When I was a resident and even working in the government and my mega group, I always thought you’d have to see about 25-30 patients to make the average salary of a ophthalmologist, 30-40 to be doing well. One of the biggest themes of this blog will be to spend your money on practice expenses in a judicious fashion. I don’t recommend renting the cheapest office possible in a bad neighborhood that is far from major highways, nor do I recommend you cut wages to find the cheapest employee possible- sometimes you get what you pay for.
But I don’t completely believe in the phrase “you have to spend money to earn money”- I believe you have to spend money WISELY in order to earn money. It’s the same concept as in personal finance- if you spend all of your money you’re never gonna become rich.
When I see articles like this one, doctors driven to bankruptcy, I just shake my head and disagree. Before I hung my shingle and opened my doors, I was drinking the kool aid that the popular media and even other physicians propagate- in this era reimbursements are too poor and the rules too complex to go out on your own; the trend in healthcare is towards consolidation. It’s funny because I know today in 2017 multiple people that are doing the same thing I did four years ago- start a solo practice, with the expectation of success.
I’ll crunch the numbers to show you how lower overhead makes sense. Many national surveys approximate the average collected revenue for a full time comprehensive ophthalmologist at $800k. Overhead is typically 55-60%, which leaves a profit of $320-360k. To cut to the chase, Ho Sun and I have overheads of 30-35%. This means we only need to collect $510k to make the same profit of $320-360k. So we only need to see 2/3 as many patients in order to do as well as the “average” ophthalmologist. This allows us to spend more time with each patient, increasing patient satisfaction and decreasing the chance something is missed.
We are essentially running concierge practices, even with Medicaid reimbursements. If you work in a competitive locale where you have to scrape to get every patient in the door, this is a viable startup model. No, we aren’t cramming in multiple tests that aren’t medically necessary for every patient. We are working smarter, not harder. Seeing less patients for the same profit allows us more time to take vacation, and keeps us from being burned out.
When people read the above numbers regarding our 30-35% overhead, they feel that we are outliers, and that we are doing something unusual and completely different from everyone else. This is simply not true at all- from our google discussion group we know of many ophthalmologists in different parts of the country that run their practices in a similar fashion that we do, with the same successes as us. Just like us, they are some of the most fulfilled and happiest physicians in the field of medicine.
When I was in the startup phase, I found that most practice management information was geared towards big groups, not solo docs. I didn’t know any of the numbers above before I opened. I only figured it out about three months after seeing patients in my solo practice. If only someone had told me earlier, I probably would’ve opened up straight after residency instead of toiling in my group jobs.
To accomplish low overhead, it’s kind of like taking care of your own personal finances. For example, you can’t blindly trust a financial advisor to maximize your returns; you can’t trust a billing company to maximize your revenue. Just like you have to make choices in order to save your money to become financially independent, you will need to make decisions on how to use your money to run your practice most efficiently. At first I was scared out of my mind to start my practice, because I never had any business experience or took any courses, but here I am writing this post!
In this blog we will discuss the steps to accomplish this, beginning with how to smoothly start your practice without paying a consultant $40,000, to the ins and outs of insurance, billing, and maximizing collections, to getting the most out of your employees, as well as avoiding common pitfalls. We hope that our information will assist not just ophthalmologists but other physicians to start their own practices. For those of you who are already in solo practices, or even small groups, we hope we can reveal some pearls to help you operate your practice more successfully.