Budget for opening a practice cold!

[q1we3]

I will keep editing the numbers based on suggestions so keep them coming. Please try not to derail the thread. Thanks for any valuable insight!

This plan is for 4 months (maybe more if I don't get enough patients) during which I work part time somewhere else and couple a days at the clinic. Once I get enough of a patient base I go full time into my own clinic. This will be in a province not saturated with ODs

Revised Numbers : Obviously these numbers are approximations

Office build cost/furniture - $ 13000
Computers/Office supplies - $3000
Display cases for frames- $7000
Initial advertisement/Marketing - $ 2000
Cost of frames to start - $10000
Cost of contact lenses - $0
One time cost - $35000

Leasing a medium size office - $3500/month
Eye exam Equipment cost - $1500/month
Payroll - only one staff member, $1600/month only 4 days
Payroll Tax for one employee - ~$400/month
Business Insurance - $150/month
Phone/Internet- $ 300/month
Electricity/Heat - $ 800/month
Accountant fee - $300/month
New inventory investment - $800/month
Advertisement - $300/month
Other general monthly expenses - $500/month
Cost to keep the clinic running ~ $10000/month

10000 *4 = 40000 add 35000 = ~75,000 for 4 months

The office will be open 4 days. I will be working at PP or corporate for 4 days and will have 2 days reserved for my patients at my clinic.

Through my clinic and my part time job I will need to generate ~ $15000/month to keep the clinic open, feed myself, pay loans, car insurance, etc.

My job should bring $4500/month (after taxes) which will cover my living expenses and the rest must come from the clinic. Initially, I don't expect the clinic to bring much extra income for me but just carry its own weight. So, how many patients would I need to see. Initially, lets be realistic and say I see 14 patients a week, 56 patients per month.

Exam fee 56 * $80/per exam = $4480
what percentage will buy glasses, not sure but lets say 40% 22 * $250 avg. per pair = $ 5500
what percentage will buy contact, not sure but lets say 30% 17 * $350 fitting and cost = 5950
Profit from glasses/contacts = lets assume cost is 35% so (5500+5950) * .65 = ~$7200
Revenue from clinic = $4480+7200 = ~11700/month - $10000/month. Which is roughly $1000 net profit which is fine since goal is get enough patients first. Cost will go down, and revenue will go up when clinic is seeing patients 6 days instead of 2.

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[Eyes Only]

Can Optometrists help me calculate how much money would I need to start a practice cold. My numbers will be off so help me out here.
Leasing a small office Rent - approximately $4000 a month
Eye exam Equipment cost - basic stuff on lease? maybe $1000 per month
Payroll - only one staff member initially, $2000 per month
Cost of frames - $12000
Cost of contact lenses - planning on starting with mainly samples, maybe $8000
Computers/office supplies - $3000
Office furniture - $ 3000
Decorating - $2000
Display cases for frames- $7000, not sure
Advertisement/Marketing - need a number for this
Other stuff - $ 6000
Cost of starting and keeping the practice running for first 4 months with $ 10000/month - total $80,000. this is my rough estimate not sure if it is realistic.

I think your equipment costs will be higher, depends on new vs used, purchase vs lease. One of the largest single expenses can be build out costs for the office. This will depend on what is available for lease. If you start with a basic shell (new construction) you may have to foot the bill yourself. The landlord may pay some or all depending on the local economy and the supply/demand for rental space in your area. You can spend anywhere from $20,000 to $100,000 or more on build out. I have a friend who spent over $100,000. Has a beautiful office though. Also, you need more frame inventory probably 3 or 4 times what you have listed. If you deal with the right CL companies you won't need to spend much on inventory but you may need to buy some fitting sets for specialty lenses.

 

[KHE]

Can Optometrists help me calculate how much money would I need to start a practice cold. My numbers will be off so help me out here.
Leasing a small office Rent - approximately $4000 a month
Eye exam Equipment cost - basic stuff on lease? maybe $1000 per month
Payroll - only one staff member initially, $2000 per month
Cost of frames - $12000
Cost of contact lenses - planning on starting with mainly samples, maybe $8000
Computers/office supplies - $3000
Office furniture - $ 3000
Decorating - $2000
Display cases for frames- $7000, not sure
Advertisement/Marketing - need a number for this
Other stuff - $ 6000
Cost of starting and keeping the practice running for first 4 months with $ 10000/month - total $80,000. this is my rough estimate not sure if it is realistic.

Virtually every contact lens company will provide you with fitting sets. Your contact lens budget should be virtually zero.

What do you plan to do for income during this time? Is this a cold start where you will be working part time and part time somewhere else?

