships with the health care team in that community.
Choosing the location for a new practice is another challenge. City records, the Chamber of Commerce, Google Earth, and the US Census Bureau are all potential resources for information. Look at traffic patterns, look at community growth, look at school boundaries, look at future road construction, and any other variables that might impact patients coming to that location. Try to position yourself for the type of practice that you wish to open. If you plan on doing pediatric eye care, for example, choose a location near the schools and near new housing developments. If you plan to do mostly geriatric eye care, then consider locating your office near the other health care providers and hospital.
I hope all this has not scared you away. I just want to again make the point that diligently researching a potential practice is a huge portion of its success. If you put in the time and effort to find an ideal location for the type of practice that you want…you will be successful. Best of luck to you in this exciting new venture! Keep us posted!
Michael Bacigalupi, O.D., M.S.
Answer 2: I would start with a thorough assessment of the need for services in the area. Does the area need another practice? Then determine the best location. Create a budget for the office and create some pro-forma financial information. I think it is really important to answer the questions: "What do I have to offer that makes me different than the other area providers; what will my niche be; how will I distinguish myself from everyone else?" This will help determine the marketing plan required to make this practice successful. Also it’s really important to recognize that you will experience a serious negative impact on your income if you decide to do this. Don't plan on any profits in the first year or two unless there is a serious shortage of OD’s in the area. You're in this for the long haul, and the big bucks are years away.
Chris Woodruff, O.D., M.B.A.
