AOA Income Survey Highlights
The recent AOA survey reveals some
interesting truths about O.D. income.
By Jerry Hayes, O.D.
The American Optometric Association (AOA) recently published it's annual income survey and while optometric income continues to grow over the long term, the AOA's findings are consistent with other industry reports; retail optical has been flat to down over the last two years. If your practice gross has
not shown significant growth since 2000, then you're not alone.
A look at gross income
In terms of "busyness," optometrists reported seeing 43 patients each week for an average of 1.1 exams each hour (down slightly from 44 patients each week in 2000). The median (that hypothetical point at which half the respondents fall above and half of them fall below) gross income for self-employed optometrists was $372,000 in 2002, down slightly from $383,000 in 2000.
On the other hand, the mean, or average, gross income for the same group was reported as $523,608 in 2002, versus $415,623 in 2000. This is a clear indication that respondents grossing above the median had high revenue.
What about net income?
Like the old golf saying, "Drive for show and putt for dough," gross is nice, but what really counts is your net income. Median net income for each optometrist in 2002 was $114,500, down slightly from $116,000 in 2000. Average net income was reported at $132,813, virtually the same as 2000. (Not good, but again, it reflects the national trend.)
In my opinion, net figures in these types of surveys usually fall a little low because optometrists tend to underreport deductible personal benefits such as retirement contributions, insurance, automobile and travel expenses. Therefore, when you add those benefits back in, the true net of your practice is generally higher than what you report on your income tax return.
Of note, optometrists in the top quartile had a median net income of $156,000, meaning 12.5% of all optometrists earned more than that. This group is doing quite well. O.D.s in the lowest quartile had a median net income of $82,500, meaning 12.5% earned less than that. (This group likely includes part-timers, semi retirees and new practitioners.)
A clear link to income level
Differences in modes of practice also led to differences in income. The highest earning optometrists were those in groups of three to five. They had a median net income of $156,000 each. Self-employed optometrists in optical chain environments had a median net income of $110,000, which is actually less than their private practice colleagues. Optometrists working for ophthalmologists topped the income list of employed optometrists at $125,000 each year.
Things are looking up
I regularly get feedback from readers protesting that my suggested overhead ratios of 33% of gross for cost of goods and 18% for staff expenses aren't high enough in today's environment. Interestingly, the AOA's numbers are even lower at 28% for cost of goods and 17% for non-optometrist wages.
While the future of optometry is bright, these statistics paint a clear picture: eye care has been a little soft over the last few years. What we see in the AOA statistics ends here, but the market seems to be picking back up. If you're doing all things you need to do to be competitive, then you can expect your practice to grow again with the upsurge in the economy.
COMPLETE SURVEY RESULTS ARE AVAILABLE ONLINE TO MEMBERS AT
WWW.AOA.ORG. GO TO MEMBER SERVICES.
A frequent writer and speaker on practice
management issues, Dr. Hayes is the founder and director of Hayes
Consulting. You can reach him at (800) 588-9636 or JHAYES@HAYESCONSULTING.NET.
Optometric Management, Issue: March 2004