 

[q1we3]

Virtually every contact lens company will provide you with fitting sets. Your contact lens budget should be virtually zero.

What do you plan to do for income during this time? Is this a cold start where you will be working part time and part time somewhere else?

That's exactly right! I have revised my post, please have a look and let me know what you think. Can you tell me what the profit margin is for glasses and contact lenses?

 

[optom123]

Who's going to be at your office for the 4 days you aren't there?

How do you expect to see 48 patients in 2 days, in a cold start?


This whole scenario is unlikely, IMO. You are dedicating too little time to your practice. You say you will work somewhere else for 4 days, corporate preferably. Why not just work @ corporate for 5 days for a year or 2...or purchase a PP instead?

If you take this route, you will most likely end up like some of the loser ODs who patrol these forums.

 

[Eyes Only]

Who's going to be at your office for the 4 days you aren't there?

How do you expect to see 48 patients in 2 days, in a cold start?


This whole scenario is unlikely, IMO. You are dedicating too little time to your practice. You say you will work somewhere else for 4 days, corporate preferably. Why not just work @ corporate for 5 days for a year or 2...or purchase a PP instead?

If you take this route, you will most likely end up like some of the loser ODs who patrol these forums.

"IMO"...who do you think you are kidding? No one cares about your opinion and you have absolutely nothing to offer on this post.

 

[Eyes Only]

That's exactly right! I have revised my post, please have a look and let me know what you think. Can you tell me what the profit margin is for glasses and contact lenses?

Your average frame cost is really low, depending of course on what part of the market you are trying to attract. You'll get the WalMart crowd with an optical full of cheap frames. I would figure a frame cost closer to double your estimate. I use a 3x markup on almost all materials.

Most ODs don't calculate profit margins on anything except the whole practice, which should run 30 to 35%. The problem with trying to figure out the profit margin on optical sales is you have to determine all the costs associated with the sales, which isn't easy to do.

I would be conservative on the initial growth rate unless you find a high demand area. A cold start could see only 2 or 3 patients a day initially. But this is highly variable, depending on the level of competition.

You are smart to consider you break-even point. This is more complicated than it might first appear. You have to determine both variable and fixed costs and then determine chair cost.

You could buy a practice, but the downside to this is paying for the goodwill which will amount to roughly one year's net income. A decent practice will cost you $250,000 or more.

 

[q1we3]

Who's going to be at your office for the 4 days you aren't there?

How do you expect to see 48 patients in 2 days, in a cold start?


This whole scenario is unlikely, IMO. You are dedicating too little time to your practice. You say you will work somewhere else for 4 days, corporate preferably. Why not just work @ corporate for 5 days for a year or 2...or purchase a PP instead?

If you take this route, you will most likely end up like some of the loser ODs who patrol these forums.

I made a mistake, clinic will be open for 4 days. The two days when I won't be there is for answering phones and people who want to pick up stuff on other days. Also, I said 56 patients per month not 2 days.
I just want to get started on my practice right away.

 

[KHE]

Oh my! You have exposed all of us in private practice for what we are.

And you've helped spread the word that the only "real doctors" in this profession WORK at WalMart!

This thread has the potential to be very valuable. Perhaps if you guys want to carry on with your little tit for tat, you could do it via PMs?

 

[Tippytoe]

still butt hurt after i exposed you for what you truly are huh?


Go sell some glasses...tell us what patients think about your ansi standard glasses, "dr."

ding, ding, ding...........troll !

 

[Tippytoe]

This thread has the potential to be very valuable. Perhaps if you guys want to carry on with your little tit for tat, you could do it via PMs?

It's unlikely to be valuable with the obvious TROLL emily/optom123 who feels to need to put her totally uneducated opinion into every thread.

I vote to ban him/her/it too. She serves no purpose except entertainment and someone to laugh at.

 

[questiondoc]

I didn't see in your model any allowances for taxes, which are seriously gonna kick your ass every month. Payroll is a huge one, business tax, unemployment, plus any matching you do for yourself towards retirement.
Payroll tax on 5k for you and 2k for employee will be close to another 2500/month. ( the more you make, the more you pay!) Phone bill/internet budget around 500/month. Plus you are gonna need an accountant to process payroll/ taxes/ etc and that will run you at least a couple hundred a month minimum. Also need to budget for CE classes oh and lastly business insurance which can run around 2k for the year..
After getting screwed running a clinic for four years, I decided the tax man could go take a flying leap at a rolling donut and I sold it to go back to school.

 

[Visionary]

It's unlikely to be valuable with the obvious TROLL emily/optom123 who feels to need to put her totally uneducated opinion into every thread.

