Wouldnt it be nice to open a cookbook and have answers to all our practice-management questions? After two decades in practice and many years teaching practice management, Ive come to realize that most simple business questions have complicated answers. While there is no substitute for experience, I hope this article provides some answers to common questions students and graduates struggle with in the early years of their careers.



An associate has no ownership interest in the practice, but many associates eventually become partners. Make the most of this early stage in your career.

Your patient base can come from senior doctor overflow or by providing coverage when he or she is out of the office and advanced services that the senior doctor doesnt offer. Most importantly, it also comes from new patients that you bring into the practice.

When considering which practice to join, determine whether the practice can support another practitioner. The appointment book should be consistently filled weeks in advance. The senior O.D. may desire to protect his ownership equity by selling a percentage of the practice. You need patient access.

Also, consider factors other than salary. Among them: cost of living and desirability of the area, spousal job opportunities and fringe benefits. Protect yourself with a contract that is drafted and reviewed by an attorney.



Live within your means, regardless of your financial situation. Monitor your income and spending habits, create a budget and stick to it. Track small expenses, because they can add up.

A good credit score can mean lower interest rates. This adds up to thousands of dollars in savings over the life of a loan. This, in turn, can help you purchase a new practice or equipment more easily.


Customer service

Patient satisfaction usually leads to loyalty and referrals. Follow this age-old formula: 1) The patient is always right. 2) If the patient is ever wrong, re-read #1. Satisfaction is not about right or wrong; its about the patients perceptions and how you respond to them.

You also need to be (or become) a good communicator. Research tells us that to communicate effectively with a general audience in the United States, we need to write at a sixth- to eighth-grade level.1 Figure out what type of patient is sitting in your chair and then communicate appropriately.

Listening is part of communication. During the patient history, for example, the patient should talk 75% of the time. Looking the patient in the eye, an appropriate touch on the shoulder or hand, a smile and an open posture can make all the difference.



Just about every graduate from optometry school has accumulated a large student loan debt. According to the Association of Schools and Colleges of Optometry, the average indebtedness among optometry students in 2002-2003 was $105,074.2 One of the most common methods of repaying the loan debt is a standard repayment optionpay the same amount each month over 10 to 20 years.

Explore options, such as graduated loan repayment schedules. These let you start with a smaller payment in the first few years, and then increase the payments for the remaining balance. This may give you a better chance to start a practice or become a partner. Sacrifice and hard work will pay off in the long run, so dont get used to easy money if your real goal is private practice.


Financial planning

Besides a budget, start planning now for your financial future. Put together a net worth statement that lists all your assets (bank accounts, real estate, CDs, vehicles, IRAs, stocks and any other items of value) and debts (mortgages, credit cards, home equity loans, student loans, etc.). This will help you as you complete loan applications and develop a business plan if you want to buy or start a practice.

When buying an existing practice or starting a new practice, a business plan needs to be produced. A good business plan should have an introductory cover letter stating what and why you want to obtain money from a bank. The business plan should have a statement of objectives, description of professional services, a description of the competition in the area, and a marketing and promotion plan.

Start saving now for retirement, even though it seems far away. Use the concept of dollar cost averaginginvest the same amount of money each month in stocks or mutual fundsto cushion your portfolio from dramatic market fluctuations over the long term. This also develops good saving habits. Time is the greatest ally in building your retirement portfolio.3



Determine your definition of success and then figure out how to reach it. Set goals for yourself that are S.M.A.R.T. (Specific, Measurable, Achievable, Realistic, Time-Bound). An example of goal setting may include: I want to get a position as an associate optometrist by September 1st in Atlanta. You have set a specific, measurable, realistic, achievable and time bound goal!

Goals should emphasize your strengths and weaknesses. Write your goals down on paper. Goals written down are 50% more likely to be achieved.4



Insurance is a necessary component of any personal and business plan. Here are some types of insurance to consider:

Life insurance. You have two options here. Term life insurance offers a predetermined death benefit for a specific length of time, such as 30 years. The cost depends on age, health and lifestyle, and will escalate over time. Whole life insurance is part insurance and part investment. Other types of life insurance include variable or universal, which are designed to maximize the investment part of the policy. These are more volatile, and you run the risk of losing some of your investment.

Types of Practice

Here are some types of practices you might consider. Each of these options has its pros and cons.


