In case you missed it, ophthalmology has caught the eye of private-equity investors. “Even as late as 2016, private equity was just making a few rumblings in ophthalmology. Nobody really knew how prevalent it would become,” says Derek Preece, MBA, principal and senior consultant with BSM Consulting in Orem, Utah. “There are market forces driving towards consolidation in ophthalmology, private equity being the primary force. But there are also other forces at work,” he says. Does this mean that solo practices are destined to get squeezed out of ophthalmology?

Anjit Nemi, MD, MBA, doesn’t think so. He’s the owner and sole practitioner at Lotus Eye, where he focuses on cataract, refractive and comprehensive ophthalmology in Alpharetta, Georgia. “I did a combined MD/MBA at Tufts University, and I always had an entrepreneurial spirit,” he says. “After finishing my cornea fellowship at 
Emory, I started work out West in a group practice. Within six months, I found myself not wanting to wake up on Monday mornings to go to work, and I thought, ‘I went through 30 years of schooling and training—and I wake up on Mondays feeling this way?’ ” he recalls. “That forced me to realize that in order to practice the way I wanted to, I was going to have to do things my way. I did look at some practices that were for sale, but I decided that if I really wanted to do this, I’d have to build something from scratch the way I wanted it, rather than trying to rework something that already existed. That’s what led me to start my own practice in the fall of 2008.”

Mr. Preece notes that the term “solo practice” encompasses more than just the one-doctor model that Dr. Nemi has built. “There are a couple of definitions of solo practice,” he explains. “One is where you’ve got one doctor. Another is where you have one ophthalmologist who may have one or two optometrists working for him or her. The third definition of a solo practice is something I call solo ownership: This is where one doctor owns the practice, but might employ four or five ophthalmologists and several optometrists.”

Regarding the future of solo ophthalmology practices of all types, Mr. Preece is cautiously optimistic. “Can small, independent practices still survive? Yes, especially in smaller towns,” he says. “Many of the private-equity consolidators are mainly focused on big practices in big markets. So first of all, if you’re a small practice in a town that isn’t a suburb with a big populace, you’re still going to be able to see your patients and continue on as you have been—albeit with some challenges.”

Dr. Nemi notes that he founded his practice in the fall of 2008 surrounded by financial turbulence. “When I started my practice, it was during a time of economic uncertainty,” he says. There was the housing-market collapse; the stock market crashed in September 2008. And there was an upcoming presidential election as we headed into a recession. So I was already starting out with the odds stacked against me. I had to build up from one patient a day, and I had to use a ‘free’ general medical EHR. Having built it up under those circumstances, I feel like my practice was battle-tested from the beginning,” he says.

What circumstances might set solo ophthalmologists up to fight for their survival? What factors might work in their favor? What battles might lay ahead for solo ophthalmologists? Here are a few points of interest that Mr. Preece identifies, with insights from Dr. Nemi.

Location, Location, Location

Where you are on the U.S. map could determine your practice’s future well-being, according to Mr. Preece, who says, “I think small practices are viable, certainly in the smaller towns, and potentially even in larger markets if they’re able to keep access to their patients and keep up on technology.”

Dr. Nemi, who’s located in a large metropolitan area, says that he thrives in a larger market by thoughtfully controlling growth. “Being in Atlanta, I am seeing people acquire practices in other specialties such as gastroenterology and cardiology, for example,” he says. “These are practices that had been around much longer than mine, and now they’re all hospital owned. The reason I’ve just gone forward is that my practice is still in a growth phase. I’ve been able to control the overhead by carefully adding just one employee at a time whenever I thought the time was right. I don’t feel compelled to open up multiple offices to make up any overhead or to reach a certain income level. I’m very satisfied with where I am right now.

“One of the reasons that some of these practices have gone to private equity is that some of them had really high overhead, and they saw the opportunity to get shares of PE and early buyout,” Dr. Nemi notes. “I may not have that, but I feel like I’m going to be fine if I continue along the path that I’m following.”

