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Is Private Equity another form of Corporate Optometry?

Is Private Equity another form of Corporate Optometry?

Private Equity has become very popular in our industry. Many older ODs find it have found great benefits with private equity as an exit strategy. Many ODs can sell their practices and not worry about the administrative tasks and still be able to practice the way they want and focus on what they love the most and that is patient care. There are many similarities and differences among practicing optometry in a private equity firm and corporate optometry. Ophthalmology went through it before and maybe the same can be said about labs being bought out over the years. PE is a tough conversation. Some might differ on this comparison, here is what some ODs think about this question.

There are the pros and cons of private equity in optometry

Some Private Equity are investing in new technology in their practices, from EHR to diagnostic equipment. They are building a practice to help with increased costs with low reimbursements. The new investment in technology allows ODs to practice the highest scope allowed. It can be a good employment opportunity for many young ODs that are tied down because of high debt and can still have that private practice feeling with higher than average salaries.

With the pros come the cons. Some of the negatives that ODs expressed were that there would not be any practices for the next generation of ODs to purchase and move the position forward. Some concerns were that these private equity firms would purchase these large practices hold them for a short period of time and sell them to a larger entity in the industry. ODs were concerned that optometry was being lead the way that pharmacy was taken. Being employed might be something that young ODs would like at the beginning of their career, but after a few year many desire to have their own business.

We asked the industry what they thought about if private equity was good for the future of optometry.

Dr Joshua Woodland from Dyerville, Iowa

“History doesn’t repeat, My point isn’t about current status of VCPs but, it’s about allowing something to take hold that allows for short sighted gains but is bad for the profession in the long term.”

Think about how other factors have affect our industry over the years. Use that information to help guide you on new trends and disruptive technology for the future of optometry.

Survey taken in the corporate optometry FB group, many of the members feel that private equity is another form of Corporate Optometry.

From this survey many ODs feel that private equity is another form of Corporate Optometry

It is not Corporate Optometry

Not all corporate opticals are the same, why would private equity firms be the same? There are different models and strategies. Leadership styles can vary in the direction they want to take that company. It is hard to make direct comparisons.

Stan Peacock- Walmart sublease holder in Marianna Florida.

“Not really, it depends on ones definition of what corporate optometry is. And also now there are different types of PE. So different definitions of PE also, especially how the OD is treated-in different PE settings.”

Private Equity is an alternative form of Corporate Optometry.

There can be a blur in being able to differ ante between the two in optometry. When the owner is not an OD sometimes it can be classified as form of corporate optometry. Usually in private equity ODs are employed by the firm. Private equity firms make the decisions on OD schedules, hiring, products for the optical, equipment and other decisions that ODs are not involved with.

John Wiener Costco leasehold in Cincinnati, Ohio

“It is meta corporate optometry. Equity is buying up everything. OMDs included. If you are working under a private equity firm, you are clearly not private. Your livelihood is at the mercy of market forces and corporate decisions that might be far removed from optometry.”

Only time will tell on what specific companies will do and what their strategy is. What is your opinion? Join the conversation on Facebook Corporate Optometry group!

Difference between S Corp and LLC for your Optometry Practice

Difference between S Corp and LLC for your Optometry Practice

You have worked for years in corporate optometry and now believe that you know everything there is to know about the field. You have all your funds and skills together, you have consulted all the business mentors, watched hundreds of documentaries on successful entrepreneurs, and are completely ready to carve out your own path.

But there is one itching question that you have not been able to solve yet. Should you open your optometry practice as an LLC or S corporation?

The business structure that you choose for your business will have a long-term impact on a lot of crucial aspects of your business. This includes the rules and regulations surrounding liabilities and the rate at which your business is levied with taxes.

First, let us have a look what each of them means:

LLC stands for Limited Liability Company, which is a business structure where the associates of a company will not be held liable to pay off the company’s liabilities. This means the personal assets of the owner(s) of the company will not be sold off to pay the company’s debts when it files for bankruptcy.

S Corporation is the kind of corporate structure in which the business is able to evade the double taxation by not having to pay corporate income tax on the profits that it makes. It usually pays income in the form of dividends which leads it to avoid corporation and personal tax. This structure also helps the owners protect their assets from any type of corporate-based liability.

The LLC is better for those owners whose main priority is flexibility in business management. The owner of such a company wants to keep paperwork at pay, does not feel the need to gain extra investments and thus does not feel the need to put up the company in the stock markets. This sort of structure is well suited for a smaller scale business. S Corporation, on the other hand, is better suited for companies with a much more complicated organizational structure such as multinationals.

The LLCs are very flexible when it comes to who should be in the top management and who reports to whom. They can be changed according to the CEO or the shareholders themselves. However, with S Corporation everything is laid out in black and white and the people who are part of that corporation are not allowed to switch up the rules to their liking.

As mentioned before, one of the biggest advantages of having an LLC is less paperwork which makes it is significantly easier for the owners to set it up. However, the S Corporation requires the owner to fill out a great deal of paperwork, which may seem tedious at first but it will work well to provide as concrete proof during unfortunate times. This is especially important since with S Corporation we are talking about large sums of money that would be related to liabilities and taxation.

A Different Approach on How to Compete with Online Retailers

E-commerce business has grown tremendously over the years and will continue to innovate and revolutionize how our patients seek knowledge, choose providers and purchase health care products. Emotional branding could be a different approach on how optometrists can compete with online retailers. It can be a way to provide the best customer service as consumer trends change and seek more of an experience than price orientated as focused on by the baby boomer generation.

