Build your Optometry Practice to Sell

hands-shakingHave you been thinking about retirement?
If you have graduated from optometry school and you currently own your practice, you should be. It’s never too early to begin the process of preparing your practice to sell. Many optometry practices do not sell for reasons that could have been prevented if the CEOs would have had the mindset that someday they would sell. If you plan to someday sell your optometry business, then avoid these four costly mistakes that have left many optometrists holding a business they cannot sell.

  1. Aging Technology – Some optometry practices still use outdated technology like the GDx. You might have a chance of selling your GDx in the United Kingdom, but you won’t get anyone to buy it in the United States. The standard optometry practice should have some form of Optical Coherence Tomography (OCT) technology.
  2. Paper Records – If you believe you will hold out on changing from paper to EMRs (Electronic Medical Records), then plan on holding out from selling your practice. Most of the optometrists who are in the market for buying a practice have not even performed an exam on paper. Also, as costs continue to mount for changing from paper to EMRs, the pool of investors who are interested in paper offices has shrunk. Investors do not want to spend thousands at the outset just to make the office current. If you remain on paper, the value of your practice is on the decline.
  3. Single Owner Doctor – What would happen if you stepped out of the practice? Is the success of the practice dependent upon one individual? The optometry practices that can remain profitable independent of a sole doctor are practices that carry the most value for potential buyers. Hiring an associate OD can be a difficult decision due to the up-front costs, but not selling your practice can be much more costly.
  4. Depending on vision benefit plans – If your practice cash flow is greater than 50 percent from vision benefit plans like VSP, Eyemed, & Superior, then selling your practice will be highly dependent upon the future of the segregation of vision and medical. As we move to an Accountable Care Organization (ACO) environment where fee for service becomes obsolete, practices must prepare for bundled payments and full capitation. To be profitable in this environment, the number of patients seen must increase as the reimbursements decrease. Optometry practices depending on “ramping up their schedules” can only ramp up so far until it starts costing the practice to see patients. Transitioning your practice to a medical model with complimentary vision benefits is a must for selling your practice.

 

Optometrists continue to make similar mistakes each generation. Building a practice that is salable is key to maximizing the potential profits of owning a practice. If doing this does not seem necessary nor desirable, it may be an indication that you are best fit for being an associate. If you currently own a practice, you will want to sell it someday. Making the above adjustments should be at the front of your list for working on the practice. An astute buyer will not pay much more than 55 percent of the last three years’ average gross collected, and many buyers will not even pay 55 percent. Take action now and build your optometry practice to sell.

Oh baby! Surviving an Associate OD’s maternity leave

The birth of a baby is one of the most exciting events a human can experience. When one of our associate ODs informed me she was pregnant, I was happy for her. As a CEO of our optometry practice, I also recognize scheduling her maternity leave will bring some challenges. Overcoming these hurdles and coming out stronger post-maternity leave is what all successful optometry practices do. The great management advantage of pregnancy and maternity leave is you most likely will be aware of it seven or eight months in advance, so you will have plenty of time for planning.

Here are a couple of tips for navigating a six-to-eight week span when an associate optometrist is out of the office.

  1. Staff time off – When you find out an associate OD will need maternity leave, you can encourage non-OD staff to plan vacations and time off. Many times your staff can and will arrange for time off when you will be without a doctor for an extended period of time. Your role is to communicate and encourage them to use that time.
  2. “Locum tenen” – The definition of locum tenens, roughly translated from Latin, means “to hold a place.” Locum tenens physicians fill in for other physicians on a temporary basis for a range of a few days to up to six months or more. When healthcare employers face temporary staffing shortages due to vacancies, illness, or other causes, they hire locum tenens physicians and other part-time clinicians to fill those vacancies and maintain patient care quality. (reference)
  3. Extended “to do” list – Plan for the office to do jobs that usually do not get done during the busy week. This may mean going through patient records and calling ones who have not been in for two years to see if they still consider your practice their eye care provider and then schedule an appointment. This may mean doing a deep clean of the office and equipment. Whatever it is, time is maximized by planning ahead.
  4. Adding appointment slots – This maybe the easiest way to address being short a doctor for an extended period of time. Depending on the size and how busy the practice is, an hour a day added to your schedule may be all that is needed.

The question still remains about how the practice is going to grow minus a doctor. The growth does not occur during the time the optometrist is out of the office. The growth is a product of what was done during the “off-season”  With any sport, the success of the season is highly dependent upon what is done during the “off-season” Being intentional about making your “off-season” productive will grow the practice when it is back to running full speed. And whatever you do, don’t lose sight of the big picture. Family growth and prosperity far outweigh practice growth.

The #1 way to avoid paying unemployment

Laying off

A bad hire can can damage office morale. Sometimes employees don’t work out and need to be terminated. However, you might hesitate before you fire them because you don’t want a lawsuit for wrongful termination, and you certainly want to avoid paying unemployment.

