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 Article Date: 11/1/2013 Print Friendly Page

## Measure potential profitability by using these metrics.

### DAVID MILLS, O.D., M.B.A

Evaluating the productivity of your practice is a valuable tool in analyzing and identifying missed opportunities to increase profitability. Two useful measures can be used: the O.D.'s productivity per hour and the utilization percentage.

#### Necessary calculations

Before you can begin your analysis, calculate the following:

Step 1. Number of hours you, the O.D., work. Use only those hours devoted to patient care. To simplify, split the day into segments. Next, determine the number of hours assigned to patient care for each segment.

Then, multiply the number of segments worked in the morning and afternoon by their average time value to determine the total hours worked in a month. For simplification, use 15-minute periods (3 1/4 hours equals 3.25).

Step 2. Average time spent to deliver patient care. For each office visit, calculate the average face-to-face time you spend with each patient. You are concerned only with the codes that you use to designate the level of the encounter — don't include what are typically defined as special testing codes, such as visual fields.

These values can be an invaluable resource for other uses, such as developing an efficient and profitable appointment schedule template. To complete this step, multiply the number of times you performed each type of service code in the month by the assigned time value. For example, if you performed the service 100 times during a month for an average of 30 minutes, this would equal 3,000 minutes.

Step 3. Total collected revenue. Add the revenues received in the business from all sources. Be sure to include collected revenues from product sales.

#### Utilization percentage

Determine this metric by dividing the total time spent during the month to deliver patient care by the number of hours worked (Step 2/Step 1). The higher the percentage, the “busier” you are. Values in the range of 75% to 85% should be your goal. This reflects little unused available patient contact time during the month. Values significantly lower may indicate O.D. overstaffing issues, inefficiency or low patient volume.

As in most metric analysis, evaluate the trends. Measure this metric on a monthly basis to identify possible “slow times” in the practice where it might make sense to have vacation time scheduled. This can also be used as a key indicator of specific staffing needs during a given month.

#### Productivity per hour

To calculate the productivity per hour, divide the total collected revenues by the number of hours devoted to patient care (Step 3/Step 1). An efficiently managed practice with a high utilization percentage should realize values between \$350 to \$425 per hour.

If your metric is significantly lower while the utilization percentage is high, productivity opportunities may be missed. For example, if the utilization percent is more than 90% and your productivity is \$200 per hour, you should investigate further to determine the cause.

#### Staying productive

Monitor these metrics monthly to develop a trend analysis. Use these figures to determine the appropriate time to consider adding additional providers to your practice or to develop employee incentive programs. OM

DR. MILLS PRACTICES AT OCEAN STATE EYE CARE IN WARWICK, R.I., AND HOLDS A M.B.A. FROM PROVIDENCE COLLEGE. E-MAIL HIM AT MILLSD@NECO.EDU, OR SEND COMMENTS TO OPTOMETRICMANAGEMENT@GMAIL.COM.

Optometric Management, Volume: 48 , Issue: November 2013, page(s): 60 61