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| It's important to do your research before starting a business. |
Location Research
When you begin searching for potential practice locations, it is necessary to have an idea of what kind of practice you want to have. Do you want to be the refractive surgery destination for a downtown metropolitan area or the do-it-all truly comprehensive ophthalmologist in a more rural area? Which part of the country is most appealing to you? Do you have to live in Los Angeles, California or is it okay to end up in rural Montana?
Regardless of your intended living situation, you should know that wherever you start isn’t necessarily where you will end up. If you discover that the location you have selected doesn’t actually support your business, you may have to move (because of the relatively small number of patients required to support a low-overhead solo practice, this is unlikely). Alternately life changes may happen and you may end up moving across the country. In any case, it’s important to have a handle on how to analyze a location before you sign a lease.
Demographics and Competition
There are a number of freely available resources that can give you an idea of the patient population in a target market. The US Census regularly publishes fairly granular data online without an access fee. Depending on where you are looking to start a practice, the local chamber of commerce may provide you with foot traffic and demographic data for free or a nominal fee. It never hurts to call and ask.
In general, about 20,000 people are needed to support one busy comprehensive ophthalmologist. This ratio changes if you are subspecialized. I’ve read that retina specialists should plan on a 1:100,000 ratio of doctors to patients for subspecialties if you desire a primarily subspecialty-only practice. For the anterior segment subspecialties, plan on closer to 1:50,000 and be ready to also do some comprehensive ophthalmology.
The other ophthalmologists in your desired practice location that do what you do are your competition. You can find them the same way that patients do - online searches. Make sure you search the National Provider Databank, vitals.com, healthgrades.com, google.com (and other search engines - as they can give different results), Google Maps, and Facebook. Not every doctor you find on these sites are going to be active practitioners. Many of these sources (particularly Vitals & Healthgrades) will show retired doctors as active. Make a list of every doctor within a 30-45 minute radius of your intended practice location (your catchment area).
Then you need to look at the website for each one of these doctors and their practices. This will give you an idea of the services they provide. Only count those who provide the same services as you (your competition). For example, if you are a glaucoma specialist, make a list of anterior segment surgeons (with whom you’ll compete for cataracts) and glaucoma specialists (with whom you’ll compete for incisional glaucoma surgery). With the number of doctors and the population data for a given geographic region in hand, you can now find out if the area is saturated or ripe for a new practice. Here are some examples based on the ratios above.
Location 1
Population: 2.5M
Comprehensive ophthalmologists needed: 125
Comprehensive ophthalmologists present: 110
Remaining need in your field: 25
Analysis: Appropriate location to become busy quickly
Location 2
Population: 2.5M
Comprehensive ophthalmologists needed: 125
Comprehensive ophthalmologists present: 135
Remaining need in your field: -10
Analysis: Difficult to have a fast start
These numbers and ratios are guidelines. I think that there is always room for another ophthalmologist in a given market. The way practices are built initially is partly on need and partly on customer service. If you treat people fairly and have excellent service, your practice will grow regardless of your location. That being said, starting a practice in a heavily-saturated market is a recipe for slow or stagnant growth. Since you will have overhead needs to be met, choosing a location with a definite need for your services is ideal. We will discuss specifics about commercial real estate and renting in another post.
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