If it improves patient care, you likely can’t afford not to buy it.

A capital investment in your business can be strategic and smart. While instinctively you might be conflicted as to whether this kind of money should be spent on the practice versus on increasing distributions and personal income, capital investments are a great way to provide better patient care while making strategic shifts on your balance sheet. The anxiety of reducing income when investing in your practice will ease when you formulate a solid, well-balanced, strategic business plan.¹

FIRST CRITERION

As a physician, you make each decision based upon its innate ability to optimize patient care. Any new equipment bought must allow for better diagnostics or treatments. If it doesn’t, then the plan stops there. You must only purchase equipment that you believe will benefit patient care; in turn, you can tell your patients in excellent faith that you recommend it. If optimum patient care isn’t the first criterion, then that purchase will not be a good investment and your reputation could be affected.

This critical step should be first in your journey, as it will guide and motivate you through your investment strategy.

GOT PLANS?

Once you decide that the equipment will improve patient care, plan step two. Before focusing on cost, consider other factors involved in the determination. Identify the other decision makers in your practice, whether they are physician partners or administrators. Educate them on the benefit of the equipment and the impact it will have on the practice. Ask them to honestly tell you their interest level so you can create solutions or better justify your reasons.

If you can’t get them all on board, don’t give up yet. A possible compromise could be to buy the equipment with only those interested; collections would then benefit those investors. You could also offer a plan to those initially uninterested who could buy in later if they change their minds.

Another critical component of your plan is to understand any and all reimbursement details. If the equipment’s use is a noncovered service, then you need to analyze the market price points and predict its frequency of use by your patient base. Also, gauge the number of patients who would be willing to pay out of pocket.

Other housekeeping concerns include the impact of new equipment on flow in the office or the operating room. A plan that considers these issues will allow for easier integration for your clinical and billing staff, clinicians, patients and even referring physicians.

SIMPLE MATH

The cost of your purchase can seem intimidating. But when you break down the number on that price tag and put it into a business plan, you will gain confidence as you realize it is easy to digest.

So do some simple math. Focus on the practice’s income and expenses per month. For income, conservatively predict how many times you would use the test or treatment per month and multiply that figure by the average reimbursement by payer. For expenses, break the cost down over a five- or seven-year loan and include interest. An internet search will show you what a loan would cost with interest each month.

These are useful numbers for you to understand the deal, and you can easily calculate them on the back of a napkin — no accountant or banker needed until you decide to commit.

IF IT’S A CLOSE CALL

Other financial details could sway your decision to purchase if the numbers are barely in your favor. One example is a tax incentive under Section 179, designed to motivate business spending. It allows a $500,000 federal tax deduction for 2017. You have an advantage for an investment that this incentive would cover, because as a physician you know best about technology relevant to patient care and understand the details of integration into your practice.

CAN’T TOUCH THIS

It isn’t easy to understand and predict the impact of new equipment on your practice. Often, less predictable factors can unfold slowly, making them difficult to measure. For example, with the new equipment, patients and referring doctors will recognize your advanced care, so referrals from these sources will increase, supporting your initial business plan.

Also, you now have new topics to talk about to referring doctors as you educate them on why you chose this technology in the interest of best patient care. Sometimes your original business plan will show a loss for a couple of years — but you don’t always have to win on paper with the numbers if you believe you are providing better care for your patients. These less tangible effects often will help the overall perception and growth of the practice.

GET GOING

Wanting to provide the best care for your patients is a top priority. A physician must create an environment within the practice to allow for this spending. Having a plan to make decisions, understanding the impact of the new equipment and knowing how to analyze the numbers will give you confidence to successfully integrate this plan for your patients. OM

REFERENCE

1. LaBorwit S. When reducing your income is smart. Ophthalmology Management. 2017; 21:1;64.

Scott LaBorwit, MD, is a principal at Select Eye Care, with locations in Towson and Elkridge, Md., and is an assistant professor, part-time faculty, at Wilmer Eye Clinic of Johns Hopkins Hospital, Baltimore. His e-mail is Sel104@me.com.

Disclosures: Dr. LaBorwit is a consultant to and speaker for Alcon.