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Is Bigger Better?
Consider these points before you decide to open a satellite office.
By: RICHARD S. KATTOUF, O.D., D.O.S.

Q: Having been in practice for ten years and knowing the geographic area very well, I am contemplating opening one or more satellite offices. What's your opinion?

Dr. T. K. Woodard

A: Expanding the number of locations can be a plus or a minus. The potential benefits a satellite office can offer:

• Open up new markets and possibly expand patient base.

• Expand certain areas of service. For example, if the new satellite is in a more affluent area, it's very feasible to add specialties such as developmental vision and orthoptics. Patients in these wealthy markets are often motivated to invest in their child's ability to learn. This type of addition to your practices will significantly raise net income and offer great clinical services to the entire community.

• The possibility of improving your purchasing power with suppliers. More offices mean more inventory is necessary. Suppliers may be willing to strike more attractive terms with the increased business.

• The possibility for associate doctors to earn additional income.

• Increase the number of medical cases in your organization, which increases your gross/net.

• Additional doctors on staff make it easier to share emergency call hours and extend office hours.

The other side

Where there are positives, there are potential negatives. Consider:

• Absent ownership can be a problem. The associate doctor must take on a role as resident manager. Give him/her the authority to keep staff "in bounds" or adhering to standard operating procedures. The associate must also be financially compensated for these management duties.

• Each location increases operating cost (overhead). In a managed care environment, the owner, consultant, and accountant must study the feasibility of paying rent, the associate doctor, additional staff and the cost of inventory, and compare it with potential profit.

• The productivity of staff with no owner present can be a problem. Employees will embezzle time, money and products, even with an owner present. The problem is multiplied by owner absence. There are numerous proven check and balance procedures to eliminate the embezzlement issue.

• Creating a schedule for each location is a problem. Have a central scheduler or assign this to the associate doctor at his/her location.

• Continuity of standard operating procedures. Many times these satellites make their own rules. These behavioral patterns go against the standard operating procedures spelled out by the owner.

• Many times the locations become competitive or jealous of one another. Rather than working as an organization, they become separate entities. Only the owner and consultant can prevent this.

Dividing tasks

Dr. R. E. Owens called my company as an owner of four independent locations. Dr. Owens and his wife are both O.D.s. Prior to my consultation, they both had an identical patient interaction of thirty-six hours per week.

The organization was an administrative nightmare. I assigned Dr. Owens the "owner/manager" and cut his patient interaction hours to eight. I taught him to administrate and visit all locations, with some visits announced and some unannounced. I empowered the associate doctors to be branch managers and gave them additional income for their management tasks. I motivated the staff with a commission if the office reached set financial targets. Structure, organization and consequences to negative behavior were the order of the day. The organization now operates as a unit, not as individual spokes of a wheel. The result is reduced stress and greater profit for the ownership.

Is bigger better? It depends on all of the above factors. If done with proper advice and careful consideration, expanding locations can be very profitable and satisfying. Adding offices without proper plans and controls is a disaster.