If you’re thinking about offering a new procedure in your practice to bring in some additional income, prepare to enter an environment of “in for a penny, in for a dollar,” says ophthalmic practice consultant John Pinto. He and other experts say that it takes a true commitment to a new procedure to make it succeed, not just the desire for more income. Without that drive, you might do better by finding ways to serve the patients you already have. Here is advice from consultants and surgeons on the considerations involved with expanding your services.
Is Expansion Always Best?
“The first and best thing for the general ophthalmologist or geriatric-oriented ophthalmologist to do to increase revenue involves increasing the efficiency of the practice they have right now and increasing the volume of the patients they see,” says Mr. Pinto. “Even on a profit per surgeon-hour basis, and after a projected two to three years of Medicare cuts, it’s still the case that the profit per surgeon hour is going to be higher from providing cataract surgery and other comprehensive ophthalmic services than it will be for most other complementary subspecialty areas like Botox or refractive surgery.” Mr. Pinto says that the typical ophthalmologist today can generate a net profit in the range of $100 to $300 per hour worked, and retinal surgeons will commonly be in the $200 to $500 per hour range or even higher.
“What occurs if they try to branch out into other areas like Botox treatments or other elective, self-pay services is that the profit yield per hour at typical volumes is much lower than with the usual services they’ve been providing,” says Mr. Pinto. “This is based on my empirical experience with practices. Ophthalmologists may end up making less per surgeon-hour with a cosmetic procedure such as Botox because they’re cannibalizing their time from an area of their practice that’s more profitable.”
So what can be done? Mr. Pinto proposes that the more economically effective action is to try to learn ways to see three to five more patients per day from the “bread and butter, geriatrically oriented patient base” that ophthalmologists are already seeing. “In the typical practice setting,” he avers, “the general ophthalmologist who can find three to five more patients per workday is able to give himself a raise of tens of thousands of dollars per year just using his existing resources.”
Two ways with which Mr. Pinto proposes you increase your efficiency are benchmarking and improving patient recall.
He advises that you look at your current volume of patients and determine whether it’s typical or below normal for a practice of your size and location. Do the same for your surgical volume by dividing the number of major surgeries you do annually into the number of patient encounters per year to determine if your surgical density is within the normal range of your colleagues. You can then use this insight to find out why you may be off the mark.
“Something that cataract surgeons can do that’s extremely enlightening is to look at their last 50 cataract cases and find out the average preoperative best-corrected vision,” he says. “Throw out the patients whose vision was 20/400 or worse.” For surgeons who use his consulting services, he’s found their average to be about 20/55. In practices that are more conservative, he says it’s not unusual for it to be 20/70 or 20/75, indicating that the surgeon usually waits a longer time before operating. However, in the “vanguard” practices, Mr. Pinto says doctors are more comfortable operating on eyes that are healthier but could still benefit from surgery. “In those practices, it tends to be closer to 20/48 or 20/47 as an average,” he says. “We don’t want to encourage inappropriate cataract surgery, but, as a surgeon, look at the benchmarks of what your colleagues are terming an operable case, and ask yourself if you’re being inappropriately conservative.”
The second exercise Mr. Pinto recommends for improving a practice’s bottom line and enhancing patient care involves randomly pulling 10 patient charts that are two-years old.
“In the typical practice, over half of those patients will have been lost to follow-up care,” he estimates. “And there can be thousands of dollars of unprovided care in those charts. So, serving the patients you already have is the most cost-effective thing you could do today to be more successful, and you don’t have to buy more equipment or take out any new advertisements.”
However, consultants like Mr. Pinto and physicians who offer elective procedures like refractive surgery all agree that if you’re truly committed to offering your patients a new elective procedure or service, if you have a passion for it, then you shouldn’t let dollars and cents stand in your way. You have a better chance of succeeding if you’re driven and approach the new venture with the right plan.
Here are three common venues ophthalmologists often try to expand into, and the important things to consider if you decide to try one of them.
This is a “classic and increasingly popular” area to enter, according to Mr. Pinto, who estimates that around 30 to 40 percent of ophthalmology practices now dispense. It’s been his experience that, in an average setting of either a solo-doctor practice or a larger one, adding an optical will boost profits by about 10 percent.
“It’s always a good idea, in principle, to diversify your revenue base,” says La Jolla, Calif., practice consultant Judy Bee. “However, when considering an optical shop, you need to look at how much of your surgical or other procedure-oriented business comes from optometrists in your community. If it’s a lot, you have to make a decision, because pushing for dispensing will actually put you into competition with the optometrists who may be your best referral sources. I’ve seen some practices start dispensing in such a situation and have a net effect of nothing because of the expense involved with the initial investment and staff costs, combined with the lost surgical referrals.”
