Welcome to eyecare insights.
Today is can be a little less patient-focused and more about managing the business of eyecare. To some of you know these podcasts are transcribed from informational lessons learned by insight eyecare’s owner Dr. Kyle Tate. Today’s articles being written about two months after our new clinic location opened up in downtown jinx. We purchased a building in goodwill from a retiring Dr. and learned some lessons along the way. Many times when a eyecare clinic is purchased is purchased for a large price that can be anywhere from .8 to 2 times the gross collected revenue. Factors that affect that purchase price are usually how up-to-date and healthy the business are. Evidently I’m not smart enough to want to do something like that and there’s not many clinics around. This opportunity came to me at random in a desperate move to find a buyer before Dr. Tom Vanderpool closed his doors 10 days later. We had a very brief discussion. Got some information on what the building was worth shook hands and Dr. Vanderpool Road off to Florida to sell his boat through the Bahamas doing eye exams on the natives.
So little more background, that phone call occurred December 15, 2018 by the end of January we completely gutted the building including tearing out some of the slab that had been cracked by a tree root. The entire front desk was removed. The doctors office walls were removed. The exam room walls were removed. And all the ceiling tiles and insulation were removed. What we left behind was essentially the four outer walls. Some of the bathroom walls, and the kitchen. Over two months. We did a complete remodel allowing us to have an additional exam room, the previous doctors office was turned into a pretest room, and the optical was enlarged around 200 ft.². The practice did not have the level of technology we are accustomed to it insight eyecare. All of their papers charts were scanned around 4000 in total, most of the equipment was sold or attempted to be sold, and new updated computers electronic records, exam equipment was installed.
Hindsight we do not regret any of these types of things. These were all items that if had been performed would’ve added to the value of the clinic by couple hundred thousand. Technically we just need to document that we can have good cash flow through the clinic and then it will be considered successful. Our building location does seem to be a little small to run three exams in our. The waiting room does not give much room for guests, and our newer open design is very open for staff and noise. However I do not want this article to sound negative because this building and practice has a lot going for it. Dr. Vanderpool did have his patients in daily contacts to a respectable amount. It is been very easy converting the other patients over. They had a previous contact lens system where people were coming every month to buy a box of contacts. Most of these patients have been doing this for a while thinking that was the only option available. They’re quite relieved to know they can buy a six or 12 month supply and have those automatically shipped directly to their house. People are also appreciating the newer level of technology in the exam rooms and the optical. We found that people for the most part want quality and if you communicate the value to them that what they’re paying for improve their lives people are okay with paying it. But we don’t want is individuals are humans is to pay a high price and find out we could’ve got the exact same thing somewhere else for cheaper. That is why it is so imperative that we discuss and explain these things to patients starting with the technician, supported by the doctor, and communicated well by the opticians. That is where the team really comes into play, in our team at insight eyecare excels at this.
What other lessons did we learn due to having a semi-relationship with Dr. Vanderpool we had more of a gentlemen’s agreement and a bank sales agreement. Ideally I would like to have had a sale agreement that listed everything out in detail. We’ve had a lot of trouble with vendors the previous owners owed money to that would not do business with us until the previous owners balance was paid. These things should’ve been well spelled out in a sales agreement and the full sale price should not have been paid upfront. For example if you are purchasing a practice for $200,000, and I would recommend keeping $20,000 behind for bills over the first six months. It was also difficult due to the fact that Dr. Vanderpool had lots of personal mail coming to the business about his family’s finances etc. and he was out of state or out of country immediately. We had multiple issues getting mail to us because they had put a forwarding address to his house and this should’ve been lined out ahead of time in a contract. But also like in a contract to have detailed wind Dr. Vanderpool would’ve paid previous balances. Everybody’s business philosophies are different and these are just some the things that I learned going forward in this.
The building reconstruction went well we did add a few projects on to make things more expensive however it really shows how valuable a good set of architectural plans and drawings are and how that can save you money. We went about 50,000 over budget on the building. Purchasing things we did not provide enough leeway for all the little items that need purchased and we did not have adequate projections on buying furniture. For example we used around $200 for chairs for the waiting room. We did not consider the optical because the $300 table and a $300 staff chair and $200 patient chairs times two adds up pretty quick. Going forward the next practice that we purchase or start I will be much more lucrative on my projective spendings as to not have to put as much cash ahead.
The absolute number one lesson I learned from buying this practice in on this adventure was that of the schedule. The very first thing I would recommend looking at when perching a practice is the schedule for the next year and previous year. You need to have hard concrete data for how many people have been coming in and how the pre-point system is. Jenks vision centers previous pre-point system was to look at the old paper schedule book and see who needed to come in when and then call those people and get them booked. Well the old paper schedule book got quote unquote lost”. It is easily cost us over hundred thousand dollars, so this first year will be quite a struggle however I’m confident with the insight eyecare reputation and way of doing things that are culture will thrive in give the people of jinx the eyecare they deserve. Once again this was an article of just my thoughts and things I learned from purchasing a practice which will not really benefit any patients but maybe so my optometry friends can reference this and find it useful. This Dr. Kyle Tate thank you for your time and have a blessed day.