Optometric Management Tip # 575 - Wednesday, March 20, 2013
Why Do ODs Resist Hiring More Staff?
When I consult with ODs one of the key factors I look at is the level of staffing in the practice. I find many optometric practices are understaffed and if the OD would simply hire an additional employee, the practice would grow.
Why the resistance to hiring?
Generally, ODs resist increasing the staff because they are concerned that the increased payroll cost will take away from the practice net income. They may be looking at a metric such as the percentage of payroll cost to gross revenue. This reasoning is often faulty and hiring more staff would actually increase productivity much more than the payroll cost. More on this below.
One other factor that causes ODs to pause when it comes to hiring more staff is they perceive staff management issues to be so unpleasant and difficult that they want to contain it. This really comes down to each individual's goals. If you want your practice to grow, a larger staff is part of that process. If you are content with your current gross and net revenue, then keeping the staff small may be the right move.
Good things happen
Several good things happen to a practice when more staff members are added. Consider these factors:
- Customer service improves. It's easy to see why; more people to take care of patients' needs.
- Productivity increases. If doctors and staff are not rushed, they have more time to educate patients and discuss additional products and services.
- Delegation increases. You would delegate more if you had someone to delegate to.
- May be able to expand office hours. Evening and Saturday hours are highly desirable for patients. Some existing staff members may resist these hours but new employees can easily be hired with those hours as a requirement.
- Stress decreases and attitudes improve when employees are not over worked
- Easier to handle call-offs and vacations
- Existing staff may perform better
Many doctors avoid increasing staff because their payroll expense percentage is already at what they feel is higher than it should be. We must realize that the data that is reported as norm in our profession is not necessarily the right figure for your practice. Furthermore, increasing the number of staff does not necessarily increase your payroll percentage. It is very likely that gross revenue will increase more that the new salary and benefits. It is quite possible that hiring another employee may cause the payroll percentage to drop! I believe 21% is too low for a large thriving practice that has advanced services, higher fees and drives growth through excellent customer service. That practice could have a 25% payroll figure or higher and it would be fine with me.
One useful metric is annual gross revenue per employee. I like this number to be about one full time employee per $135,000 of annual gross revenue. Calculate your full time equivalent (FTE) number of employees by adding part-timers together. While not absolute, your gross revenue per FTE employee should not be too high or too low. There is a tendency to think that we would like the figure to be as high as possible. If we can achieve gross revenue of $200,000 per FTE, isn't that better than $135,000? It really is not better because it is likely that it can't be sustained. It is likely that the doctor is not delegating efficiently and could increase revenue and production if more staff were involved. It is likely that customer service is suffering and stress may be high.
The best way to determine the proper staff size for your practice is to observe the operations over a period of about two weeks. Over time, we see the unusual random events even out, such as a big rush of patients, or an unusual span of no shows, or staff call-offs and vacations. We want a good balance between staff being crazy busy sometimes and having time for side jobs and conversations with co-workers at other times.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management