Venturing into Private Practice

  Opinion Article © Vision Club 2020

(This follows second piece of opinion by Dr. Sudarshan Khanal on private practice and entrepreneurship in optometry)

Private practices are generally of two types; solo practice where individual doctor start practice as per his/her own schedule and group practice where doctors from same or different specialty come together and run the practice.

The advantage of being in group practice is risk sharing but exponential growth of individual income is usually not guaranteed and individual freedom of practitioner is also constrained. Also, range of services can be provided from single building. Drishti Eye Care System and many poly-clinics are very good example of group practice.

ASK yourself before you start, "Am I ready to muster the courage to take this road less traveled?"

Since I am into solo private practice where I bear the pros and cons of the practice, it would be prudent to share the opportunities and challenges inherent in it. I am going to start with the challenges starting with the financial aspect in today’s write up.

Financial aspect

During training we are used to operating different diagnostic instruments in hospitals and most of the instruments are from the best companies like Haag Streit, which is very expensive. Investing hefty amount of money by a person from an average-income family in order to start a private practice is a daunting task.

Personally, it was the first time in my life I needed such a big amount of money because I completed my higher secondary education from a government school and got scholarship on merit for my undergraduate and postgraduate studies. It was the time to start from scratch and getting to the basics. I made a list of minimum resources and the amount of money needed. I extended my hands for getting help from my parents, relatives and friends. Since lending money from banks requires you to pay the interest each month I managed to borrow money from acquaintances. It is because we cannot be sure that the practice would go in profit from the first month of its operation.

Usually, new ventures, like private practice, have to go through different phases. They can generally be described as early phase, mid phase, adult phase and mature phase.

Early phase usually lasts for first year. It is generally advised to be mentally prepared to bear the overhead cost (rent, staff salary, maintenance) from the initial investment. Mid phase lasts for two years and covers 2^nd and 3^rd year. In healthcare industry it is believed that 20 percent of new ventures fail in first year, 40 percent in third year, 50 percent in fifth year and 80 percent in tenth year of operation. If the practice survives first three years, then there are high chances the practice will run smoothly thereafter. It is found that practice may start getting profit only after it completes mid phase. Adult phase is between 3^rd and 10^th year and is known as expansion phase. Mature phase is beyond 10^th year and is known as phase of prosperity.

At the beginning we fail to comprehend the factor of return of investment (ROI). It is the time an investment in certain instrument break even. The more expensive the instrument more is the ROI and it alters the different phases of practice cycle.

For example if we choose between an Indian slit lamp and a slit lamp from Zeiss, Indian slit lamp would cost only one lakh and Zeiss would cost way beyond four lakh rupees. If Indian slit lamp runs for one year and if we assume that we allocate two hundred rupees from daily profit to cover the cost, it will take around 15 month to break even. But if we choose to use Zeiss slit lamp, the break even time would be above 60 months. Also, ROI not only includes the overhead cost of instrument but also the interest rate if it is loaned, depreciation value, maintenance cost, staff training cost and other minor technical cost that comes in between.

In medical practice it is very unlikely that the growth of patient base is exponential. Perseverance and ethical practice will lead you to have gradual up-curve. It will take time to increase the per day profit allocated to cover the ROI amount. A sound financial planning is prudent and involves a lot of homework and nitty-gritty calculations. From financial perspective, if practice survives for three years or more then only it will move towards sustainability.

Some questions one has to ask to oneself before stepping into private practice are:

Am I ready for that first three year phase?

Am I ready to grind myself?

Am I ready to persevere?

Am I ready to get humiliated?

And most importantly;

Am I ready to muster courage to take this road less traveled?

 

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