Take Financial Risk Out of Your Refractive Practice
Plan wisely, make the right investments and execute flawlessly.
By William B. Rabourn

[Part 1 of a 3-part series]

New procedures such as LASIK have changed the landscape of ophthalmology forever. An entire market segment that was previously unreachable is now easily accessible, and practices that have successfully capitalized on this trend have shown tremendous growth.

Even with intense competition in the arena of vision correction, the demand for capable surgeons is growing at a record pace. Last year, about 1.3 million people had refractive surgery, an increase of almost 50% over the previous year, according to one estimate. That growth is expected to continue, albeit at a somewhat slower pace. So why are some practices boasting record growth while others are struggling to cover their costs?

The best-run practices plan for success and anticipate growth. Procedures such as LASIK involve large expenditures of time, resources and dollars. It's important to build a successful strategy that will allow your practice to grow well into the future. In this three-part series, I'm going to discuss guidelines and principles that have helped shape many of the most successful refractive surgery practices in America. The first step in this process is developing a strategy to minimize risks and increase growth potential while building your refractive practice.

Success starts with a strategy

I strongly believe that having a well-planned strategy is important to the success of every facet of my own life, as well as the practices of my clients. Yet when it comes to growing your practice, you may easily get caught up in day-to-day details and overlook the two most fundamental of all business principles. Where do I start? Where am I going?

Your first goal should be to put your practice on sound financial footing. By building on a solid foundation, you'll be able to invest wisely in the resources that will help you achieve all of your goals for longer-range growth.

Take a hard and honest look at your practice. If your goal is to perform 200 procedures a month, ask yourself if your practice can perform at that level without sacrificing quality of care. Could your infrastructure be more streamlined? Do you have the right technological resources available? Marketing is a valuable resource, but word-of-mouth carries even further. If your practice can no longer provide a high quality of care due to an unexpected jump in patient volume, the resulting negative word-of-mouth will guarantee that your practice's popularity won't last long.

Minimize risk through wise investment

If you choose to add refractive surgery to your practice, where and how you invest is crucial to your success. When you invest in the right areas of your practice, your refractive volume can soar, and you'll reap the rewards of your investment.

The key is to invest wisely in four crucial areas:

• information (demographics, market research)
• technology (lasers, keratomes, and diagnostic equipment)
• facility (office, surgery suite, ambulatory surgery center)
• people (internal and external relationship strategies)

These four elements will form the core of your refractive practice. The right investment mix will vary, depending on your needs, capabilities and market, but once you've found it, you will be successful.

Invest in information

Ophthalmologists exist primarily to serve the vision needs of specific communities and regions. Each market is as unique as each surgeon, and vastly different economies of scale come into play. If you focus your career to meet the regional needs of your market, you minimize your risk of failing.

Investing in information about the patients you'll serve is never a poor decision. For starting practices, I can't overemphasize the value of research. Begin your research even before you put your name on the door. By researching the market, young practices gain valuable insights into the needs and wants of the community, while experienced practices can examine trends and other key factors that are integral to providing the market the best in care.

Key factors that determine the dynamics of your particular market include population density, income, education, and age, as well as regional and cultural factors. What percentage of your market participates in managed care? How many patients in your area are Medicare allowable? There are a number of methods available that can help you gain keen insight into the market demographics of your region. The five most commonly used research methods are:

Regional knowledge. If you're operating in a geographic location that you know very well through experience, you can often take educated guesses as to the needs and wants of the market. Though not an exact science, there's something to be said for human intuition.

Internal surveys. By asking the right questions and charting answers over a period of time, you can gain a unique perspective into your patients. An internal survey can accomplish two things. First, specific questions that focus on service, convenience and patient satisfaction can help you identify weak areas in your practice. Second, by requesting demographic information (income, age, education), you'll develop a clearer idea of your "average patient," which will be invaluable in developing a marketing budget. Many established practices use internal surveys as their sole means of research, but in doing so are overlooking the potential of reaching out to undeveloped sectors in their market.

Marketing and advertising firms. Agencies can provide valuable insight to the marketplace, but few know the specific needs of your ophthalmic patients. What advertising agencies can offer are comprehensive media plans that can leverage the power of your media dollars. Agencies can also negotiate with media representatives for better rates, and many agencies also specialize in design, if your practice is in need of an image.

Ophthalmic consultants. Consultant agencies can provide key insights into the minds of patients, while also assisting local media sources to help meet the specific needs of your particular market.

Marketing personnel. The size of your practice and your patient volume weigh heavily in this decision, which I recommend only for high-volume practices with substantial media budgets. As a rule of thumb this option should never be utilized if your marketing budget doesn't run into six figures.