Here is the number one way to avoid unemployment costs:

Quit and Document
When employees quit voluntarily, they will have a harder time receiving unemployment pay, so quitting is the best-case scenario. Of course, many times poor employees refuse to see they are the problem so you may have to fire them.

However, when a problem employee does quit, make sure you document extensively what led up to the resignation. Then when you receive a notice that your former employee is filing for unemployment, you can submit your documentation for an appeal. This can and has worked for optometry employers. The key is to document all threats that the employee made to quit, and also to document that neither you nor your staff encouraged the individual to quit.

One last word of advice: In your employment manual, make sure that you use the term “at will employment” for referencing staff employment. An employment attorney is an important part of your team and can be instrumental in leading you the optometrist to make these key human resource adjustments.

How to stick it to your NO SHOWS

When patients cancel or or forget their appointments, a highly productive day can turn into a day that’s only slightly better than just staying at home. Because frequent cancellations and “no shows” are costly, some optometry practices try to punish patients by charging them a “no show” fee. However, I think they end up losing in the long run.

Is there a way to stick it to the schedule busters?

Maybe, or maybe not. First, you need to consider these three things:

    1. Is your appointment reminder system efficient and effective for the patients you serve? SolutionReach has been effective for us. DemandForce and WebSystems3 also have good ones.
    2. Does your EHR track the number of N/S (No Shows) a patient has? Once patients hit two or three, schedule them in slower times of the day or double-book them at the end of the day.
    3. Find the source of the problem. If it is an entire family, fire the family. There are times when the relationship needs to be ended. For more information of this topic, check out Dr. Henry Cloud’s book Necessary Endings. Also, look closely for trends. Maybe your unreliable patients tend to be ones that have a certain type of insurance. If so, maybe it’s time to stop carrying that particular insurance.

Patients generally do not like paying for appointments they didn’t attend, so I would highly recommend that you do not charge for no shows. I believe far more damage is done than the small amount of money collected. Instead, use the above suggestions to minimize the number of cancellations and no shows, and decrease the negative effect on your practice.

Dialing for dollars: How to reduce costs

Photo of a telephone and dollars over a white background

In the past several years, staying profitable in an optometric business has become a battle. Reimbursements continue to decline while cost of goods and general optometry practice bills increase. Expenses will quickly eat up profits if you don’t proactively control your costs.

The bite that hit our practice recently was the corporate “family plan” for our mobile phone and device costs. I was amazed how the plans had changed, without even a courtesy call to inform us of the rate increases. One phone call this morning saved us $100 per month ($1,200/year) in data usage.

To be proactive in keeping your costs as low as possible, make the following a yearly habit:

4 steps every optometry CEO should take yearly

1. Collect all reoccurring bills into one folder.

2. Review the costs of the bills and what services are included.

  • Examples – mobile/device, telephone system, internet, trash, general insurance, electric, cleaning, lawn services, snow removal, IT company, data storage, shredding of hard drives, service agreements, software, website company, etc.

3. Highlight all the numbers that represent each company.

4. Call each business, asking the following questions:

  • Is the office currently receiving the best rate for the services that we receive?
  • If we were to switch to a different company, should we expect to receive the same offer coming back to you?
  • What other services do you offer that could potentially save us money?
  • Would we receive a better rate if we committed for a period of time?

Many variables impact the rate that each company gives you. One thing is for sure, all companies have different rate plans and those plans change to adapt to their competitors.

For example, we have been with SolutionReach for three years and the agreement includes a no-rate increase as long as we continue with them. This loyalty benefit allows us to control costs as the practice grows.

Many optometrists say the time required to do this is not worth the savings involved. I respectfully disagree, as they are usually the ones who wonder why their practice net continues to slowly erode. Don’t be surprised if the yearly exercise saves you between $1,200 to $6,000 per year.

Tattoos – Practical application to staff non-compliance

When a staff member is not following office guidelines, as the CEO and staff manager, I believe having protocols in place for consistently and fairly restating expectations is important.
Businessman in a suit with no sleeves and tattoo on his arms

For example, we have a staff tattoo policy that addresses how tattoos can (or can’t) be displayed for patients. Neither I nor Dr. Yarrow, the other owner, have any issues with tattoos. However, we know many of our patients may view tattoos as unprofessional. Based on this, we have implemented a policy that all tattoos should be covered during office hours when patients are present. I have been surprised at how positive the staff have been about this policy, and how much they have appreciated the guidelines.

So what happens when some staff members consistently forget to cover their tattoos?