I vote to ban him/her/it too. She serves no purpose except entertainment and someone to laugh at.

A good start would be to place on ignore. I did. It's great!

 

[Eyes Only]

I didn't see in your model any allowances for taxes, which are seriously gonna kick your ass every month. Payroll is a huge one, business tax, unemployment, plus any matching you do for yourself towards retirement.
Payroll tax on 5k for you and 2k for employee will be close to another 2500/month. ( the more you make, the more you pay!) Phone bill/internet budget around 500/month. Plus you are gonna need an accountant to process payroll/ taxes/ etc and that will run you at least a couple hundred a month minimum. Also need to budget for CE classes oh and lastly business insurance which can run around 2k for the year..
After getting screwed running a clinic for four years, I decided the tax man could go take a flying leap at a rolling donut and I sold it to go back to school.

Payroll taxes are going to depend on whether or not the doctor incorporates. But yes, you must pay the 7.65% to match employee contribution to social security and medicare.

The more you make, the more you pay applies to everyone including employees. Self employed have more opportunities to reduce taxable income than anyone else.

My suggestion for the original poster is to make a pro-forma (projected or hypothetical) income statement using a spreadsheet and see what they come up with. There should be enough people here with actual business experience to help you work through the process.

You need an accountant, so factor in some accounting fees.
Insurance varies considerably depending on where you practice.

 

[q1we3]

I have edited the numbers again, keep the suggestions coming

I will keep editing the numbers based on suggestions so keep them coming. Please try not to derail the thread. Thanks for any valuable insight!

This plan is for 4 months (maybe more if I don't get enough patients) during which I work part time somewhere else and couple a days at the clinic. Once I get enough of a patient base I go full time into my own clinic. This will be in a province not saturated with ODs

Revised Numbers : Obviously these numbers are approximations

Office build cost/furniture - $ 8000
Computers/Office supplies - $3000
Display cases for frames- $7000
Initial advertisement/Marketing - $ 2000
Cost of frames to start - $15000
Cost of contact lenses - $0
One time cost - $35000

Leasing a medium size office - $3500/month
Eye exam Equipment cost - $1500/month
Payroll - only one staff member, $1600/month only 4 days
Payroll Tax for one employee - ~$400/month
Business Insurance - $150/month
Phone/Internet- $ 300/month
Electricity/Heat - $ 800/month
Accountant fee - $300/month
New inventory investment - $800/month
Advertisement - $300/month
Other general monthly expenses - $500/month
Cost to keep the clinic running ~ $10000/month

10000 *4 = 40000 add 35000 = ~75,000 for 4 months

The office will be open 4 days. I will be working at PP or corporate for 4 days and will have 2 days reserved for my patients at my clinic.

Through my clinic and my part time job I will need to generate ~ $15000/month to keep the clinic open, feed myself, pay loans, car insurance, etc.

My job should bring $4500/month (after taxes) which will cover my living expenses and the rest must come from the clinic. Initially, I don't expect the clinic to bring much extra income for me but just carry its own weight. So, how many patients would I need to see. Initially, lets be realistic and say I see 14 patients a week, 56 patients per month.

Exam fee 56 * $80/per exam = $4480
what percentage will buy glasses, not sure but lets say 40% 22 * $250 avg. per pair = $ 5500
what percentage will buy contact, not sure but lets say 30% 17 * $350 fitting and cost = 5950
Profit from glasses/contacts = lets assume cost is 35% so (5500+5950) * .65 = ~$7200
Revenue from clinic = $4480+7200 = ~11700/month - $10000/month. Which is roughly $1000 net profit which is fine since goal is get enough patients first. Cost will go down, and revenue will go up when clinic is seeing patients 6 days instead of 2.

 

[optom123]

I don't think you are going to get any answers here since most of the ODs who post here are merely glorified opticians as they sell glasses primarily. It's not just me who thinks this, but this is the opinion of most OMDs too.

Why don't you just talk to an OD that you shadowed?

 

[Ben Chudner]

I don't think you are going to get any answers here since most of the ODs who post here are merely glorified opticians as they sell glasses primarily. It's not just me who thinks this, but this is the opinion of most OMDs too.

Why don't you just talk to an OD that you shadowed?

This is not the first time you have made the comment about OD's in PP being glorified opticians. I get it, you don't understand the nature of optometric business and for some reason you are trying to make working in a corporate location appear to be more prestigious. First of all, your 2/3 number is not really correct anymore. I think in the days before scope expansion it might have been true, but my split was closer to 50/50 because of how much medical billing I did. Second of all, you have no idea of what most OMD's think, and if you believe that they see PP OD's as less of a doctor, can you imagine what they think of an OD that practices in Wal-Mart? One more thing to think about. If a PP OD is a glorified optician because of selling glasses, what would you call a doc that mainly spins dials all day without treating much disease. In an OMD's office, that would be a technician with a high school diploma. In Wal-Mart that would be the OD. So, by your standards wouldn't you have to consider the doc in a box a glorified technician?

