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Careful planning can still lead to great opportunities in ophthalmology
Depending on where one touches the elephant, the perception on the current environment and future opportunity for ophthalmology can be quite different. I tend to be an optimist and that colors my thinking significantly, but I also try to look at the facts and put some realistic boundaries on my optimism.
Overall, as an ophthalmologist in active practice trying to provide high-quality care for patients, I find myself increasingly challenged. The same is true in my role as a consultant to, investor in and board member of many companies both large and small. Yet, I continue to see significant opportunity as well.
One way to evaluate the current state of a field, industry or company is to perform a SWOT analysis, looking at the strengths, weaknesses, opportunities and threats confronting the entity in question. While a comprehensive SWOT analysis of ophthalmology as a whole would run hundreds of pages, I will in the next few paragraphs hit a few of the key issues from my personal perspective.
The strengths in ophthalmology are significant. We have a high and growing demand for our services as the population ages and new treatments emerge. Our patients highly value their vision and are willing to spend their own money to preserve, restore and enhance their eyesight. There is, at best, a flat and, by my analysis, slightly declining population of ophthalmologists to serve the ever growing demand for eye care.
Venture capital, private equity and a healthy cohort of well-capitalized strategics are committed to our field, resulting in a steady flow of capital to generate new and innovative products to treat our patients. In comparison to many of our MD colleagues, we are in a fortunate position.
Still, in regard to weaknesses, we share with our colleague practitioners an arguably broken system of medical delivery and reimbursement. The 18% or so of the gross domestic product (GDP) spent on health care in America is expected to grow to 20% over the next few years secondary to the increased costs associated with the Affordable Care Act (ACA).
Most experts think 15% of the GDP, at most, spent on health care is sustainable, and many advanced countries with high-quality Western-style care spend only 12% of their GDP. As the cost of all government-paid entitlements increases over the next decade, the next recession in America will likely put us in crisis mode, generating even more pressure on our fees and fee-for-service dominated health care system.
The “triple aim” of the ACA is high-quality outcomes, satisfied patients and reduced cost. The first two for many, including me, seem incompatible with the third. The reduced costs will have to come from somewhere, and that somewhere is almost certain to include reduced reimbursement to physicians. If inflation and wage pressures return, along with the increasingly staggering costs of regulatory compliance and electronic health records, most practices will find their personnel costs escalating as well. Increasing costs in the face of reduced reimbursement will result in significant reductions in doctor take-home pay and, for some poorly managed practices, bankruptcy.
The summary of strengths and weaknesses for me can be reduced to a growing number of patients with an increasing burden of disease and advancing methods of treatment colliding with reduced dollars to compensate the care providers, including physicians, facilities and industry. Only the best-managed practices, hospitals and companies will survive, and they will find themselves competing with one another for the pool of money available.
On to opportunity, and we have many in ophthalmology. First, we have a significant opportunity in the patient-pay sector to mitigate the expected reduced reimbursement by third-party payers. These include spectacle sales, contact lens sales, nutritional supplements and OTC medications, refractive cataract surgery, refractive corneal surgery, oculoplastics, and a host of products and services that enhance wellness, beauty and performance, which patients are proving they are willing to pay for with their hard-earned cash.
In addition, we are not totally dependent on the hospital system and can independently own and operate ASCs, laser centers, optical shops and the like. We can hire other doctors and care extenders, including employee MDs and ODs, physician assistants, technicians and opticians to enhance our geographic reach and patient volume. We can also learn to practice more efficiently and/or work longer hours or for more years, allowing for increased revenue production.
The easiest way for a doctor to generate more revenue is to see more patients. Most of us have facility infrastructures that are significantly underutilized. Innovative ophthalmologists of the future will find ways to keep their offices and ASCs running at least 12 hours a day for 6 days a week, with two shifts of employees. This will also satisfy patients who find it difficult to take off work to see the doctor and would enjoy evening or weekend appointments. One way or another, through smarter or harder work, the successful ophthalmologist of the future will need to generate more revenue per doctor per day and have more doctor days per unit of facility and personnel cost. It can and will be done, and this is the greatest opportunity I see for most practices to meet the challenges of the future.
Finally, we come to threats, and there are many. Another severe economic downturn could depress patient demand for our services in the face of increasing costs. The increasing capital and length of time it takes to bring a new product to market could reduce the number of new technologies and drugs developed to better treat our patients. Regulatory demands and litigation threats could become even more challenging and perhaps even crushing for physicians, facilities and industry.
In many communities, a consolidation of power by accountable care organizations that control large patient populations could exclude large numbers of ophthalmology practices, significantly reducing their access to patients. A severe recessionary crisis could even move the U.S. to a single-payer system and make it illegal for doctors to own ASCs, optical shops or any entity that generates patient revenue.
Depending on whether you are an optimist or a pessimist, there is plenty to support your position in the current ophthalmology environment. For me, it is most productive and constructive to be an optimistic realist. In my experience, fortune favors the prepared mind, especially when that mind acts on the information available in a rational manner. Every physician, facility and company in today’s environment needs a carefully formulated business plan that is examined and updated at least once per year. For most ophthalmologists, a consultant expert in the field is a valuable resource in completing this important exercise.
Sadly, the days of guaranteed success for an ophthalmologist by simply taking good care of patients are gone. Fortunately, there is still great opportunity in ophthalmology, but careful planning and execution of a well-thought-out business plan will be required to prosper in our ever more challenging external environment.