Action Plan

As the staff managers we cannot assume the worst of our staff, we must assume that a staff member who does not have his or her tattoos covered is probably busy working and simply forgot. To easily solve this, open up your employment manual and export the page that references tattoos.  Then communicate to your staff member with a kind email stating:

  • “As I have observed you working so very hard at the front desk taking care of patients, I would have to assume that your efforts in complying with office guidelines is just a mental slip up. For your review, I have attached a page from the employment manual for your review. Thank you in advance for reviewing.”
  • Attach the exported page from the employment manual and send it to the staff member with the above message.

For the majority of staff this simple piece of communication should resolve the problem for a while. Staff members are human and they will probably forget again at a later date. If the later date is months down the road don’t worry, this is part of managing people. Send another reminder.

If the staff member continues with non-compliance, there may be a bigger issue that requires a face-to-face discussion. You then need to have that Crucial Confrontation.

Training Camp – Reaching your optometric staff’s full potential

One of my favorite podcasts is ManagerTools. I enjoy hearing the two experts’ ideas about effectively leading and managing employees in a small business.

After years of listening, I recall most strongly their assertion that managing is not for everyone. I feel that is why so many optometrists struggle with leading their staff.

Most practices are too small to afford a highly-compensated office manager, so, like everything else, the task of training lands in the lap of the optometrist.

Unfortunately, when this happens “managing” is merely a term used to denote a hierarchy of leadership. Actual training is not being done. For the optometrist wanting to improve patient care, investing in training is a great place to start, and it can even improve office morale in the process.  Here is how to start:

  1. Began by deciding who should attend – In a small office with five or fewer hourly employees, the meetings should include everyone and the doctor. Larger offices may need to divide into teams and schedule different times, like over the lunch hour or right after closing are two possibilities. Our office uses three different teams:  dispensary, front desk/insurance, and doctor’s assistants.
  2. Determine the topics to be discussed. – This will be based on who is present and what areas you identify as being weak. Topics like first impressions, phone call etiquette, job description review, employment manual review, and job expectations are all good places to start.
  3. Schedule a time convenient for all doctors and staff. – This can be done easily with an online scheduling site called Doodle. It’s free and you can do away with annoying multiple emails as you all try to find a workable time.
  4. Create an agenda – Start by making a list of everything you notice during the day that does not run smoothly. Observe your staff members interacting with patients and determine what areas need to be improved. Then develop your plan for training. Don’t forget to search YouTube for training videos in areas you would like improvement. Many customer service companies have videos on YouTube.
  5. Show up to the meeting – Sending reminders to your staff members a day in advance reminds them of the additional meeting. Reminders are also a great way to start the team building.
  6. Lead the meeting. – The meeting should be relaxed and allow for open discussion. Remember, you would like to not only train but allow your staff to present the areas they have noticed that could be improved.

In order to walk a thousand miles you must begin with the first step. Training your staff is the first step to reaching the fullest potential in patient care. As noted by the experts on ManagerTools, being a manager is one of the most boring jobs in a company because it requires someone to repeat the same process over and over. Management is repetitive, but it extremely important to the success of an optometry practice.

What to look for in a potential buyer of your optometry practice

The ease of selling a product is inversely proportional to the cost of the product. If a patient at your practice wants to buy a bottle of ophthalmic lens cleaner, no one is concerned whether the individual can pay for the $5 bottle. However, if a patient is buying three pairs of sunglasses with all the additions, some may be concerned about the patient’s ability to pay for the total bill.

電卓と冒険者Now let’s take that to extremes and look at a potential buyer of your optometry practice. Most optometrists who own a practice assume when they are ready to sell, a qualified buyer will come along and buy it. Think again. Buyers are having more and more difficulties putting together resources to purchase a practice, and the larger the practice the harder it is.  And even if someone can buy the practice, will he or she be able to manage the financing for you to receive the payoff?

When you are ready to sell, ask yourself these three questions about any potential buyer.

  1. Is his or her financing complete? – Many practice sales have dissolved due to the inability of the buyer to get financing. If a buyer can only come up with 80 percent of the financing, you may consider financing the remainder.  Please do remember that if you do this the financing agency (i.e.- bank) will get paid in full before you do.
  2. What is the buyer’s lifestyle? – Look at the history of the buyer and and his or her credit rating. Have loans been paid back?  Has a school loan ever gone into default? Does his or her taste of vehicles, housing, and vacations indicate being highly leveraged?  If so, you may consider clicking “next” on the buyers page.
  3. What kinds of relationships does the buyer have outside of the practice? – This directly relates to an associate OD that you are considering going into partnership with to buy your practice out. A friend of mine once said, “The most common theme about an individual who has multiple divorces is that individual.” Before agreeing to financially “marry” a potential buyer, remember that the integrity of an individual outside of the office is directly related to integrity inside the office.

Many sellers are so excited at the prospect of selling their practice that they overlook various red flags in the process. This is why all optometrists looking to sell their stock in the corporation should begin the process at least three to five years prior to exiting. Don’t assume your practice will be sold and you will receive all your finances from the practice. Start early for the best chance of finding a reliable buyer.

