Building Better Business
Figure out your level of business skill
and then aim higher.
Jerry Hayes, O.D.
According to the most recent AOA survey on
optometric income, the median (that hypothetical point at which half are above
and half are below) net income for optometrists was $110,000 in 2002. But there
was a wide range in earnings as optometrists in the bottom quartile had a median
income of $82,500 while those in the top quartile earned nearly double at
$156,500. Why does one group of optometrists earn so much more than others?
Looking at O.D. earning power
While some would attribute the variation in
earning power to external factors such as practice location and the level of
competition, I think it has a lot to do with the practice owner's business
skills. Simply put, the better job an optometrist does of managing his practice,
the more money he tends to make.
So how do you become a good manager? From a
consulting standpoint, I've found that practice owners must master four distinct
skill sets, which I call the Hayes Practice Excellence Matrix, to become a
high-earning optometrist. Those skills are:
1. Patient care
2. Staff management
3. New business development
4. Finance and administration.
ILLUSTRATION BY GREG
Patient care. This is a universal
area of strength for optometrists. As a profession, we consistently provide high
quality vision care and eye health services to our patients. But as we all know,
patient care skills alone don't guarantee success in private practice. If you
aren't interested in managing the business side of your practice, you should
seriously considering working for someone else.
Staff management. Learning how to
hire, train and lead a team of good employees is the first hurdle on the road to
practice growth for most O.D.s. As a rule, you should generate about $150,000 to
$200,000 in annual revenue for each non-lab employee. Because your capacity to
see more people is a direct function of how much you delegate, the more
employees you have, the more dollars you can produce in your practice.
New business development. Once you
have a good staff, instead of seeing eight patients by yourself each day, you
can provide equal or better care to 16 and then 32 through the use of capable
assistants. At about the time they develop the capacity to competently serve
more people, high earners learn to use internal and external marketing to
attract more patients to the practice.
Finance and administration. This is
the last practice management skill most O.D.s master. Unfortunately, learning
simple business skills (e.g., analyzing practice overhead and creating a budget)
has never been an important part of the optometric culture. Why is this
important? The work that goes into building a $1 million practice with a large
staff can represent a lot of wasted effort if you're netting 20% instead of 35%,
as you could be.
Learn on your own
The bad news is, we don't get serious training
for anything other than patient care in optometry school. So we're left to
figure out most of this on our own.
The good news is, any O.D. who's interested and
motivated can learn how to become a better business manager by attending
lectures, reading articles, working with consultants and visiting successful
colleagues. That's how I did it. And you can too.
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: October 2004