Optometric Management Tip # 400 - Wednesday, October 07, 2009
Differences in Revenue Production among Associate ODs
Hiring an associate optometrist is a great way to foster continued growth in a practice, but what can a practice owner do if the new doctor continually produces less revenue per patient than the senior doctor? First, let's make sure that we are analyzing the data properly. Second, we'll discuss ways to bring up the production of the associate.
A useful statistic is gross revenue per patient (GRP), also called average sale per exam and other similar names. This is often calculated by taking the total practice gross income for a month and dividing it by the number of comprehensive eye exams done that month. In my opinion, gross practice income should always be defined as “collected” gross income, meaning after insurance write-offs. For accuracy in tracking, I use comprehensive exams and simply ignore all other office visits even though some of those visits produce income. The gross revenue per patient stat can be figured for the practice as a whole and for each individual doctor. Ideally, the GRP will be fairly close to the same for all doctors, but often a senior doc may have a higher figure.
Apples to apples
While you may not be able to control all the variables that exist in the patient populations of two different doctors, we should examine them and consider the factors that may explain why one doctor produces more gross practice income than the other.
- Since we are analyzing collected gross income, consider if one doctor sees more vision plan or Medicaid patients than the other. If so, that could be a major reason for a difference in revenue production, but it may also be one that the owner may decide to do nothing about. It may be a very good strategy for the practice as a whole.
- Does one doctor have a different specialty? Consider if one OD sees more contact lens patients, treats more ocular disease, concentrates on vision therapy, or specializes in dry eye therapy. Again, this may be perfectly acceptable to your philosophy, but it may help in understanding the reasons for different production.
- Patient age trends with each doctor may make a difference. Senior citizens may be less likely to buy new eyewear while younger folks may buy multiple pairs of glasses. It would be unusual for the younger doctor to have an older patient population, however.
- Does one doctor work with a different optician in the practice? Opticians and other staff members can have a huge effect on product sales, so consider if one doctor typically has a specific assistant or if the assignment of patients to staff is completely random.
Increasing low production
Once you have good data and have made adjustments for the patient population differences, and if the associate doctor still has much lower revenue production, I would take some steps to remedy the situation. Some optometrists have a true aversion to product sales of any kind and they actually avoid discussing optical products. In my view, this is as much of a disservice as high pressure sales tactics would be. Neither extreme is good; patients need professional guidance about eye care treatment options.
Consider these points for increasing the production of an associate optometrist.
- Have your technician ask a key question as part of the case history before the exam: are you planning to get new glasses today? Many patients say yes and when we know this in advance it makes the whole visit very easy. One hundred percent of those people who say yes to that question get glasses. This was tip #1, which is in the archives.
- Consider taking some of the selling process out of the doctor's hands by using a scribing optician to take over as soon as the exam is done. Let your office system and optical department do the selling. Of course, it's always better to have the doctor involved in recommending optical products, but some of it can be delegated.
- Meet with the associate in private to discuss the business aspects of eye care. Tell the doctor that your practice philosophy is to always presume that the patient wants the best eye care. The most complete eye care. Not the cheapest. Tell the doctor that it is actually somewhat insulting and discriminatory for anyone to presume that patients don't want or can't afford the best products and by withholding those products he or she is doing a disservice. We should not use our own spending habits as a guide in advising patients. Let patients decide after they hear all the options, but they also deserve to hear their doctor's recommendations.
- I don't believe that associate ODs need incentives or commissions on sales, even though those techniques are frequently used. I would openly discuss the need to treat the optical as an important part of the business model of the practice. Optometrists who don't understand that may be considered a less valuable team member.
- If the associate agrees with the concept of recommending optical products and contact lenses, but does not know how to go about it, consider having the junior doctor observe the senior doctor during a few exams. You can discuss your differences in chairside communication techniques in private, but there is no better training than watching.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management