John B. Pinto

The apparent constraints that come with the scale of a practice are also accompanied by a few gratifying opportunities for big-practice builders who get their second wind. Once you’re in the $10 million club, it’s easier to take on projects that others lack the resources to execute.

It almost inevitably happens in larger settings that the partners, particularly the cost-sensitive younger and older partners, develop a preference for optimizing near-term doctor take-home pay rather than long-term success. This conservative bias halts the growth of large practices in its tracks, although the partners may feel for several quarters or even a few years that cost-containment is working. After that, parsimony in areas like marketing, development of the management team and ongoing facility maintenance catches up and claws every dollar back from the partners in successive years. With continued short-term focus, practice profits slide even lower than they were before someone got the bright idea to fire the gardener, let the techs go without a supervisor and allow a junior clerk to take over a half-million dollar marketing program.

Large practices commonly feel as though they have run out of things to do next. By the time a practice reaches $10 million or more in collections, virtually all possible ancillary services have been developed. There is generally already at least one ASC. Optical dispensing is old hat, and the special testing department can’t really add any more patient services. In already-large practices, all or nearly all appropriate subspecialty areas are covered, and any that haven’t been added yet are likely of no interest to the founders, either due to an incompatible patient base (pediatrics) or lackluster economics (neuro-ophthalmology).

Only a small percentage of ophthalmic practices in the nation ever reach $10 million or more in annual collections. But the lessons learned along the way by these market leaders are critical to pass on to practices still striving for this benchmark — and perhaps equally valuable for surgeons with more modest business goals.

Let’s continue the discussion of strategic planning with the last two steps.

Let’s continue the discussion of strategic planning with the next couple of steps.

It’s easy to get hung up about the preparation of a strategic plan for your practice. I’ve had hundreds of clients nod their heads and promise to write up their strategic intentions, or promise to edit my first draft of a plan for their practice, only to return months later to find this chore undone. And of course, this is not accounting for the vast majority of surgeons who don’t have someone to help them craft their plan or to even keep after them to get the job done.

There are dozens of technical and due diligence steps on the road to merger. At the front end of any prospective consolidation, none of these is more important than assessing the financial impact of the proposed transaction on the current partners.

As this blog goes live, we are mere weeks away from Inauguration Day and the start of a new administration in the White House. Good news or bad from Washington and CMS, ophthalmic practice budgets, along with surgeon household budgets, are entering a potentially tender new stage.

Whether you voted red, blue or purple on Nov. 8, by the time Jan. 20 rolls around, we are in for interesting times and potentially material changes in America’s health care system.