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Ophthalmologists who plan for reduced reimbursements will still find success
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The unfortunate reality for the cataract surgeon today is that while reimbursement is going down per case, patient expectations are going up. To meet these expectations, more expensive preoperative screening is required to practice at the highest level.
Besides the usual careful full ocular examination and ultrasonic biometry, evaluation of the ocular surface with a dry eye screening questionnaire, tear film osmolarity, MMP-9 and meibomian gland imaging can discover as many as 50% of preoperative patients have asymptomatic dry eye disease. Properly identified and treated before surgery, it is no problem; missed and it can result in a poor outcome, and the ophthalmic surgeon is often confronted with an unhappy and in some cases even angry patient. Preoperative topography also detects much corneal pathology that cannot be identified with routine slit lamp examination.
Then comes the retina and especially the macula. Preoperative OCT is required even by the fellowship-trained retina surgeon to detect many subtle macular abnormalities that can and do significantly affect visual outcomes after cataract surgery. So, like it or not, to do the very best job as a cataract surgeon, we need to screen our patients with preoperative dry eye diagnostics, topography and macular OCT, often at our own expense.
As my friend John Pinto has said from the podium and in print: “Today’s patient (and their insurance payer) expects a Mercedes-Benz experience and outcome at Volkswagen prices.” This is the “unfortunate truth” about today’s practice of ophthalmology. At the same time we are being stressed by reduced reimbursement for surgical professional fees, we are facing increasing costs in both personnel and diagnostic devices required to provide the highest-level patient experience and outcome. None of us is comfortable providing second-rate care, so we must respond.
For many, the lost profits in surgical professional fees can be made up by participating in the increasing facility fees available through ownership in the ASC where the cataract surgery is performed. If you are blocked from this opportunity, be sure to offer presbyopia-correcting and toric IOLs to your patients and MIGS as well. Consider offering as many other surgical procedures as you are competent to perform, including glaucoma, cornea, oculoplastics and even medical retina, including intravitreal injections.
If you are blocked from ASC ownership, a big opportunity to enhance income remains in the clinic. We ophthalmologists are primarily office based. For the ophthalmologist who works five days a week, usually four of them are spent in the office. Thanks to our primary care colleagues, evaluation and management code reimbursement is going up. So, the best way to enhance revenues is to see more patients per doctor day and to add doctor days. With the increase in point-of-service testing in the office and the many office-based procedures, including YAG laser, selective laser trabeculoplasty, cornea cross-linking and intravitreal injections, along with the many dry eye office treatments now available, every office visit can add up to $250 per patient in fees. If you are trained and have the patients, corneal refractive surgery can also be a significant office-based revenue producer, and being well trained in at least PRK offers the enhancement strategy needed for the premium IOL channel.
We can see more patients an hour with the help of a scribe and technicians, at least six per hour, and for many of us, eight or more. And, of course, we can work more hours a day and/or more days a year. A missed opportunity for many is to consider office hours one evening a week and/or even Saturday mornings. Add eight patients a day, which is one patient an hour, times 180 clinic days a year, and you have seen 1,440 more patients a year. Multiply that by $250 per patient including office procedures, and that is $360,000 a year — in the office. It would take an increase of 545 cataract surgeries a year to match that. And in 5 years, cataract surgery professional fees will be lower and office practice fees will be higher per encounter. So, unless one does 1,000 cataracts a year in an owned ASC, it is better to focus on the office-based practice.
A new comprehensive ophthalmologist generates one eye for OR surgery for every 10 patients seen, so seeing the 1,440 additional patients a year will also add 144 in OR procedures as well, which will translate to another $80,000. This makes the total benefit reach $440,000. To match that would require doing 800 more cataracts a year, unrealistic for nearly every comprehensive ophthalmologist. No doubt, the best way to earn more is to see more patients an hour or work more days or half days in the office. A good practice consultant, such as Maller and Associates or J. Pinto & Associates Inc., can help you learn how to do so in an efficient manner.
Adding services such as optical is good for some practices and/or adding employee ophthalmologists, optometrists or, for the big practice, physician assistants is good for nearly every practice. Office practice is now lucrative enough that, for the low-volume surgeon who does one to two cases an hour in a hospital outpatient department, many may be better off just staying in the office and maximizing revenue and efficiency there. Certainly this is an option for the senior ophthalmologist, and good medical ophthalmologists are in high demand.
Finally, we need to be cost-effective in the provision of our care. Our employees and the equipment required to practice state-of-the-art ophthalmology are expensive, as mentioned above, and getting more expensive. If an ophthalmologist generates $1.2 million per year in revenue, doing 500 surgical cases a year, only $275,000 of that revenue comes from time in the OR. The rest, more than 75% of the revenue, is derived in the office. At a 70% overhead in the office, the ophthalmologist can earn $360,000 per year, which according to Medscape is the national average for ophthalmologists. With a good practice consultant and prudent management, one can reduce the overhead 5% in the office, which is $46,250 to the bottom line.
We are well positioned in ophthalmology to survive and even thrive, but we will have to work a little harder and a lot smarter or adjust to a lower income level, which brings me to the final point. The prudent ophthalmologist will manage their income wisely and rightsize their lifestyle in the face of today’s external headwinds in medicine. At $30,000 per month of income, one has about $20,000 per month to spend after taxes. Pay yourself and your family first by saving at least 20% of that after-tax income each month. Get good financial advice and follow it carefully. While today’s ophthalmologist retires at around 62 after a 30-year career, I believe the 30-year-old ophthalmologist finishing training today should plan to work until age 70 or even 80. Another 10 to 20 years of revenue in what can be one’s most productive years can work magic for an individual’s financial planning.
In summary, the ophthalmologist of the future will have to work harder, smarter and longer than the last generation to enjoy the same lifestyle, but with careful planning at work and at home, today’s ophthalmologist is well positioned to survive and even thrive in the face the external environmental winds of change.
Disclosure: Lindstrom reports he consults for or owns equity in Unifeye Vision Partners and many companies that provide drugs and devices to ophthalmology, including Zeiss, which manufactures OCT.