Finances

Lessons Learned: Avoid New Practice Miscalculations

By Diane Palombi, OD

If I could turn back the hands of time and have a do-over when I was establishing my independent practice, there are several things I would do differently. Hopefully my mistakes can help the next doctor who decides to open his or her own practice.

Choose a location on a main road. You have heard the phrase, “location, location, location” when it comes to real estate. It was very true in my own circumstance. The town where I located my practice had two main roads. I did not pick either one of them. The main reason was the lack of available retail space. Unfortunately, my practice was off the beaten path enough that the only drop-in traffic was from lost travelers needing directions. When I picked my second office location, it was on one of the main roads. New patients could find it much easier. Another advantage: The strip mall the office was located in was larger than the strip mall at my first location, which generated more street traffic.

Best to start with a small office space. My first office was way too big. Formerly I had worked at probably one of the largest Lenscrafters optical locations. I based my practice space on what I was accustomed to. Big mistake, I had a lot of wasted floor space that I was paying dearly for in my monthly rent. My second office was almost half the space. Besides the savings in rent, it was easier to monitor the place. I rarely had any theft since the dispensary was very visible from the front desk. Things might have been a bit too cozy at busy times, but it seemed to work well.

Look at and understand the details of your lease. Every month my first landlord charged a second fee for shared expenses of the tenants like water, trash, accounting, street lamp electricity and property upkeep. These fees were split among the tenants based on square footage leased. I was sharing space with a restaurant and a hair/tanning salon. They both used a lot more water, and the restaurant required a huge dumpster. I felt that I was subsidizing their usage. The landlord’s wife was doing the accounting work, which was being billed at a high rate, and I felt he was gouging us on the upkeep fee. My second location did not bill the tenants any additional fees besides the rent payment.

You may not need employees initially. Things are slow if you are starting a practice cold. I brought a full-time and a part-time employee with me from Lenscrafters. I even increased their salaries. It was hard to keep them busy. I know my full-timer was bored at times. Their salaries also consumed a lot of my generated income initially.

Watch how you spend your advertising dollars. Salesmen are good at convincing you that you need big flashy ads in magazines, newspapers, direct mailers, advertising flyers and phone books. Think about it, though. When was the last time you picked your doctor because he or she had a large color print ad in the phone book or the value page magazine? You probably asked for recommendations from friends or family members–or just searched online. A small simple listing in the phone book is most likely all you need. Another problem is the number of phone books available. My area had at least four, and even neighboring counties felt you needed to list with them. I would choose the most popular ones. If you live in the area, you know which phone books you prefer. Professionally handled search engine optimization to ensure your practice is at the top of the Google search listings also is a worthwhile investment.

Find out the most popular insurance plans in your area and get on the panel ASAP. The majority of my patients ended up having insurance plans. I had very few private pays, which was the opposite of what I experienced at Lenscrafters. I made the city and school districts plan a top priority. If there are major industries in your area, get on those also. I did make the exception of very low reimbursement plans. I did not want to spend time with three patients to generate the income of one patient with a better paying plan. You have a better chance of generating revenue in those early days if you are on some insurance plans. We took hardly any insurance at Lenscrafters, so I did not realize how important it was to be on these panels. I lost some valuable time setting these up at a later date.

I survived my mistakes–and you will, too–provided you learn and make the necessary changes.

What decisions from your first years in practice would you like to take back? Or, if you’re a new practice owner, what challenges are you currently experiencing? What have you learned so far?

Diane Palombi, OD, now-retired, was owner of Palombi Vision Center in Wentzville, Mo. To contact her: dlpod1@hotmail.com

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