Corporate Practice

Companies employ optometrists to provide services in a next-door, or mercantile, lease arrangement. The optometrist usually receives all fees charged for services, while sales of ophthalmic products such as frames and lenses are paid to the employer company.

Most people in this situation are independent contractors, which means you are solely responsible both for the liability claims arising from practice and for withholding income and Social Security taxes. The medical records are the property of the employer and remain in the office if you leave.

The advantages of corporate practice include the following: little initial investment, good starting income, and the ability to start practicing without the responsibility of hiring staff, purchasing equipment, or advertising. Disadvantages include a lack of security, limitations in the scope of practice, a ceiling on earnings and lack of flexibility in scheduling.



Many new graduates start as an associate for a private-practice optometrist. A major advantage: An associateship is oftenbut not alwaysa trial run for later partnership. Disadvantages include lower initial earnings and lack of control, initially.

Ophthalmologists also employ optometrists, generally at a higher salary; but, you should make sure the job description matches how you wish to practice. Also, long-term advancement opportunities may be limited.



Partnership agreements are long-term contracts that serve as the cornerstone of a successful partnership and should be carefully scrutinized. A good accountant and lawyer are essential to this process.

The prospective partners should take the time to discuss at length practice philosophies, responsibilities, economics, and similar subjects before they make a commitment to each other.

Most partnerships between two persons are on a 50-50 shared basis. Income can be divided by a combination of ownership percentage and productivity methods.

The benefits of partnership include sharing the risk, better retirement funding and disability protection, and ease of planning vacation time. Optometrists in larger group practices of three to five doctors are among the highest earners, with a median net income of $156.000.6


Joint Practice

An alternative to traditional associateships and partnerships is a shared space agreement. In this type of arrangement, two or more optometrists share a common location and the expenses of the practice (expenses are proportionate to usage).

Each O.D. has a separate patient base, financial and patient records, equipment and instruments. The shared expenses might include the following: rent, utilities, repair costs, supplies, equipment payments, and salaries of employees who work for more than one doctor.


Solo Practice

One of the most challenging, yet rewarding, endeavors that a young graduate can undertake is the formation of a new practice. It provides the maximum flexibility and control to practice the way you want, but also the highest financial risk.

According to the latest AOA income survey results, the average net income for a self-employed optometrist is $148,900. However, it may take a number of years to reach this level of incomeso plan accordingly.

One of the first things to do is obtain both demographic information and health resource data on your chosen practice location. A loan proposal should be prepared. Make site visits to check out the location, and start researching and purchasing equipment and instruments. Professional advisers, such as an attorney, an accountant, a banker, an insurance agent, and a real estate agent, need to be selected.

Youll need to apply for provider identification numbers from insurance companies, as well as Medicare and Medicaid. A few months before you open, your practice, obtain professional liability insurance.

In the last month before you open, hire and train employees. Have announcements printed and mailed to your potential patient base, and start scheduling appointments.


Military Service

The U.S. armed services can offer challenging patients and a variety of job locations. Favorable retirement pay, good benefit packages, and long-term job security are among the other advantages.



Instructors pay may be on the lower end of the pay scale, with an average salary of $77,287.7 Even so, positions in academia have other advantages. These include good benefits, no required initial investment, a guaranteed salary and a favorable retirement position.
  Disability insurance. Dont forget this, because you are at greater risk of becoming disabled than of dying. Disability insurance protects your ability to generate income.

Buy-out insurance and office overhead insurance. These policies help if a partner becomes disabled and is unable to produce income for the practice or must sell his or her share of the practice if injured.

Health, homeowners, and auto insurance.

Malpractice insurance. This, of course, needs to be in place before you see your first patient. If you plan on working as an employee, malpractice insurance is usually paid for by the employer. Self employed O.D.s need to purchase malpractice insurance on their own.



Do your research to help you decide where to practice. Resources include:

Places Rated Almanac: The Classic Guide for Finding Your Best Places to Live in America
(David Savageau/Macmillan General Reference), which compares 329 metro areas for climate, housing, health, crime rates, transportation, education and economic outlook.

Money Magazine
, which also rates various aspects of 300 communities every year.

The Yellow Pages and The Blue Book of Optometrists (Jobson Medical Information, 2007), which can help you determine the optometric potential of an area.