Invest in technology

Surgeons often tell me that they can't afford the best technology; it's too much of a financial risk. My response is invariably: "If price is your priority, eventually you'll be behind the game." New lasers, proven keratomes and advanced diagnostic technologies produce superior results with greater consistency. If you don't invest in them, you're putting your practice at risk.

Plan for success; if you choose to hold your wallet close to your heart, you'll soon find it empty.

For refractive practices on tight budgets, older procedures such as radial keratotomy are still extremely effective, but lack the public confidence, excitement and marketing momentum of laser vision correction.

Always remember that money is adjunct to the welfare of your patients, so never hesitate to refer a patient to an experienced doctor with better technological capabilities.

Select the best laser option

If your strategy includes LASIK as a small part of a general ophthalmology practice, a traveling laser may be an appropriate option. You may also consider developing a shared laser surgery suite model, in cooperation with other practices.

However, if your strategy includes laser vision correction as the key component of your practice, there's no substitute for having an exclusive laser suite on site. Traveling lasers and shared surgery centers can be a nightmare to schedule, and can be inconvenient to you, your staff and your patients.

The decision as to when it's right to purchase a laser is a matter of simple math. Take your monthly patient volume and multiply it by your laser fee, then compare that number to a monthly laser payment. Even if your practice has small to moderate LASIK volume, you can easily recoup the cost.

If you've examined your laser vision correction patient volume and decided that you can't justify the expenditure for new technology, determine what volume you'll need to make the investment viable, and then develop a marketing platform that will enable you to reach that goal. (In part two of this article, I will discuss this subject in greater depth.)

Invest in your facility

If you don't plan for growth, you may experience one of a successful practice's worst nightmares: patient volume that's too great for your existing space and too time-consuming to allow you to relocate.

Space is a premium in any practice, and will disappear rapidly with the slightest growth. Purchasing your own building with room for future growth is ideal, but even if you're leasing space, you can tailor your office layout to reduce chair time while increasing the comfort level of both your patients and staff. If you're building, consider planning for an ambulatory surgery center, or ASC. Although not required for all refractive procedures, ASCs are essential for many current procedures, and will be required for future techniques. An ASC can also become an additional profit center when your patient volume is high enough.

Ask yourself these 10 questions when considering the layout of your facility:

1. Will your office have enough space for future volume?

2. If the need to redesign the interior occurs at some future point, will wiring in every room be sufficient for computers and equipment?

3. Do you plan on building an ambulatory surgery center?

4. Will you have room for future equipment?

5. Do you plan on bringing other doctors on staff?

6. If choosing to purchase a laser, will the laser be easily seen by patients?

7. Will patients have a comfortable waiting area?

8. Is the design conducive to the workflow of your staff?

9. Will patients have easy access and parking?

10. Is there a need to open additional facilities in surrounding areas?

Invest in people

Never underestimate the value of building solid relationships. By developing strong lines of communication with your staff and associates, both internally and externally, you'll save your practice countless hours and dollars.

With the ophthalmic patient, first impressions are extremely important. Unless you answer your own phone and greet every patient, that first impression almost never happens with you. Many patients will spend more time with your staff than with you, so encourage your people by developing incentive programs for helping to build patient volume and increase efficiency.

Give your employees realistic goals they can strive to reach. Reward them when they help your practice reach that next level.

Internally, recruit a talented team of professionals and strive to create a work environment that keeps them motivated, productive and happy. Each instance of employee turnover will cost you time and resources that your practice can ill afford, so minimize this expense by promoting a team environment whenever possible.

Externally, develop relationships with medical professionals in your community, particularly optometrists. In cases where strong competition exists between ophthalmologists and optometrists, everyone loses -- including the patient.

There's a place and a need for ethical co-management. When done properly, co-management is the bridge that unites optometrists and ophthalmologists to meet the needs of patients.

What's next?

Once you've minimized your risks by investing in an appropriate blend of information, technology, office environment and people, what do you do next? If you're 100% focused on managed care, which can often be shaky at best, you can sit back and wait for patients to come through your door. Otherwise, you need to generate awareness within the community by creating a productive marketing platform.

Next month, I'll discuss developing a sound advertising budget, choosing marketing vehicles, and getting the most from your media dollars, all of which will help to minimize financial risk in your refractive practice. OM

William B. Rabourn is the founder of Medical Consulting Group, an ophthalmic consulting firm based in Springfield, Mo. He may be reached at 417-889-2040 or via e-mail at bill@medcgroup.com.