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Article Date: 11/1/2004

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Gravity, Death and Taxes
There are some things in life you can't change. So focus on those you can.
By Gary Gerber, O.D.

I continually hear loud moaning and complaining from O.D.s across the country and their grumblings know no consistent geographic region or demographic description. North or South, young or old -- I constantly hear, "There are too many doctors." "Patients don't take any responsibility any more." "Managed care, the Internet . . . ." And on it goes.

Like death, taxes and gravity, other natural constants are at work in our practices. For example, I continually see the work of Vilfredo Pareto (the Italian economist whose work spawned the 80-20 Principle) in every optometry office I visit. I often wonder if the negativity I see isn't self inflicted -- at least partially -- because of a lack awareness of Pareto's 80-20 rule.

Here are some common 80-20 examples and how they affect your practices.

The root of referrals

Eighty percent of your referrals come from 20% of your patient base, yet our consultants still continually see doctors in denial trying feverishly to enhance their base of referrals. It's uncanny and downright spooky that time and again we've seen this 80-20 rule occur in every practice in which we've worked. You can't beat it, so don't try. Instead of pouring your marketing dollars down the drain, pick another battle that you have a chance of winning.

Who's not paying their bills?

Eighty percent of your accounts receivables come from 20% of your patients. This is another one of my favorite "laws" that's fun to watch practitioners attempt to defy. The truth is, most of your patients and their insurance companies do pay their bills. If they didn't, then you'd be out of business.

Yet many of us still set severe collection guidelines that affect our entire practice based on the 20% who owe us money. If you're not consciously aware of this, you can't be faulted for taking a jaded posture of, "My patients are deadbeats who don't pay their bills! No wonder I hate being an O.D.!"

Targeting the gripers

While our consulting company hasn't (yet) been able to conclusively quantify that 80% of patient complaints and headaches come from 20% of patients, I think you'd readily agree that it's certainly true. And as above, not recognizing that we're powerless to change this, we can easily fall prey to feelings of frustration from these chronic complainers.

Described by another economist as "the vital few and the trivial many," we can use Pareto's Principle as a straightforward learning tool. Too many of us are guilty of not seeing the "vital few" and instead focusing on the "trivial many." Besieged with constantly changing governmental and insurance industry regulations, we fall into a defensive posture to protect our practices and our livelihoods. And we do it by setting up policies based on the actions of the trivial many that undoubtedly affect the vital few.

Who are these vital few? As true as are the other 80-20 rules, so too is it a constant of optometric business life that 80% of our practice's net comes from 20% of our patients.

When I've presented that last comment in lectures, I hear most doctors say, "Maybe in your clients' practices, but not in mine!" "Oh no, Gary. In this case, Pareto was wrong! Eighty percent of my net comes from 80% of my patients! And that's why I have instituted the various guidelines and procedures in my office!"

Don't sweat the small stuff

Pull some charts and do some investigating of your own. What goes up must come down (gravity). Death and taxes are just as certain. And Pareto was right. Use his concepts to help you glide through your day and focus your energy where it's most productive: On the vital few.

Dr. Gerber is the president of the Power Practice, a company specializing in making optometrists more profitable.  Learn more at www.powerpractice.com or call Dr. Gerber at (800) 867-9303.

 


Optometric Management, Issue: November 2004

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