Eyeworld

84 | EYEWORLD | WINTER 2024 P RACTICE MANAGEMENT by John Pinto and Corinne Wohl, MHSA, COE About the authors John Pinto President J. Pinto & Associates San Diego, California Corinne Wohl, MHSA, COE President C. Wohl & Associates San Diego, California more. In the early months, there will be sharp drops in practice profit, and the senior doctor has no recourse except to reduce their salary or draw on loan proceeds to preserve income. Ta- ble 1 shows a typical, if markedly simplified and accelerated, cash flow in the first several months. As you can see from the stylized example in Table 1, if the new doctor's productivity can be accelerated (as by a brisk credentialing tempo and strong outreach efforts), the senior doctor has only a short-term drop in personal income, followed by a nice income boost. Obviously, you don't want to stretch out the process. A senior doctor making $40,000 in the base month before their new hire's arrival is going to resent their young colleague getting stuck at a "month 2" level of productivity, which would result in a significant income drop for the senior doctor. For the same reason, you also don't want to bring a new doctor on prematurely. Here are a few rules of thumb: 1. Have a clear need for the new doctor's la- bor. Before you bring on a new doctor to form a two-doctor general ophthalmology practice, you should be personally seeing at least 20% more patients per month than you can com- fortably fit into your schedule. This typically translates to 600 or more patient visits per month for a general ophthalmologist (inclu- sive of paid as well as postop visits). Alter- nately, you should have reached (but not yet exceeded) your comfortable personal patient volumes, be growing total patient volumes at least 10% a year, and have a high level of confidence that this growth rate will continue. 2. Plan well ahead. This level of excess produc- tivity (or superior growth rate) should have been in place for at least the last 6 months before you make a hiring commitment. From this, you can see that it's occasionally appro- priate to begin the doctor search process well before you think you actually might need additional help, especially if you work in a less desirable market. It may take 2 years or longer to find an acceptable candidate. 3. Have advance capital reserves in place. Make sure you have significant financial reserves in place to carry yourself through the first few soft quarters after your new doctor arrives. Whether these reserves are held as Shifting from solo to group practice A fter decades of consolidation and re- tirement in eyecare, a high percent- age of ophthalmologists are still in solo practice, most of them happily. Solo practice provides the self-satisfaction and peace of absolute control. Soloists don't have to consult with a colleague or confront peers on difficult business or med- ical issues; they need only direct subordinates. Soloists work and spend as they see fit. Still, the economic and professional advan- tages of group practice are compelling and may outweigh the desire for lean independence. • High fixed overhead and expensive technolo- gy upgrades can be shared. • Patients can be better served if subspecialists are present; a patient's needs can be ad- dressed in a single organization. • It's easier to afford management and advisory talent when their cost is borne by two or more doctors working together. • The quality of care may be higher in group practices for two reasons—first because each surgeon learns from his or her peers and second because two or more surgeons work- ing together affords a kind of "sentry effect" oversight, even if there is no formal quality assurance review process. • There is greater practice security. When a solo surgeon falls ill, the practice grinds to an immediate halt. A second or third surgeon can keep the company going. • Call coverage is shared. Part-time surgeons can even job share. Many soloists we advise can be unsure about the timing of adding the second or third doctor to the practice. It's critical to forecast the almost inevitable cash flow crunch that occurs early on as you take on a new associate and to have cash reserves allowing you to take a per- sonal pay cut for several quarters or longer. Let's imagine a solo surgeon with $1.2 million in revenue and a 40% profit margin who adds a partner-track colleague. Near term, espe- cially if there are credentialing delays, the new associate will represent a financial headwind. It's typical for a new doctor's first-year costs (including recruitment, wages, taxes, benefits, relocation costs, insurance, staffing, and other professional support) to reach $400,000 or

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