Mr. Pinto advises “don’t be oversized or undersized” with your optical. By assuming that you’ll sell glasses to between half and 70 percent of the patients for whom you write a spectacle prescription, you can estimate how large your optical should be and how many opticians you’ll need to cover it.
“Also, if you’re just getting into optical dispensing, an easy mistake to make is to pick a junior optician who doesn’t have a lot of experience, based on the idea that yours is just a small optical,” says Mr. Pinto. “In such a case, the whole operation will be run very poorly. Instead, you’re obliged to get a strong candidate, someone who has run an optical of the appropriate size previously.” He says it’s not unusual for a $10 million practice that starts an optical to hire an optician at $60,000 to $70,000 per year who has experience running a million-dollar dispensary.
“If you’re a solo ophthalmologist who’s barely going to keep a full-time optician busy, you basically have to over-hire the position to get someone who is capable of launching and running the operation for you,” says Mr. Pinto. “And then cross your fingers that, with increased practice expansion, the optician will have enough to do.”
Whenever a general ophthalmologist considers expansion, refractive surgery, and its flagship procedure LASIK, always spring to mind. However, as the turbulence of the LASIK market has shown in the past several years, just offering the procedure doesn’t guarantee success.
“I wouldn’t recommend that anyone get into LASIK unless they’re willing to make a very strong commitment to learning about the procedure, developing their technique and managing patients who aren’t happy with their results,” says Los Angeles surgeon Andrew Kaster, whose practice became exclusively refractive surgery six years ago. “These patients are extremely demanding.” He says thinking that you’re going to do this on the side to earn a little extra income does a disservice to yourself and your patients, and it could even worsen your situation. “If you have unhappy refractive surgery patients, you could actually lose goodwill in the community,” he says.
First, he recommends learning how to do the procedure well through training courses and wet labs, and finding a mentor, maybe someone outside your community, who you can work with and learn from.
“I also think some surgeons tend not to use the proper equipment, both diagnostically and therapeutically,” says Dr. Kaster. “On the therapeutic side, I see people buying used lasers, not getting the service contract and not maintaining lasers properly. Diagnostically, they may not buy the wavefront equipment or a topographer, though it’s possible to be furnished with such equipment at an open-access laser center. But, in refractive surgery, the equipment does become outdated eventually, and you always seem to have to buy something occasionally.” If you want to go with an open-access center and not make a large initial cash outlay, Dr. Kaster estimates that the center can provide the diagnostic equipment, laser and even a microkeratome for a facility fee of $500 to $1,000 per case. The center also typically provides staff as well, though Dr. Kaster says that when he was starting out and used an open-access center, he always brought a trusted tech of his own who knew his system and the patients.
Marketing costs can also get expensive, depending on your market and the level of competition, sometimes costing as much as $300 per case. However, Dr. Kaster thinks you can get by with the minimum at first, which consists of internal marketing via brochures, and then ratchet it up from there, if necessary.
“I wouldn’t recommend refractive surgery unless someone feels good in his gut about performing the procedure and dealing with these patients, and feels he’s capable of providing a good service with good results,” says Dr. Kaster.
“Botox [Allergan] is OK as a moneymaker,” says Sarasota, Fla., oculoplastics specialist Karen Chapman, “but it’s not great.” She doesn’t want physicians to think it will yield a windfall, or that it won’t take some work.
“In the general practice, the ophthalmologist may not be used to spending a lot of time with patients,” she says. “But in a cosmetic practice, patients have a lot of questions about Botox or other procedures.” She estimates one Botox treatment takes her about 20 minutes, which includes the time spent talking with the patient.
You also need to make sure you’ll have enough patient demand for it because once opened, a vial of Botox is supposed to be used completely and isn’t meant to be stored for later use. Dr. Chapman says that most cosmetic Botox treatments involve the use of 20 to 50 units of the agent, which comes in a 100-unit vial. You can treat two to five people per vial depending on what they want done, and a vial costs around $448. “I think offering Botox is something that’s reasonable to consider,” she says. “But it takes some time to try and figure out if it’s cost effective.” She estimates that you can charge $300 to $600 for a Botox treatment, depending on your area.
To begin, she recommends taking an Allergan-sponsored training course, then devoting a half day per week to Botox treatments, just to make sure you can use all of your vial. And internal marketing can work in the beginning if you have a busy enough practice with a healthy number of patients between 20 and 60 years of age.
“You have to figure in your overhead when determining how much revenue you can make with Botox,” says Dr. Chapman. “Most general ophthalmology practices have high overhead in the 60 to 70 percent range. My overhead is probably 45 to 50 percent, so for me to make any money on Botox, I have to charge more than double what it costs me to provide it. You’ll have to be doing a fair amount to make any significant impact on your income. However, if you feel like you’re getting bored with your usual procedures, you might try Botox for six months to see if it catches on. If not, it won’t be a huge investment.” To contact an Allergan training coordinator to learn more, call (866) 542-3501.