REFRACTIVE SUGERRY
Do You Have What It Takes to Start a Refractive Practice?
Set aside those medical credentials for a moment, and start thinking like a small business owner.

Setting up and successfully operating a refractive surgery center is challenging no matter when or where you choose to do it. The fact that you're essentially selling a "luxury" or "lifestyle" product (minimizing dependence on eyeglasses or contact lenses) makes this type of practice unique compared with other ophthalmic specialty practices — which demands unique practice management strategies. Thinking of yourself as a small business owner who just happens to be a physician is the key to making it work.

I started my solo refractive surgery practice IWANT2020.com Inc. 6 years ago in the very competitive New York City market, during what, in retrospect, was the worst of a LASIK lull. An uncertain economy, coupled with the need for fine-tuning the procedure, had crippled many laser centers, especially those owned by investors and physicians who knew little about the intricacies of LASIK and the costs of running a laser center. When it became apparent patients were not turning out in droves, many of these centers went belly-up.

This was the environment when I entered the market, and here is my story.

I bought a failing laser center that was owned and managed by two ophthalmologists, an op-
tometrist and a business person. Two to three patients a month were getting LASIK; the center was losing money and about to enter bankruptcy. I assumed all debt and took over.

Despite the bleak picture, I was confident I could turn the center around for several reasons. The previous owners weren't very knowledgeable about laser vision correction. The ophthalmologists were more experienced with cataract surgery, and the op-
tometrist knew more about dispensing eyeglasses. All of them figured adding laser surgery would be a cinch. Obviously, given the outcome, they were wrong.

I, on the other hand, had worked for TLC Manhattan for several years and was familiar with how a top laser center managed daily routines and patient flow. I was even somewhat up to speed on marketing. I turned the center around within a year. By the end of the first year, we were cash neutral, and by the second year we were cash positive.

Some Do's and Don'ts

To make a go of a solo laser refractive surgery center, avoid taking the step too soon in your career. Work in a similar operation and learn about the best practices so you can take that knowledge into your own venture. If I'd opened a center right out of fellowship, I honestly think I would have gone bankrupt. Taking a couple of years to observe a successful laser center is excellent training and gives you adequate time to save money — and you'll need a considerable amount to start your own center.

Financing your own practice is relatively easy in today's economy and has been for several years with low interest rates and willing lenders. However, buying or leasing an excimer laser and related equipment (aberrometer, topographer, pachymeter, keratometer and the like) can approach $1 million. Because leasing fees and per-procedure fees can be prohibitive, it's a good idea to buy the laser outright, if possible.

I earned my M.B.A. from New York University in its part-time program while I was getting my laser center up and running. The knowledge I gained from my business training helps me run the numbers more realistically than refractive surgeons without this training. Physicians get into financial trouble by being overly optimistic when projecting revenue. Instead of thinking about a typical week or an average week when estimating how many surgeries they'll do per week, they use the numbers from a good week. This doesn't take into account holiday and vacation weeks. You have to be really conservative in estimating your anticipated revenue. This advice goes for the expense side of the practice, as well. Those who do poorly tend to underestimate their expenses, particularly advertising.

One of the biggest mistakes the previous owners of my center made was not marketing the center. In the laser vision correction market, patients don't look for you. You have to find them. In our tough market, advertising isn't an option, it's a necessity. As a new center, you have to advertise because at this stage, you won't make it on physician referrals and patient word-of-mouth alone. In my opinion, most general ophthalmologists don't refer LASIK patients to others, especially in light of shrinking cataract reimbursement. If revenue in the form of a laser refractive procedure is up for grabs, even if a physician does only one or two refractive surgeries a month, he'll usually do it himself rather than give it to a specialist. This is not necessarily best for the patient, but, nonetheless, it's a fact. Taking all of this into consideration, today my annual advertising budget exceeds $100,000. 

Another mistake to avoid is thinking that the day-to-day operations of the center are beneath you because you're the doctor. When I first opened the center, I had one staff person who acted as the receptionist, the laser technician and the work-up technician. In addition to performing all laser procedures — which I still do myself — I had to handle every other aspect of the practice from inventory to billing to marketing.  

After 2 years of working with a bare-bones staff, my center now has five full-time employees in addition to me.

Small-business Minded

To succeed financially in a refractive surgery center, sometimes you need to forget you're a physician and think of yourself as a small business owner. What helped me a great deal during the start-up phase and continues to work well is networking with other successful small business owners.

Most refractive surgeons, in-cluding me, initially think other physicians will help them iron out the wrinkles in their new practice. Knowing what I know now, I wouldn't count on their help. especially in the refractive surgery field.

I found networking with non-M.D.s much more helpful. Whether it's the woman who owns the shoe store down the block or the brothers who run the deli across the street, these business owners face the same challenges you have — managing inventory, purchasing, staffing, rent and utilities — and they're not your competition.

The physicians who helped me when I was opening my laser center were those who were retired or close to retiring. Retired business people also can be useful resources, and to that end, I network with members of the Senior Corps of Retired Executives (SCORE), a free consulting and resources service offered through the U.S. Small Business Admin-istration (sba.gov).

While getting IWANT2020.com off the ground, I did not hire business consultants. However, I'm now ready to work with a consultant to help the center transition to the next stage. Where am I going from here? I'm looking for a more upscale, stand-alone facility to accommodate practice growth and to distance the business from the optometry practice with which we currently share space.

Originally, sharing a facility made sense because the optometrist was one of the owners. Now I see it as a disadvantage for two reasons: First, because we are, in essence, competing with a business that sells eyeglasses and contact lenses; and second, the center's advertising need not be as sensitive to the use of contact lenses and glasses if we are not "attached" in any way. This increased independence also will help us in our branding efforts.

Believe in Your 'Product'

I am a true proponent of LASIK, and this has been tremendously beneficial to my center. I was the first New York City refractive surgeon to have LASIK, and I decided early in the start-up phase of my practice to hire only staff who wanted the procedure.

To date, I've brought all of my staff beyond 20/20. There's no need for them to memorize pre- and post-op instructions. To discuss the procedure with patients, all they need to do is reflect on their own experiences. This helps them be more empathetic and really enhances the overall credibility of what we do here.

Ultimately, the best advice I can give ophthalmologists who are considering opening a laser center is try to think of yourself as a business person who happens to be a physician and enjoys helping people see.

In the laser vision correction market, patients don't look for you. You have to find them.

Emil William Chynn, M.D., F.A.C.S., M.B.A., is the director of IWANT2020.com Inc. and is on the teaching faculty at New York Eye & Ear Infirmary. For more information about Dr. Chynn, go to IWANT2020.com.