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Merging Made Easy
Not sure if merging your practice is a good idea? Read these tips to find out.

Q I'm an independent O.D. and am considering merging practices with another O.D. Is this a good idea? What do we need to do to commence this project?

Dr. S. A. Riley, via e-mail

A: Merging independent practices is a great idea, but there's one large potential negative issue that's difficult to project. I'll cover the pros and the cons.

Go ahead and merge

Here's why merging your practice with another optometric practice is a good idea:

• Lower cost of goods. One frame and contact lens inventory for two doctors costs less than two separate inventories.
• Lower cost of employees (percent of salaries to gross). The merger will result in a smaller overall staff size.
• Lower cost of rent for each doctor (or both could share in cost of owning a building). Either way is cheaper than going solo.
• Better schedules for each doctor. Each O.D. can reduce her patient-interaction hours and her availability for emergencies.
• Each O.D. has more time to develop an optometric specialty.
• Rather than having the sole responsibility for administrative tasks, you get to share them with the other doctor.
• Sharing the cost of telephone, electric and gas lowers the cost of operation for each doctor.
• You also get to share equipment costs, which lowers each O.D.'s investment.
• It's easier to take time for continuing education or a vacation because the other doctor can cover the office.

ILLUSTRATION BY GREG RAGLAND

Rethinking your decision

There's only one risk to merging your practice with another O.D.'s practice, but it's significant: The chemistry between the doctors is a big unknown. You're entering into a professional marriage. Egos, personalities, mode of practice, spouse's attitude, medical problems and peculiarities may not raise their ugly head until the two of you complete the merger.

To begin the merger, you should have a professional appraise each practice. If one practice has a higher value, then make an agreement for the owner of the lesser-valued practice to pay the difference in value or to work it off. The doctor who owns the lower-valued practice can agree to a work-equity concept in which he'll work more hours for lesser financial compensation until he pays off the other doctor.

When entering into a potential merger, consider hiring a consultant who has experience in these ventures. When two parties attempt to do this on their own, it often leads to significant adversarial posturing. Most attorneys and accountants have no experience in optometric or ophthalmic mergers.

A consultant will develop a merger agreement and act as the negotiator. Once both parties agree to the points of the merger, give the document to an attorney to put it into a legal document. This process will save you and your potential partner time, money and stress.

Merging makes sense

You want to join practices with little stress. That's why I suggest involving a consultant when considering merging your practice with another. The managed care environment we find ourselves in makes it difficult to maintain a high net income. Mergers are one answer to lower cost of operations and raising net profit. 

Dr. Kattouf is president and founder of two management and consulting companies.  For information, call (800) 745-EYES or e-mail him at advancedeycare@hotmail.com. The information in this column is based on actual consulting files.