Ophthalmology Business

MAY 2013

Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.

Issue link: http://digital.ophthalmologybusiness.org/i/130662

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Page 8 of 22

always better? Ophthalmology Business takes a look at some of the advantages of a small practice S ince the 1990s, with the first healthcare reform during the Clinton Administration, there has been a consolidation of smaller independent practices into larger practices, said John Pinto, president, J. Pinto & Associates, San Diego. At the same time, Mr. Pinto said that according to his estimates, probably more than half of the ophthalmic practitioners out there are practicing in a small context of one to three physicians. "I think it was in the 90s when everyone said the solo practice is dead. There is a similar drum beat occurring today saying it's going to be impossible to practice as a soloist. I think that's premature," he said. While it may be a greater challenge today to stay small, Mr. Pinto said, a physician should still be able to practice in whatever context allows him or her to thrive. When smaller is better The advantages of being in a smaller setting can be summed up in the potential diseconomies of scale when you get over about five or six doctors in a practice, Mr. Pinto explained. "The sweet spot is between three to five surgeons, and this is true not only in ophthalmology but also in other surgical specialties," he said. Any fewer than that and it becomes harder to share resources like equipment and staff. Any larger than that and it starts to fold in on itself and the profit margins shrink in percentile terms, he said. "In addition, smaller practices can be much more nimble, and in the current environment, being able to shift quickly, getting in and out of services can be an advantage," Mr. Pinto said. From a subjective standpoint, a smaller practice results in a more human scaled organization. If it's a small two-doctor practice, everyone is in one building, he explained. It is easier having 15 people around the table deciding together what's going to be happening in the next week than if you have a much larger organization. Certainly, being part of a smaller practice could be a bit less frustrating. "I would say in my solo, two, and three doctor client practices, the surgeon owners are happier in that setting than they are in much larger groups. As Ted Turner once said, 'Complexity and frustration in an organization is equal to the number of people squared,'" Mr. Pinto said. According to Derek Preece, principal and senior consultant, BSM Consulting, Orem, Utah, from the standpoint of negotiating with larger entities like insurance companies and accountable care organizations, it's usually not advantageous to be in a smaller practice. However, he said, sometimes larger practices get set in their ways so it's difficult to make a decision because there are so many different opinions. A smaller practice continued on page 10 May 2013 • Ophthalmology Business eZine 9

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