 

[optom123]

Ben, one need not be an Optometrist to understand optometric business. For example, take a look at the numerous opticals/corporate entities that aren't owned by ODs. I believe I have adequate knowledge of how an optometrists conducts business and I never implied that corporate is more prestigious. Though, I do firmly believe that it can be more lucrative and is infinitely better than working for another OD.

The 2/3 number was never my number. Eyes only supposedly makes 2/3 of his/her income through dispensing and I used that to add icing to my argument that most ODs are really just glorified opticians.

While I may not know what most OMDs think, let's just try to think logically for a second.

What is the difference between an Optical and an OD's office?As soon as you enter, you are literally bombarded with fancy posters where models are showing off new glasses and contacts. Then there might be some pre-testing areas in the back, followed by the doctors room, if it is an ODs office.

However, when going to three different OMDs in the past 10 years, it was quite noticeable that I was in a professionals office and not some optician/od who was looking to make a quick buck by marking up their extensive collection of glasses.

The OD at walmart doesn't sell glasses, so if the OMD is going to criticize the corporate doc, it will be only because the OD works at walmart (as if that is somehow a bad thing). Not because the corporate doc sells glasses for a living, which is exactly what most PP docs do for the MAJORITY of their income.

The inherent duties of an OD, whether at a private practice or corporate practice or an OMDs office, are the same, so no, corporate docs aren't glorified techs. You may do less or not practice to the full extent of your training, at an OMDs office or corporate, but that is your choice.

This is not the first time you have made the comment about OD's in PP being glorified opticians. I get it, you don't understand the nature of optometric business and for some reason you are trying to make working in a corporate location appear to be more prestigious. First of all, your 2/3 number is not really correct anymore. I think in the days before scope expansion it might have been true, but my split was closer to 50/50 because of how much medical billing I did. Second of all, you have no idea of what most OMD's think, and if you believe that they see PP OD's as less of a doctor, can you imagine what they think of an OD that practices in Wal-Mart? One more thing to think about. If a PP OD is a glorified optician because of selling glasses, what would you call a doc that mainly spins dials all day without treating much disease. In an OMD's office, that would be a technician with a high school diploma. In Wal-Mart that would be the OD. So, by your standards wouldn't you have to consider the doc in a box a glorified technician?

 

[nicmc]

Ben, one need not be an Optometrist to understand optometric business. For example, take a look at the numerous opticals/corporate entities that aren't owned by ODs. I believe I have adequate knowledge of how an optometrists conducts business and I never implied that corporate is more prestigious. Though, I do firmly believe that it can be more lucrative and is infinitely better than working for another OD.

The 2/3 number was never my number. Eyes only supposedly makes 2/3 of his/her income through dispensing and I used that to add icing to my argument that most ODs are really just glorified opticians.

While I may not know what most OMDs think, let's just try to think logically for a second.

What is the difference between an Optical and an OD's office?As soon as you enter, you are literally bombarded with fancy posters where models are showing off new glasses and contacts. Then there might be some pre-testing areas in the back, followed by the doctors room, if it is an ODs office.

However, when going to three different OMDs in the past 10 years, it was quite noticeable that I was in a professionals office and not some optician/od who was looking to make a quick buck by marking up their extensive collection of glasses.

The OD at walmart doesn't sell glasses, so if the OMD is going to criticize the corporate doc, it will be only because the OD works at walmart (as if that is somehow a bad thing). Not because the corporate doc sells glasses for a living, which is exactly what most PP docs do for the MAJORITY of their income.

The inherent duties of an OD, whether at a private practice or corporate practice or an OMDs office, are the same, so no, corporate docs aren't glorified techs. You may do less or not practice to the full extent of your training, at an OMDs office or corporate, but that is your choice.

You are completely out of touch with reality. To think that you know how Optometric business works as a Pre-Optometry student is ludicrous. I am in Optometry school, and I do not claim to know the first thing about running a practice. I have started to do research on the subject, and I have started to look at my plan like the OP. Even with my research, I have a very long way to go, and I think that it is incredibly obnoxious how you continue to insult the doctors on this forum and to act like you know more than they do about their business. I thoughtfully read everything that they post on business because I know that they are the ones who have been out in the world with regards to Optometry, and they have experience running an Optometric business that we as students cannot possibly have. You aren't even in Optometry school yet. There are some really good doctors on this forum who give some good advice, and if I were you, I would shut up and start listening or pick a new career path. Either way, please stop hi-jacking threads that have the potential to help those of us who are here to learn about the business and experience of real-world O.D.s and get their advice, do so.