Finding Successors

Although it’s not an issue on Dr. Nemi’s radar right now, having your practice remain viable by eventually bringing younger partners aboard may prove difficult if the trend toward consolidation continues apace. “One challenge will be finding a successor doctor. When a doctor with a small practice gets towards retirement age, is he or she going to be able to find a replacement? My feeling is, yes, but it’s not going to be as easy as it once was,” says Mr. Preece. “The large, consolidated practices are going to be very appealing to young doctors as they exit training with 200-, 300- or 400,000 dollars of debt. The large practices are going to appeal to them because they seem stable and may be able to offer higher starting salaries, although potentially less long-term income. If you’re coming out of school with hundreds of thousands of dollars of debt, you’re really wondering, ‘Am I going to make enough of a salary starting out to service my debt and buy a home and a car?’ So there will be some challenges for smaller practices in recruiting doctors.”

“My practice is turning 10 years old in October, so I don’t think there’s a scenario where a larger practice or PE can offer me anything that would be more lucrative than what I’m capable of doing at this point in my career,” says Dr. Nemi. He acknowledges that things could’ve been a lot different when his practice was in its infancy. “For example, let’s say I was a new cornea grad from Emory getting ready to start out practice, and larger opportunities had presented themselves.”

Although he doesn’t entirely rule out one day being pulled into consolidation, Dr. Nemi adds that the prior history of private equity—as related to him by older colleagues—serves as a somewhat cautionary tale. “A scenario could arise where an offer gets placed, saying, ‘We like your quality of practice, in terms of the care you provide and your reviews, and we think you’d be a good practice to have in our portfolio: This is what we’d like to offer you,’ ” he says. “I could conceive of that as an option, but there were earlier private-equity groups in the late 1990s and early 2000s, and a lot of those fizzled out, so who’s to say this isn’t another up-and-down cycle?

“I can’t personally comment on it, because I wasn’t practicing back then,” Dr. Nemi continues. “But my dad was a general surgeon, and I do hear from my peers of that generation that when the ACOs and managed-care organizations came to prominence in the 1990s, a lot of people assumed that it was going to be the end of solo practice. But those people who stuck it out independently are still there.”

Dealing with Insurers

It’s no secret that larger practice groups have more clout with payers, so solo practices are intrinsically more vulnerable with regard to reimbursement. “One scenario where my practice wouldn’t be fine is if Medicare were to say, ‘We’re going to reimburse solo practitioners 300 dollars per cataract, and group practices that meet our criteria in terms of size and accreditation will get the standard rate.’ That’s one way that I and other solo practitioners could be hurt,” Dr. Nemi says.

“If the larger practices are able to get exclusive contracts with private insurance companies and potentially Medicare Part C companies, they might drive smaller practices out of business, because those smaller practices just won’t have access to enough patients,” cautions Mr. Preece. “A practice in a larger market that’s heavily consolidated could lose patient flow—and that’s a killer. Small or solo practices may lose patients as they become out of network for their patients, most of whom won’t go out of network because they’d end up paying for much or all of the care they need.”

Dr. Nemi has found an effective way to mitigate the risk of being stuck with unworkably low reimbursement rates that he says also helps to increase the flow of patients to his office. “With private insurances here in Georgia, if you’re a solo practitioner, you cannot negotiate your rate. The people in larger groups can negotiate rates, whereas we’re just given the standard rate,” he explains. “But now, there are hospital-based groups—which I’m part of—that allow you to have access to the rates that the hospital is able to secure for its physicians. In exchange, you have to maintain certain quality parameters and CME credits. I also take call for some of the local hospitals.” He notes that while it may be a bit unusual for a solo ophthalmologist to have a hospital affiliation, doing so accrues another benefit 
besides better reimbursement rates. “Taking call for the hospital has allowed me to generate greater patient flow into the office via referrals from the primary-care doctors while letting me align myself with an organization that has allowed me to get a better fee schedule,” he says.

