If you own a practice or desire to own a practice, you will eventually need to sell the practice. As Stephen Covey best said, “Habit 2: Begin with the end in mind,” most of us do not live or think in this way. An optometrist is an optical and medical professional that has never been defined as a business owner or entrepreneur. When you chose to begin your profession in optometry you inadvertently decided to minor in business and business administration. It is important that, as Covey says, you begin with the end in mind. The risk of not doing this is creating a practice where the peak of the value is 10 years prior to when you are ready to sell the practice. Practice sales are occurring today with values between 55-65% of the last 3 years gross collected. To keep your practice value high, consider 3 reasons you are losing value.
- Technology – You or your practice has chosen to not embrace technology assuming that you will continue to thrive without needing to make the change until you are forced to. The profession of optometry has only begun to feel the impact of the technologically savvy generations. Optometry schools are now
graduating optometrists that do not see the world without technology. These ODs are interacting with patients and talking in a way that is relevant, current, and a language that resonates with the 40 and under crowd. The new ODs are accessible, much easier to communicate with through social media and mobile technologies. Consider Motorola, they chose not to embrace digital technology in cellular phones in the mid-nineties. The result was a relatively unknown cell phone company called Nokia. Nokia became the market leader almost overnight because they chose to embrace the future and Motorola did not. - New Patient ratios – One of the best gauges to determine a healthy and
vibrant practice is the number of new patients in the office. Is the number of new patients in your office growing or declining. This statistic is directly reflective of the value of your practice. Buyers are being educated to look at thenumber of new patients to help determine the current growth of the optometry company. If a practice has not been growing then the value has stagnated and therefore buyers should be aware of paying too much. You add value by growing. If you are not growing it is time to implement a strategic growth plan. - Resistance to the Medical Model – Please do not assume that this negates the importance of the optical component of our profession. Optometry was built on optics and that should remain a core component of our profession.
Unfortunately, we have continued to see the decline in product reimbursements in the dispensary and dispensary profits are not like they were 20 years ago. With these changes you must adapt by incorporating the medical component of optometry. This may mean that you need to hire a new associate who has been thoroughly trained in medical eye care. This would allow you to keep and manage a number of primary eye care patients that you once referred. The medical mindset is also consistent with pricing your services appropriate, especially in contact lens new fits and refits.
The above 3 reasons your optometry practice may be decreasing in value are only a couple of areas that you must be aware of to keep the value of your practice up. Buyers are becoming more savvy and opportunities abound for them to be selective with the practice they choose to purchase. If you are lagging in technology, if you are not seeing growth in new patients, and if you are not embracing medical optometry; be aware that your practice is slowly losing value. No one desires to get to the end of their career to sell patient records and close the doors without a buyer. Investing in your practice now can result in double digit returns when it is time to sell.