 

[Eyes Only]

This is not the first time you have made the comment about OD's in PP being glorified opticians. I get it, you don't understand the nature of optometric business and for some reason you are trying to make working in a corporate location appear to be more prestigious. First of all, your 2/3 number is not really correct anymore. I think in the days before scope expansion it might have been true, but my split was closer to 50/50 because of how much medical billing I did. Second of all, you have no idea of what most OMD's think, and if you believe that they see PP OD's as less of a doctor, can you imagine what they think of an OD that practices in Wal-Mart? One more thing to think about. If a PP OD is a glorified optician because of selling glasses, what would you call a doc that mainly spins dials all day without treating much disease. In an OMD's office, that would be a technician with a high school diploma. In Wal-Mart that would be the OD. So, by your standards wouldn't you have to consider the doc in a box a glorified technician?

Ben,

I think your practice is the exception, not the rule. Since I am a CL specialist I don't have the same medical billing level you do. Although things have changed a little, the latest data from the MBA program (2010) says 61% of gross comes from optical sales in the average MBA practice.

For anyone not familiar with MBA program, it is a CE program geared at practice performance and generally has practitioners that are more successful than average participating.

The website is www.mba-ce.com

You need to register to use the website, but there is no charge. This is the benchmark I use for my practice.

 

[q1we3]

This optometry forum is just pathetic, no point in trying to get any meaningful discussion going. I made huge mistake by starting this thread. KHE please close this thread

 

[KHE]

This optometry forum is just pathetic, no point in trying to get any meaningful discussion going. I made huge mistake by starting this thread. KHE please close this thread

No...it's a good thread with a great question. Unfortunately, it's been hijacked by boneheads.

I've deleted all the postings that aren't even remotely relevant to this thread. If people want to have a tit for tat bickering flame war, I would suggest they do it via PM because from now on, I'm just going to start deleting the BS trolling posts.

 

[Ben Chudner]

Ben,

I think your practice is the exception, not the rule. Since I am a CL specialist I don't have the same medical billing level you do. Although things have changed a little, the latest data from the MBA program (2010) says 61% of gross comes from optical sales in the average MBA practice.

For anyone not familiar with MBA program, it is a CE program geared at practice performance and generally has practitioners that are more successful than average participating.

The website is www.mba-ce.com

You need to register to use the website, but there is no charge. This is the benchmark I use for my practice.

Eyes, you are correct that the MBA program is a great resource. I was a key opinion leader for Ciba when that program was started so I was fortunate to be one of the original MBA members. The data you are referring to actually lumps contact lens sales and other with optical sales to come up with 61%. The actual revenue from glasses, which is what optom123 was talking about, is only 43%. I would further make the point that in many surveys, OD's accidently lump fitting fees into the sale of contact lenses so that number may actually be lower. That being said, I would also like to clarify that revenue and income are different. While my renevue was fairly equally split between optical (including CL sales) and professional fees, the percentage of my income that came from professional fees was much higher than the optical due to costs of goods sold.

 

[KHE]

I have edited the numbers again, keep the suggestions coming

I think you will be able to keep your cost of glasses down to much less than $15000. When you're starting out, look for companies that will provide you with inexpensive close outs. Many of the frame vendors will also do consignment. So I think you have too much allocated there.

I think your estimation for the cost of a buildout is incredibly small unless you're expecting a landlord to do it for you. In many parts of the country, occupancy is low so it's likely you'll be able to negotiate that but expect to pay a slightly higher rent. In essence, your landlord will likely just ammortize the majority of your buildout over the length of your lease. This isn't necissarily a bad thing though.

 

[q1we3]

I think you will be able to keep your cost of glasses down to much less than $15000. When you're starting out, look for companies that will provide you with inexpensive close outs. Many of the frame vendors will also do consignment. So I think you have too much allocated there.

I think your estimation for the cost of a buildout is incredibly small unless you're expecting a landlord to do it for you. In many parts of the country, occupancy is low so it's likely you'll be able to negotiate that but expect to pay a slightly higher rent. In essence, your landlord will likely just ammortize the majority of your buildout over the length of your lease. This isn't necissarily a bad thing though.

I have now allocated $13000 -$15000 for the office build. I plan on leasing something that is as close to what I already want. Cost also depends on where you are building, this is based on where I live now. We build houses for living and market is extremely saturated with people doing construction work for dirt cheap. But, only time we tell since this cost is highly variable.