Understanding what might trigger a patient emotionally to buy products or seek services from your office can be a way to combat online retailers and create loyalty and retention.   Tapping into the emotions of your patients from the first interaction to promote your service or products is called Emotional Branding.   Your brand image is very powerful. It triggers your patients to engage with you. Once you have them engaging with you, emotional branding builds those lasting relationships that creates patient retention, loyalty and trust.

 

Call to Action Plan on Emotional Branding.

 

  1. Storytelling– The patient brand experience depends on it.  The way you create emotional engagement is critical to getting the results that you want whether it is making a sale, creating patient retention or building a reputation. Create a story of you! Let your patients or potential patients know who you are. A Parent, animal lover or sports fan whatever it is promote it in the office, via eblasts or social media to create a personalized approach to your brand strategy. Engage your patients and learn what has attracted them to you. Understand the lifestyle of your patients and promote products or services that your patients will benefit from. You want to know what triggers them to choose your office. Promoting yourself through storytelling is a powerful way to get patients talking about your office and referring others. Storytelling creates a  brand story that educates patients, inspires them or makes them feel something. Those feelings create lastly impressions that keep people coming back and not going to your competitor. Let your patients know about your volunteer work as an optometrist, your struggles and accomplishments, provide a “human effect” that online retailers can’t compete with. Your goal is to make them feel or experience something during the interaction.
  2. Emotional Drivers– Once you have successfully promoted your brand through storytelling and understand what your patients want. You can determine which emotional drivers influence your patients.  Some emotional drivers in your optometry office include being healthy, improving appearance and self confidence. Knowledgeable ODs can use these drivers to cultivate personalized approach to the treatment plan, recommendation of products and ultimately a defensive strategy to online retailers.
  3. Consistency – People don’t like change if they are comfortable and happy with your services. They are used to a certain experience and value. Develop a brand specific strategy that is inviting to your patients. Whether it be that your services are provided on a timely manner or a friendly environment for families, being consistent will differentiate your office from online retailers. The value and emotional experience that your patients feel outweighs e-commerce pricing. When returning patients ask about your vacation or children you have successfully accomplished the art of emotional branding.

 

Email Messages and HIPAA Electronic mail messages

Email Messages and HIPAA Electronic mail messages (”email”) is an economical and timely manner for doctors and patients to communicate with each other and is discussed in the Code of Federal Regulations, 45 CFR 164 522 (b). The prevailing principle is that covered entities (doctors) are not restricted from using email to leave messages for appointments or dispensing of product, but that the content of the message must be “the minimal necessary amount”. However, if the patient specifically restricts email or phone messages, the doctor cannot still use those channels to communicate with the patient. The next question is whether all email from a doctor needs to be secure. In most cases, if the patient authorizes the doctor, the doctor can use email to send a message to a patient. It is not required that all correspondence between a doctor and patient be secure, but ensuring that the doctor might unintentionally release protected health information (PHI), the doctor should consider using only secure email. A popular program, Google Mail (also known as “GMail”) is not HIPAA compliant because it relies solely on Secure Socket Layer (SSL) as the form of encryption. This makes the transport secure but not the content. HIPAA requires the content to also be secure which what encryption of the content will do. There are a number of encrypted email providers that meet the HIPAA requirements and can be found through a query on the Internet. An example of minimum necessary information through an insecure email or unencrypted email content is “Ms. Smith, please call (123) 456-7890 Dr. ABC” . The doctor should avoid saying what the call is for or by identifying the specialty of the doctor. Even if the patient explicitly authorizes the doctor for normal email messaging, the doctor should still observe the minimal necessary PHI. This also includes telephone or text messages. In summary, the doctor should use secure email providers to send messages with the minimum necessary information.
Tips4EyeDocs, Richard Hom OD Dr. Hom is a noted security and computer blogger.

Business metrics in Corporate Optometry

There are a lot of questions on business metrics in corporate optometry. What is a good net percentage compared to gross revenue and how many patients should you be seeing a day. How many days a week should you be working? It really depends on the brand that you are working with. Some ODs will work 3 days a week and see 30 patients a week others will work 5 days and see the same number of patient. It is negotiable. For the number of days you work you should be seeing 8-12 a day, if you are seeing less you should not be there more than 3 days a week and your rent should reflect that volume and number of managed care exams.

Net profit can range from 50%-80% of gross revenue.  Some fixed expenses that can change the net for each corporate optometry setting are  rent,EHR, accounting, payroll, business phone, office supplies, lease on equipment and optometry malpractice and licensing.

Your goal is to at least gross 1k per day of work that is 10-12 patients a day. It can vary on based on patient demographics and managed care plans.  Medical service fees are typically higher than routine eye exam. Check your explanation of benefits (EOBs) to determine your fees for those procedures.

Evaluate your  average Transaction Per Patient
Average transaction = Total visit fees collected/number of patients

It can be broken down even further to determine chair cost or revenue per hour. Being able to see more patients per hour efficiently can mean more income per hour and being able to do administrative duties during non peak times or moonlighting to increase income.
You should understand medical and non-medical visits. Medical exams typically are a shorter visit that can be done by a technician then evaluated by you.The average transaction for a medical exam can range from $100 to $200  The average transaction for a routine eye exam can range from $55 to $75.

Understanding these metrics in corporate optometry will help you be successful in the business. Read more at https://corporateoptometry.com/product/business-metrics/