Article Date: 5/1/2003

fix this practice
Take Control
Consider this advice for preventing theft, raising your net and more, while at the same time controlling your costs.
By Richard S. Kattouf, O.D.



Q Optometric practices are always attempting to keep costs under control. What ideas do you have on this issue?

Dr. A. S. Sokol, Via e-mail

A: Keeping costs under control is difficult in a managed care market. Most doctors haven't evaluated and modified their management techniques to meet the new marketplace. Below is a list that you must, as a practice owner, adhere to so you can keep your costs under control.

► You must have a system of checks and balances in place to ensure that collections are accurate. Check your frame and lens inventory on the computer, review your profit and loss statements on a regular basis and keep track of the percent of staff salaries to your gross.


Most doctors don't evaluate daily accounting logs and staffers are aware of a doctor's negligence. If the wrong person is handling this task, he could break collection policies, which raises accounts receivable and lowers cash flow. Monitor your accounts receivable regularly and set a target number based on your operating expenses.

► It's important for you to be aware of everything going on in your practice to prevent embezzlement of time, money and product. By implementing a checks-and-balances system and by making sure to open the office mail, you prevent theft of money. Having strict policies regarding personal telephone use and computerized inventory control are key to preventing time and material theft. O.D.s and M.D.s receive failing grades in controlling these important issues.

► If your office can fabricate at least 40% of your spectacle prescriptions rather than sending them to managed care labs then you should investigate lens casting (molding) and in-house finishing labs. This can lower the cost of goods and raise net income. Just make sure you take into consideration the total number of lab jobs. Most offices don't pay close attention to lab costs. It's good practice to keep your cost of goods at 29% of your gross income.

► Give team commissions that your staffers must earn instead of automatic annual raises. Set targets that ensure that you're earning more so you can afford to give additional income to staff. I often see all of one office's staff combined making more than the owners of the practice, who are struggling with low net.

► The staff of many offices add to the overhead rather than to the profits. Teach your staff to be income producers. For example, train your contact lens tech to perform all follow-up evaluations and collect data so you have more time to perform full exams. When the tech's done, evaluate the patient's data and perform one or two tests. This way each employee earns his income and makes money for the practice.

O.D.s in general do a poor job of cross training and delegating to make staff profitable. Find employees who can do some or all of the following: Data entry, pre-testing, contact lens insertion and removal, optical work and front office work.

Know what's going on

The key to controlling costs is defining strict staff policies that everyone adheres to. If you want your practice to be efficient, profitable and productive, then re-examine the aspects of your practice that you have the least control over. Implement a system of checks and balances and take charge. It's your practice -- know what's going on inside.

Dr. Kattouf is president and founder of two management and consulting companies.  For information, call (800) 745-EYES or e-mail him at The information in this column is based on actual consulting files.


Optometric Management, Issue: May 2003