What sort of advertisement or marketing should one do when starting new? Visit other local doctors, magazine articles, radio ads, newspaper ads? what has worked for you?

And thanks for cleaning the thread!

 

[KHE]

I have now allocated $13000 -$15000 for the office build. I plan on leasing something that is as close to what I already want. Cost also depends on where you are building, this is based on where I live now. We build houses for living and market is extremely saturated with people doing construction work for dirt cheap. But, only time we tell since this cost is highly variable.

What sort of advertisement or marketing should one do when starting new? Visit other local doctors, magazine articles, radio ads, newspaper ads? what has worked for you?

And thanks for cleaning the thread!

I recall at one point in time you had mentioned that you were from Canada. I can't speak to the ins and outs of marketing an optometric practice in Canada due to the nature of third party payors here in the USA so I can only give my opinion on the American situation.

As far as advertising goes, I would say that radio ads, newspapers etc. etc. do not work at all because in order for them to be effective, they have to appear repeatedly and for a long period of time. A cold start up practice won't be able to afford it. Even if you could, it's not effective.

The best way to attract new patients to the office is, unfortunately also the slowest but that is through referrals from satisfied patients.

The second best way is to be on the patients insurance plan.

When you open cold, every single solitary appointment that is made, even if it's just one a day should be asked "is there anyone in your family who I can also make an appointment for?"

WHen patients come in, you should not send recall postcards in a year. You should pre appoint them.

 

[Ben Chudner]

When you open cold, every single solitary appointment that is made, even if it's just one a day should be asked "is there anyone in your family who I can also make an appointment for?"

When patients come in, you should not send recall postcards in a year. You should pre appoint them.

Great advice!

 

[20DOC20]

OK. Here's what mine cost, approximately. I opened 6 weeks ago. I got 45K working capital with mine. My total loan cost is looking to be around 110-120K. Not too bad.

Office build-out remodel - $ 8000
Reception seating $2000
Computers - $4000
Office supplies - $2000
Display cases for frames- $11000
Initial advertisement/Marketing - $ 2000
Cost of frames to start - $6000
Cost of contact lenses - $0
Leasing a small office - $900/month
Eye exam Equipment cost - $20,000 (not leasing)
Payroll - only one staff member, $1200/month only 4 days
Payroll Tax for one employee - ~$400/month
Business Insurance - $90/month
Phone/Internet- $ 269/month
Electricity/Heat - $ 180/month
Accountant fee - $0/month (I do my own books)
New inventory investment - $300/month
Lab fees - about 20% of your practice revenue, or 30 to 40% of your materials revenue.
Advertisement - $800/month
Other general monthly expenses - $200/month
Cost to keep the clinic running ~ $5000/month

I leased a 900 sq foot space. I elected to buy the equipment. You can expect to do an average of 3 patients a week for the first month. Maybe 4 patients per week average on second month, depending on time of year. We did OK, but we had a sluggish start because I opened two weeks prior to Christmas. My biggest expense right now is advertising. That should go down once three thousand more recall cards are mailed and the initial grand opening package with the newspaper is concluded. I'm also not paying myself until monthly income exceeds 5K.

I found some really inexpensive frame suppliers: Capri Optical, Modern Optical (can access thru POG Labs), Global Optique (medium regarding expense). I also use Walman Optical (for higher end frames). But, there are literally hundreds of suppliers. Also, look into some lab-stocked frames through Essilor's labs. Many labs also carry package deals if you use their lab-stocked frames and that can save your patients money and will allow you to run sales.

One thing that was kinda neat ... my revenue per patient was much, much higher than I'd anticipated. I suspect it's because I pay my one employee 5% commission on her net sales. I pay her a base salary plus 5% of any income (revenue/receipts) attributable to her. I had anticipated $215 per patient, on average. I did $378 instead. Seriously consider a partially incentive pay schedule.

 

[Shnurek]

I had anticipated $215 per patient, on average. I did $378 instead. Seriously consider a partially incentive pay schedule.

That's great news, congratulations!

 

[blazenmadison]

Congrats with your new office!!

Just a few questions for you....

OK. Here's what mine cost, approximately. I opened 6 weeks ago. I got 45K working capital with mine. My total loan cost is looking to be around 110-120K. Not too bad.

Office build-out remodel - $ 8000

8000 seems pretty low but you do have a smaller office 900sqft. Are you in a retail shopping center or medical complex? Did the landlord give you concessions for buildout?

Reception seating $2000
Computers - $4000
Office supplies - $2000
Display cases for frames- $11000
Initial advertisement/Marketing - $ 2000

Are you on EMR? Have you started taking any vision plans or medical ins?