Once you narrow your search, analyze the area(s) under consideration. Look at demographics, employment statistics, economic growth, retail sales per capita income, median household income, and market saturation of eye care providers. A good rule of thumb: one O.D. for every three dentists. It has been shown that a patient visits a dentist three times for every one visit to an optometrist.5


Managed Care

Can you survive without managed care? Maybe? Vision-care plans have become very popular with employers and employees.

The medical eye care model of modern optometric practice requires optometrists to participate in managed care and insurance plans to compete for patient access. Getting credentialed for plans can be an important aspect of any career move. Also, you will need to become familiar with proper coding and billing, if youre not already.



Sell yourself to prospective employers. Besides writing good resumes and cover letters, youll need to make personal contacts.

If youve identified where youd like to practice, contact all the optometrists in the area, as well as industry sales reps who might have leads on opportunities. Get involved with local and national optometric associations. Attend national and regional meetings with the goal of introducing yourself to some of the attendees.


Develop good relationships with ophthalmologists in your community. You will need to refer patients to retina, cornea, cataract and refractive surgery specialists for second opinions and secondary care. The ophthalmologist is also a valuable referral source for you for contact lens fitting, low vision services, and surgical comanagement.


Practice Mode

New grads have many options to consider. Each has pros and cons. (See Types of Practice.") Choosing to form a new practice affords you the most control but involves the highest financial risk.



There are several ways to find opportunities. The AOAs optometry career center (www.optometryscareercenter.org) is one such resource for students and O.D.s in search of new opportunities. Also contact your state association and alumni service for information on jobs postings or practices for sale.



A receptionist, ophthalmic technician, frame stylist, insurance and billing coordinator, and an office manager are all needed. About 20% of revenues go to salaries and benefits. Staff will need to receive vacation time, personal leave, holiday and bonus pay, and insurances.

Your staff is one of the most important ingredients in the recipe for success, because employees conduct greatly influences a patients decision to return to the practice. Respect and develop a good relationship with staff members, whether you are in position to hire them or not.



Patients expect to be informed about new technology as it becomes available, and they depend on you, the eye care provider, to make product recommendations. When you keep abreast of latest innovations, you can use your knowledge of patients medical and lifestyle needs to boost satisfaction as well as practice income with two simple words: I recommend



If you are considering buying a practice, there are many factors that go into determining its true worth. Besides gross and net income, youll want to consider location, visibility, physical assets, and percentage of established, new and active patients. Full-scope practices that provide high quality care, the latest equipment, and high-end materials will have a higher value.

One of the most difficult components to determine when calculating the value of a practice is good will. Good will is defined as the likelihood that the buyer will be able to enjoy the same economic benefits as the seller.5 Most people think of good will as what the sellers sweat and tears (hard work) over the years has contributed to the value. An acceptable way to determine good will is to average net income from the preceding three years.

With this information gathered, the following formula could be used to calculate if the proposed selling price is reasonable: fair market value of ALL tangible assets (including accounts receivable less than 120 days on a discounted basis) plus the average of net income for the preceding three years.



Set high goals. Keep those goals in focus and you can achieve them!

Now, take your ingredients, combine with a recent graduate, add a pinch of wisdom and simmer for three to five years. Once your alphabet soup is seasoned, you are on your way to becoming an experienced and successful practitioner.

Dr. Eisenstatt is in private practice. He is chief of ophthalmic services and assistant professor at Southern College of Optometry in Memphis, Tenn.


1. Association of Medical Directors of Information Systems. Comprehension and reading level. The Informatics Review. Available at: www.informatics-review.com/FAQ/reading.html (Last accessed September 19, 2007).

2. Murphy J. Is Student Debt Out of Control? Rev Optom 2004 Jul 15;141(7):37-42.

3. Fowles D. The Everything Personal Finance in Your 20s and 30s Book. Avon, Mass.: Adams Media Corporation, 2004.

4. Williams Group. Career Advocate for the New Practitioner. Lincoln, Neb.: Williams Group, 2003.

5.Class JG, Thal LS, Kamen RD., Rounds, Ronald S. Business Aspects of Optometry. Philadelphia: Elsevier Inc., 2004.

6. Hayes J. AOA income survey highlights. Optom Management. Available at: www.optometric.com/article.aspx?article=&loc=articles\2004\march\0304021.htm (Last accessed September 19, 2007).

7. PayScale. Salary survey report for job: optometrist. Available at: www.payscale.com/research/US/Job=Optometrist/ Salary (Last accessed September 19, 2007).

Vol. No: 144:11Issue: 11/15/2007