OCT 2012

EyeWorld is the official news magazine of the American Society of Cataract & Refractive Surgery.

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continued from page 21 optical benefits that might not always be there; and senior patients who came in for the same reason, many of them fearing that their Medicare benefits were on the line. • In one client setting, we're about to acquiesce to a pending reduc- tion in Medicaid fees—not because we want to, but because we have to. Medicaid payments provide just enough marginal revenue to stay afloat in this tough setting. • In another client's office, Medicaid fees for pediatric ophthalmology services have just been reset well below historic figures. This doctor could likely be closing the practice and retiring shortly, leaving patients in a 200-mile radius without subspecialty care. • In numerous large client settings, our 10-year business plan is to take over (through mergers, acquisi- tions, and new office development forcing out those who won't join us) a substantial majority of the remaining private practice eyecare in our service area. • Many of the country's heretofore "struggling but safe" eye surgeons are one bad vote in Washington away from disaster. I've got scores of clients with profit margins below 30% (while norms range from 35-45% and higher). Some of these low-profit surgeons got that way because they chose to practice in costly urban and suburban settings with too many doctors. Others have been painted into a corner with debt from their educa- tion or a past business misstep. For the typical general ophthalmolo- gist with a 25% profit margin today, a 5% Medicare fee reduction along with even mild inflation will result in a 25% pay cut. Imagine what would happen if Medicare shaved off 10%. • Surgeons who once blanched at the idea of seeing more than 25 patients in a day are now obliged to hit more than 40 visits in order to make payroll. In the future, if lower payments arrive, 50+ patients will have to be seen—if they can be found. • Later this year I'll be launching a new collaborative study with sev- eral clients on opportunities for "frugal innovation." We're doing this on the assumption that profit enhancement—once almost entire- ly dependent on revenue gains— must now simultaneously depend on a material reduction in the cost to serve each patient. On the hit list will be things we never fussed with before, like having regular employees handle routine office cleaning throughout the course of the day (saving the cost of a night janitor), or switching from the Send us your favorite APP! Have a favorite app that helps you with business or personal activities? Email stacy@eyeworld.org with the app name and how it helped you. Apps selected will be published in Ophthalmology Business and their submitters will receive a $50 iTunes card. You may be selected for a brief interview. 22 Ophthalmology Business • October 2012 sharply creased cotton lab coats the doctors like to polyester ones because the docs can take them home and throw them in the washer instead of paying for dry cleaning. In the future environ- ment, these picayunish savings, when added up, will be meaning- ful. Because the economic recover is anemic and our leaders are divided as to a solution, the federal deficit will continue. Because of ongoing deficits, the nation's debt as a per- cent of GDP will keep sailing well past the 100% warning line and reach levels that briskly elevate our borrowing costs. As borrowing costs rise, interest payments will edge out funds available for the entitlement spending, which supports 60% or more of the typical ophthalmology practice. This will compel lawmakers to take emergency steps, and we'll undertake an obliged phase shift in the way that healthcare is paid for. When the music stops, there won't be enough chairs for everyone. And the chairs still left will not be quite as overstuffed as in the past. No matter the pace of events, I'm sure we'll all learn to make adjustments, just like Mr. Brunton. Maybe he was on to something. And at some breaking point in the future, we will say to every patient, "If you have a little lunch money left over, please drop it in the jar on the way out. Today is 'Parsimonious Day.'" OB Mr. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice management consulting firm established in 1979, with offices in San Diego. He can be contacted at 619-223-2233 or pintoinc@aol.com.

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