Cost of frames to start - $6000
Cost of contact lenses - $0

What is your intended market? With $6000 frames...you must have around 200-300 frames on display?

That should go down once three thousand more recall cards are mailed and the initial grand opening package with the newspaper is concluded.

Recall cards? I'm guessing you bought this office?? So this isn't a COLD-start?

 

[q1we3]

Thank you so much to 20DOC20 for posting about his. I have not posted here for quite a while due to lack of any worthwhile discussions. It would be greatly appreciate if you could answer few question for future ODs like me who want to open cold upon graduation. You can answer what blazemadison asked first since I have similar questions.

Here are my questions:

1) What type of settings is it? I mean population:OD ration? city, suburban, rural?
2) How far is the nearest OD pratice?
3) Are you working full time somewhere else and seeing patients on Saturdays at you clinic?
4) Are you doing anything extra to market yourself in the community?
5) How long do you think it will take for the clinic to cover its cost of running? Based on you avg. per patient it seems like ~20-25 patients per month should cover the cost? How close are you?

Thanks!

 

[Dr Colin K Chan]

hi, may i ask where you're opening your practice?
i opened mine less than a year ago.
renovations a bit over 80 000
equipment 130 000
frames 30-40 000
misc. equipment and furniture 10 000.
rent 5700/month (1194 sq. ft.)
staff 3000+ / month
phone/internet/ads 800/month

i'm currently working 2 days a week there, i have an associate that's also there for 2 days. i'm working corporate 4 days a wk.
hope this helps.

 

[20DOC20]

To answer some questions: I said this was a cold start because my optometrist consultant told me that because I'd waited a year between jobs in the area (I had a non-compete agreement) that my practice would take on the growth pattern of a cold-start. The reasoning was a loss of a year's worth of patients and the loss of gaining more patients set me back. Secondly, the previous clients were mostly commercial patients, who tend to be more loyal to the location than the doctor. All of these things turned out to be true and it's basically been like a cold-start.

It's almost been worse than that though because the commercial reputation followed me and a lot of private practice patients here are choosing established private practice OD's rather than me. I think I'd have been better off starting absolutely cold in a town where I had no reputation.

Anyway ...

I am using an EMR and it's 299 per quarter. First year had free updates.

My monthly expenses are as follows (after one year in practice):

Payroll 1000
Payroll tax 300
Rent 900
Electric 88
Phone and internet combined 189 (one line through charter)
Insurance (inc SAIF) 110
Natural Gas 45
Advertising 500
Lab bill (ave) 1350
Contact lens bill 400
Misc 150
Loan 800 (this has been stepped up from 0 to 400 to 800 and leveling off at 1150)
Frames 500
Taxes 300
Leased vehicle 325
Dr. Draw 1000
Total monthly expenses = 7957.00

Also was a question about number of frames. I have about 300.

One mistake I made was selling cheap sunglasses. I ordered 500 from Blue Planet Eyewear for a promo and NO ONE WANTS THEM! They were 5.00 wholesale each, on average. I should have gotten some spendy sunglass line in here like Rayban or Serenghetti. But now, a year later, I haven't the capital for any. They won't do consignment either ... damn Luxottica!!!

I HIGHLY recommend you get as many as you can on consignment. I got about 50 or more frames from ALTAIR on consignment and I ordered the best sellers. Altair is owned by VSP, and you have to be a VSP doc to get them. Also got Fetch Eyewear from CLEARVISION on consignment. Consignment frames has helped cut a lot of costs because some frames just don't sell and then you're stuck with them!

I'm always on the lookout for more consignment frames. Is anyone aware of other companies doing consignment?

So, yeah, it's been a learning experience. Unfortunately, I'm highly doubtful this company will survive because I've read that a cold-start practice should start making profit by 6 months and definitely by a year. I'm just starting to break even at one year and am WAY behind schedule.

One of the biggest problems I had early on was a BAD LAB! How was I supposed to know they sucked? I ended up firing 3 labs and finally, six months into it, we had some good labs to work with. Note: not all VSP labs are good labs! Not all Essilor labs are good labs. Some are and some are not, even within the same company!

I got on Essilor's H-level pricing, which provided me with low prices for lenses and kept that portion of the cost-of-goods sold low.

One big mistake may have been accepting Spectera. If the practice weren't on such a slippery slope, I'd drop them.

Also, note that with SOME EyeMed plans you are reimbursed below wholesale price on some lens addons if you're not careful! For example, Eyemed National Vision Railroad plan is a discount plan and the patient pays $40 copay for AR coat. Well, if you believe in selling quality products such as Crizal, $40 is below your wholesale price and so if they want that AR they'll have to order something cheap like Sharpview AR, or else pay the 30% off retail for Crizal.