Five ways to tell staff “I appreciate you”–and have them believe it!

Closeup portrait happy excited surprised young businessman about to open unwrap red gift box isolated grey background, enjoying his present. Positive human emotions, facial expression feeling attitude

Have you ever given all your staff members bonuses, and then wondered why it seemed to make no impact on their loyalty or productivity? Did only a few even thank you for their bonus?
Contrary to popular belief, the number one reason good staff members leave a practice is not for more money. Numerous experts have determined the main reason good people leave is they do not feel appreciated.

At work, people express and receive appreciation in different ways. If you try to express appreciation in ways that aren’t meaningful to your staff members, they may not feel valued at all. This is because you and your staff members are speaking different languages.

Dr. Gary Chapman, bestselling author of the 5 Love Languages partnered with Dr. Paul White, a business consultant, to create The 5 Languages of Appreciation in the Workplace to help identify different communication styles. The result is an incredible resource that I believe all optometrists managing staff should read.

The list of appreciation languages below are from their book. Take the time to discover the languages of your staff members and review their language of affirmation. This tool can help you start communicating to your staff in a language they understand.

  1. Words of Affirmation – Spend concentrated time on these staff members by sending simple thank you notes or stopping them in the hall to just say “thank you.” People who respond to Words of Affirmation know they are important when they are told exactly that. If you notice they did something good, make a quick note and communicate it.
  2. Quality Time – Not all of my 20-plus staff members require Quality Time, I discovered, much to my relief. However, there are a couple of staff members that I do need to sit down with weekly and give them my time to communicate their importance to me. This knowledge has allowed me to concentrate my time most appropriately.
  3. Acts of Service – Offer to assist a staff member who responds to Acts of Service with her daily “to-do” list and you have communicated you appreciate her. Be ready for her attitude to be positive and encouraged after she watches you help with a couple of tasks.  You don’t have to do all the work, but you might vacuum the carpet one evening to help her get home earlier.
  4. Tangible Gifts – Those $10 AMEX gift cards will go much further and it will cost you less if you only give them to the staff members who communicate through the language of Tangible Gifts. These people may be ambivalent to Words of Affirmation, so acknowledging their work well done may not make an impact. Give them a gift and they will know you care.
  5. Physical Touch – if you determine this is the primary language of a staff member, it would be wise to refrain from anything more than a handshake or pat on the back.

All people know they are appreciated when their preferred language is spoken to them. When people are appreciated, they are more loyal, and the workplace environment will be more encouraging and productive.

The #1 Reason Staff Leave your Optometry Office

I think the most difficult aspect of being the CEO of my company is staffing. Like all optometry graduates, I was highly trained for the clinical work, and I enjoy it. I’ve also found the business development and growth to be fun, like a calculated game of chess that rewards those who think ahead. Managing the staff, however, seems to me at times like having 10 wives with unpredictable moods, needs, and expectations. But I want them all to show up for work, because an early-morning text saying someone can’t make it in never bodes well for the day. Managing a staff is draining, and sometimes makes me think about selling the practice early. What can we as CEOs do to decrease the pain of management?

Young woman with paper bag over her headEach situation is different, but many of the experts in management will lean on one of these three reasons people do not stay at their jobs:

  1. Unhappy environment – The majority of individuals hate conflict. Very few people look at conflict as a way to grow. Minimizing the intrastaff conflict that exists is the first step in keeping this out of your office.

      •  Recommendation – Stop conflict early and make individuals deal with the small problems before they become insurmountable. Schedule a time at the end of the day for the two in conflict to meet with you, the mediator, and address the issue.

  2. Not feeling appreciated – The majority of optometric staff are female. Relationship expert Gary D. Chapman describes five different “love languages” that people use to communicate, and in his research, Chapman determined a high percentage of women respond best to the love language “words of affirmation.” Job satisfaction increases when people know they are needed and appreciated.

      •  Recommendation – Create a “to do” every week to affirm one staff member. This can be done through email, a traditional card, or sending flowers. Whatever the case, do something.

  3. No job description or expectations – It is difficult for staff members to be successful if they don’t know the expectations. Staff members need to know how to measure their daily efforts, so when they leave each day they will know if they have completed their job and done it well. Many optometry CEOs do not take the time to regularly update job descriptions and review them with the staff. Do your staff members a favor and let them know what you expect.

      •  Recommendation – Every staff member should have a job description and expectation list that outlines his or her responsibilities. Create one for each staff member and review it a minimum of every 12 months.

So what is the #1 reason staff leave? Experts can’t pinpoint this for your particular setting, so you will need to guess (or ask some of your staff members). The point is, if you are having a problem keeping staff, these three areas are great places to investigate. Then make sure you are consistently giving staff members what they need to be successful at their jobs.