As Mr. Preece has mentioned above, a dearth of payer contracts, or anything else that stanches the flow of patients, is a practice-killer. What does the flow of patient traffic look like in a healthy practice? Mr. Preece says that it’s a careful balance of demand and patient convenience. “In general, when a lot of patients want to see a doctor, that will increase the length of time it takes to get in to see him or her. However, inefficient patient flow and poor scheduling processes can also increase that time, so the lead time to get an appointment isn’t always an indicator of a healthy practice,” he says.

But as a rule of thumb, he says that he likes to see lead time for new patients that 
falls within a two-week window. “When a doctor gets his/her schedule consistently booked out further than about two weeks, the chance that new patients will look elsewhere for care begins to climb, so I advise doctors to try to arrange their schedules so they can see new patients within two weeks. Existing patients will tend to be willing to wait a little longer for their appointments,” he advises.

“We generally book one week out,” says Dr. Nemi. “However, we have an online appointment-booking module on our homepage which allows patients to see any available appointment openings in real time, just in case slots open due to cancellations or rescheduling.”

Technical Support

A cash infusion from investors is undeniably helpful when it’s time to purchase big-ticket diagnostic and surgical equipment—and the kind of online presence that allows Dr. Nemi’s patients to grab open appointment slots. “In addition to having access to successor physicians and access to patients, keeping up technologically is another critical issue for small or solo practices,” says Mr. Preece.

“At some point, the larger groups make a pitch to their patients about having the latest and greatest equipment that not everyone else has, and it’s not just clinical machines,” he continues. “It’s IT; it’s EMR technology; it’s technology for patient portals. It’s spending money on kiosks in the waiting room where patients can check in, or it’s the ability to check in online. All of these require investment, and small practices will have a harder time making investments in technology. We could add to that 
personnel, because operating and maintaining some of these things requires personnel. They’re going to have a harder time keeping up with technology that over time will become more and more of a prerequisite to keep attracting patients.”

Add to this that some insurance companies already require ophthalmologists to have EMR and have strict reporting requirements in order to be on their panels, and the burdens of avoiding penalties and earning bonuses under MIPS and MACRA, and solo practices have their work cut out for them. There is also the risk of failing to keep up with federally mandated staff training on HIPAA, for example, simply due to the lack of a dedicated office administrator. “The smaller and solo practices don’t have a training staff. Everyone’s really busy doing their own job, and as things get more complicated in the ophthalmology space, employee training becomes more important. That’s another area where solo practices can fall behind simply because they lack the resources to do all that,” says Mr. Preece, whose company offers web-based employee training materials in addition to doing onsite consulting.

Dr. Nemi says that running a lean practice, by adding key support staff very slowly over time, has helped. “I have four full-time employees and one 
part-time. When I started, it was just one employee besides me, and I’ve added staff gradually along the way,” he says. He also credits choosing a hassle-free EHR system with keeping him on par with larger practice groups. “As a solo practitioner, if you incorporate the right technology, you can even outperform peers in larger practices,” he says. “As I do my routine charting, the data on each patient is being extracted, so I’m not spending time after clinic doing administrative work, even though that might seem necessary to keep up with requirements.”

Chief among those requirements are the relatively new MIPS and MACRA reporting requirements. “For Medicare purposes, I think the biggest area to focus on is what was previously called meaningful use, now part of MIPS,” Dr. Nemi continues. “The ability to meet those requirements in order to get the appropriate bonuses and to avoid penalties in terms of reimbursement is really a reflection of the type of EHR that you align yourself with. I have colleagues in successful group practices that are still on paper charts, and they’re taking a major hit from Medicare in terms of penalties for not meeting meaningful-use requirements.”

Although he believes that independent practices may be able to resist the rising tide of consolidation in less-saturated markets, Mr. Preece concurs with Dr. Nemi that EHR adoption is central to keeping up. “Over time, the deficit for smaller practices that haven’t, and the gap between them and those that have kept up, will get wider and more expensive to overcome,” he says.

Dr. Nemi plans on continuing to keep 
up, and says he feels no disadvantage when comparing his solo practice with larger ones. “I think that by not succumbing to peer pressure, working hard, taking good care of patients and being mindful of expenses and overhead, it is possible to be productive and profitable as a solo practitioner,” he says.  REVIEW