The eyecare industry is constantly evolving, and your practice may be considering new business opportunities to adapt and remain successful in this challenging environment. VMG Health Senior Consultant Andrew Maller presented the course, “Best Practices for Assessing the Feasibility of New Business Opportunities,” at the American Academy of Ophthalmology 2024 Annual Meeting. Andrew supports physician practices with expertise in ophthalmology and medical aesthetics. He specializes in practice valuations, physician compensation modeling, and other areas related to the financial management of physician practices. 

He delivered the course on the second day of the meeting, with participants joining both in person and via a live stream. The session was engaging, with pauses for audience questions throughout. When exploring the feasibility of new business opportunities, it is important to consider strategic, operational, and financial factors such as growth strategy, new service lines, space, staffing, provider capacity, revenue, patient volume, costs, and more.  If you were unable to join or watch the session, we have provided some key takeaways below:  

  1. Evaluate your goals to understand how specific business opportunities align with your overall strategy. Consider their impact on your growth strategy, differentiation in the marketplace, service lines, and, most importantly, patient care. How will this growth enhance patient outcomes? Will it affect patient volume? 
  2. Consider equipment financing options. When you are considering a new piece of equipment, there are a variety of options. These each have benefits and drawbacks that may be different for each individual organization. These include cash payments, bank loans, and lease agreements. Deciding which financing option is best for you depends upon several factors, including your comfort with debt and the sum of the payments over the equipment’s lifetime.  
  3. Factor in variable versus fixed expenses in your break-even analysis. Variable expenses, such as cost of goods sold and production-based compensation formulas are proportional to the level of activity. Fixed expenses do not typically vary with patient or procedure volume and include rent (depending on the situation), most staff salary costs, insurance, principal payments on liabilities, etc. When evaluating any opportunity, it is important to determine the break-even  point, the level of volume necessary where the investment moves from a loss to zero.   

Case Study Analysis 

Andrew highlighted multiple case studies, each focusing on common new business opportunities for medical practices. The first was a new equipment feasibility analysis, looking at considerations to determine expected cash flow and how to determine the break-even point. He showed an example of the analysis using the Ophthalmology Connection tool and discussed key concepts such as determining the revenue rate and variable cost per procedure using the new equipment.  

The second case study was related to how to determine the financial feasibility of adding a new provider. The Ophthalmology Connection New Provider Feasibility Analyzer he referenced looks at numerous factors, such as the new provider’s compensation model, anticipated incremental costs to the business (such as added headcount, marketing, and facility costs), as well as how to estimate patient visit volume and revenue. He gave insights into bringing a new provider up to speed and how factors such as training, credentialing, and other factors can contribute to meeting levels of predicted patient volumes.   

Best Practices 

The session concluded with a lively discussion with the audience about some of the key reasons that a higher number of new opportunities fail compared to ones that are deemed successful. While the reasons vary, many opportunities are not successful due to overreliance on gut feel, lack of proper planning and diligence, low patient demand, or a lack of leadership at the physician and administration levels.  

Although never guaranteed, practices with a better track record of being successful with these types of opportunities usually share some common attributes such as: 

  • Dedicated leadership and involving multiple stakeholders in the decision-making process 
  • Focus on strategy first before looking at the operational and financial impact 
  • Disciplined approach to pro-forma modeling 
  • Regular goal setting and monitoring  

Ask the Experts 

In the ever-evolving healthcare market, practices are searching for ways to stand out among competitors, improve patient outcomes, and enhance profitability. Senior Consultant Andrew Maller’s session at the American Academy of Ophthalmology 2024 Annual Meeting provided valuable insights into assessing the feasibility of new business ventures. His course emphasized the importance of aligning new opportunities with overall business goals and patient outcomes by examining strategic, operational, and financial factors. By evaluating growth strategies, service lines, and financial options, practices can make informed decisions that support sustainable growth.  Get in touch with our team today to see how we can help your business thrive. Looking for the tools mentioned in this course? Ophthalmology Connection has several industry-specific tools to support your business needs.