Article Date: 5/1/2001

Business Advisor
Six Signs of an Inefficient Practice
Are you getting back less from your practice than what you're putting in? Here's how to tell and what to do about it.
By Jerry Hayes, O.D.

If you're feeling overloaded these days, ask yourself if you're activity-oriented or results-oriented. Even if you run around like a whirlwind all day -- if you're not efficient, you'll get less done in terms of serving patients and generating revenue for your practice.

Red flags

Listed below are six red flags that tell me that a practice may be busy, but not efficient:

  1. A full appointment book with a low gross. If you gross less than $400,000 and are booked solid more than 1 week in advance, the first thing I'd advise you to do is figure out a way to see more patients in the same amount of time.
    Look at the difference in income between seeing seven patients a day versus seeing 10 (see above).
  2. Average less than one exam per hour. I don't advocate an "assembly line" approach because some patients simply require more time. Doctors who routinely spend an average of more than 30 minutes with each patient often do it for the wrong reason. While patients appreciate personal attention, they really crave great overall service.
    If your staff does a mediocre job with that patient in terms of answering the phone and dispensing contact lenses or eyeglasses, it doesn't matter how long you spend with him, he's not going to be happy.
    However, if you spend a reasonable amount of quality time (15 to 25 minutes) with a patient and the staff does a superb job on their part, the patient will be extremely pleased.
  3. Low staff-to-gross income ratio. I like to see the staff productivity ratio around $125,000 per employee. That means a $500,000 practice would only have four staff members. Note: This includes clerical staff plus chairside assistants, but excludes staff in an optical lab who do cutting and edging.
  4. Low inventory turns. Ideally, your frame inventory will turn three to four times each year. For example, if you dispensed 20 frames per week x 52 weeks = 1,040 frames (4 turns = 260 frames). That means your practice should only stock 260 frames at any one time. Yes, a large display is nice from a merchandising standpoint, but it's expensive.
    If you dispense 1,040 frames per year and keep 1,040 frames on hand, your cost to stock that extra inventory is 1,040 frames - 260 frames = 780 frames x $50 wholesale cost per frame = $39,000 tied up in slow moving inventory. Low inventory turns are a guaranteed way to lower your net and raise your cost of goods.
  5. More than 30 days between staff meetings. One of the biggest causes of inefficiency in a practice is poor communication between the doctor and staff. Instead of one long monthly meeting, break your staff into small groups of one or two and meet with them for 15 or 20 minutes on a weekly basis.
  6. The first response to implementing new ideas into your practice is, "I can't do that because . . . ."
    Any O.D. can improve his productivity -- as long as his desire to improve his practice is stronger than a normal resistance to change.

Simply perfect

We've just covered a few key areas of your practice that you can easily assess and improve. The changes I've suggested are simple but can have a big impact on your net. Try them, and see how much more efficient your practice becomes. 

 

Income Chart

7 patients/day x $200 = $1,400/day x 5 days = $7,000 gross income per week x 46 weeks per year = $322,000 per year.

10 patients/day x $200 = $2,000/day x 5 days = $10,000 per week x 46 weeks per year = $460,000.

At a net of 33%, seeing 10 patients instead of 7 represents a difference of $45,540 in net income.

A frequent writer and speaker on practice management issues, Dr. Hayes is the founder and director of Hayes Consulting. You may call (800) 588-9636 if you need help with your practice.


Optometric Management, Issue: May 2001