Same goes for the Scratch coat on some plans. The patient's copay is 15 for scratch coat. If you believe in selling the good stuff with 2 yr manuf warranty such as TD2 that copay is one dollar above your wholesale price, and so, with those plans, you have to educate the staff and make sure they sell the factory front/back SRC for CR-39 instead of TD2, or give the patient the option of 30% off retail for that non-covered product. You can get screwed if you don't constantly watch your wholesale prices.

Just be aware that you are NOT a non-profit organization, and that you exist to make money. You may have a bleeding heart to give away TD2 for free, but in the end, it'll come back and bite you. Fair is fair. Make the patient pay for the better quality product if they want it and if not, don't offer any warranty!

Another mistake was having a sloppy warranty policy. We've only just recently gotten the bloody thing in writing and we're giving it to the patient at the time of sale, not after. I basically matched most of the insurance companies labs warranty policies.

In our area, if you're too generous, the population will take advantage of you, and so I've been stingy in the refund area. I figure we can make any pair of glasses work if the patient is willing to try. We've had a couple women customers want refunds because they later decided they didn't like the frame they'd chosen. I figure the customer bears the blame for this and I don't do refunds for cosmetic likes or dislikes. I mean, come on! Not even VSP offers refunds for cosmetic reasons, nor does Davis Vision lab.

We offer refunds within the first 24 hrs of purchase, but after that, we figure the lab has received the order and at that point it's irreversible.

We also now tell people over the phone that all copays, overages and out-of-pocket expenses are due at the time of service, and that we don't do layaways. I don't allow patients to carry an out-of-pocket balance greater than $35.00 EVER!!!! No exceptions! We've gotten burned there, too.

Remember, you're not a finance company. You're a doctor's office and every dr's office in this country requires all copays paid at time of service.

It may have been a mistake to be closed Saturdays. When I worked commercial, Saturday was typically no-show day. If the weather was nice, they'd blow us off. I had wondered ... possibly ... opening every other Sat morning, but my assistant has another job on the weekends and so ... I just haven't done it.

 

[20DOC20]

Anyway, this experience has greatly humbled me and I have TONS of respect and and admiration for an OD who can actually make a living in private practice!

And any advice would be great, well, other than filing Chapter 7, which may, unfortunately, be my next chapter!

 

[20DOC20]

[1) What type of settings is it? I mean population:OD ration? city, suburban, rural?
2) How far is the nearest OD pratice?
3) Are you working full time somewhere else and seeing patients on Saturdays at you clinic?
4) Are you doing anything extra to market yourself in the community?
5) How long do you think it will take for the clinic to cover its cost of running? Based on you avg. per patient it seems like ~20-25 patients per month should cover the cost? How close are you?/QUOTE]

1. Rural. Farming community. 40,000. Draw population up to 80,000.
2. Nearest practice is 1.5 miles away.
3. Nope. I did some fill-in work here and there through the year, but locally, no one wants to hire me because I'm a direct competitor
4. I tried everything regarding marketing except giving talks. I probably should ... but the problem with that is everyone wants to hear about cataracts, AMD and as soon as the find out I can't actually treat it, then what's the point? They'll goto MD anyway. I had thought about lecturing on how to buy glasses. I think optical illusions would be cool, but my consultant thought it was a lame idea. I really should think about giving talks ... it's just that I'm a terrible public speaker and I'm afraid I'd look like a total dufus.
5. Right now I'm breaking even. With this economy it's been schizophrenic and unpredictable. Never seen anything like it. If you look at our income curves on my accounting software, you'd think you're looking at someone's heartbeat! I need about ten patients per week to break even. But if we have a month high in Davis Vision or other really CHEAP low rb plans it may take 12 per week to break even. So per month between 40-48 to break even. See with these low reimbursement plans, my average revenue per patient dropped down to 218 per patient on average. Ouch!

Oh, one mistake on the location is that I'm TOO CLOSE to Walmart!

One person asked what type of location: It's in a strip mall. It seemed a great location: next to a very busy cafe, dentists upstairs. But it seems to me the cafe gets ALL the business, so much so, there's no more room for parking. My first landlords told me they'd let me out of the lease should I go under. Well, they sold the building to some jerks who told me I would not be let out of my lease early and that in order to get out of it I'd have to list them as a creditor on my bankruptcy. (I had inquired about getting out of the lease and changing locations). So ... I'm stuck in a bad spot. I was forced to sign a 5 year lease by Bank of America as a condition of the loan. Thanks!