I've written a lot of articles on this site about how to start a solo ophthalmology practice and given a lot of recommendations. I think it would be helpful to give an overview of what a first full year as a solo practice eye doc can look like. These data are composite data from me as well as some friends that are in solo practices around the country. Collectively, we represent comprehensive ophthalmologists as well as 3 different fellowships. I've broken down the aggregate data into quarters to make the data more manageable. Take these numbers with a grain of salt as they represent rural, urban, and suburban practices with different practice philosophies. My goal here is to give you a pretty good idea of what to expect during your first year if you move to a new area and open your doors without having a referral network in place.
1st Quarter:
The first month was universally very slow. On average we saw 2.3 patients per day and only did a handful of surgeries (0-5). However, by the time the first quarter was over, the clinical load increased to 3.5 patients per day and 6 cases per month. That puts the surgical conversion rate at about 10 clinic encounters per surgical case. This is an unusually high number (most benchmark data that I've seen put it closer to 20 clinic encounters per surgical case). I believe this ratio is skewed by the fact that we hadn't built up my patient base enough to have a significant amount of return visits. As the denominator increases, I would expect the ratio to approach 15-20 clinic visits per surgery for most people.
Average monthly cash flow: net negative to net positive
Approximate net income: $-15,000-$20,000
2nd Quarter:
By the second quarter, we were up to 5.8 patient encounters per day, and an average of 7 cases per month. The ratio of clinic encounters per surgical case continued to climb and was now about 13:1. Most people became cash flow positive by the end of the second quarter.
Average monthly cash flow: net zero to net positive
Approximate net income: $25,000-$40,000
3rd Quarter:
In the third quarter, the average practice really started to turn a corner. We saw 8.6 patients per day and did about 16 cases per month. The ratio of clinic encounters to surgical case at this point held stead at 13:1. One of the practices had little competition, so they had a fast start and skewed the data substantially. I had to eliminate the outlier to calculating the mean to more accurately reflect the average. Everybody was cash flow positive by the end of the third quarter.
Average monthly cash flow: net positive
Approximate net income: $30,000-$60,000
4th Quarter:
At this point, the first big milestone was reached for everybody - double digit clinic visits. In general, we saw 10.3 patients per day and did about 15-20 cases per month with a surgical conversion ratio of 15:1. This is the point where the practice philosophies started to separate out a little bit. The net income was pretty comparable across the board but was a little higher for practices like mine that focused on extremely low overhead. Some of us had hired front desk workers, an office manager, ophthalmic technicians, and outsourced billing by this point. One of the group, had a very fast start and was up to 2 front desk, 2 technicians, 1 clinic manager, and 1 billing manager. This person was at the high end of gross income, but the overhead brought the net profit closer to the group average.
Average monthly cash flow: net positive
Approximate net income: $30,000-$100,000
Annual Data:
Average gross income: $400,000-$800,000
Average gross expenses: $200,000-$500,000
Average gross profits: $200,000-$400,000
Average total income (salary + bonus): $250,000-$450,000
In general, people paid themselves a total that meets or exceeds most private practice and academic job offers for new graduates. They made most of their money on the bonus. A big plus to owning your own practice is that any gross profits at the end of the year can be given to your shareholders (you) in the form of a bonus. Be very careful how much of your income comes from taxed regular income and distributions (I recommend talking to a CPA to make sure you do this right). The last thing you want is to get on the IRS audit list.
Key Takeaways:
How do I maximize revenue?
Either go rural or focus on premium/cash pay procedures. Some of the highest margin
How do I get busy quickly?
Go rural. The person who consistently had the fastest start and made the most money was in a rural location.
How many employees do I need at the beginning?
In general, 0-2 employees is about right. On a personal level, I was able to make it about 3 months before I broke down and hired someone. As soon as I did that, I wished that I had a front desk worker sooner. My quality of life was substantially improved, and I will never go back to doing absolutely everything myself. I recommend front desk as your first hire. I did all the office/billing manager functions (and still do), but if you're not interested in all that extra work, that should be your next hire.
Things are so slow to start, what should I do while I wait for patients?
Learn everything and meet everyone. You're in charge of how everything about your practice functions so you should know how your practice works on a granular level. Use your down time to learn about billing, revenue cycle management, coding and modifiers, etc. You should also introduce yourself to all potential referral sources. This includes at least optometrists, other ophthalmologists, primary care doctors. This is a daunting task at the outset and is really an ongoing public relations issue.
Should I advertise?
The people who advertised tended to get a few more patients a little faster, but it didn't seem to make too much of a difference. I believe the aggregate data here are misleading because of the varied practice locations. If you're in a competitive market, direct-to-consumer advertising is going to be very important. It is crucial if you focus on elective/cash pay procedures. If you're in a rural location, no/minimal advertising is fine.
Is it okay to take vacation?
Yes! In fact, the first two quarters are the best time you'll ever have to take a vacation while working. Your patient base isn't yet so large that you're missing out of revenue if you take a week or two off. It's also highly unlikely that you'll get an emergency call while you're gone. I do recommend arranging all coverage with another office in town just in case.
Why don't the quarterly numbers add up to the annual numbers?
I took out some outliers for the quarterly numbers and included everybody in the annual range. My goal in this post is to give you a general idea of what to expect if your practice is close to the median practice. The ranges are very wide due to the heterogeneity of practices that make up the individual data points.
When do I start making money?
On average, you should become cash flow positive after 3-6 months. The biggest driver of cash flow is expenses, and the largest line item is usually staff salaries. I recommend paying yourself a resident-level salary in the first year to achieve cash flow positivity as soon as possible. This might not be an option for you, and that's okay. Just know that the more you pay yourself, the less you'll get as a distribution and the longer your delay becoming cash flow positive.
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