Article Date: 2/1/2005

business planning
Business 101: Business Planning
Part two of a three-part series on business strategies. This installment focuses on optometric business basic training.
BY SCOT MORRIS, O.D., F.A.A.O., Conifer, Colo.

Unfortunately, the basics of business planning isn't a major focus for optometric education, leaving us to "figure it out" on our own. We ask friends or colleagues how they do it or read about it in a journal article such as this. Maybe we read general business management books or, in a best-case scenario, we hire a business consultant to "streamline" our operations.

So why is all of this important? Spinning dials, fitting contact lenses and treating eye disease is important, but if you don't manage your business effectively, you'll have to see a lot more patients just to achieve the "net" lifestyle you desire. We have a tendency to get preoccupied in everyday issues and miss out on designing our practices and our lives so that they're what we want instead of what everyone else wants.

I'll outline the major business components of optometric practice (strategic planning, operations overview, financial management and marketing) and present a brief checklist of areas to contemplate this year and every year.

The strategic plan

The first basic premise of practice management is that if the practice is going to change, then you have to take responsibility to create and promote that change. The old adage that failing to plan is planning to fail holds true in every industry, including ours. The process begins with a tactical plan to establish and reach your goals. After all, you can't hit a target if you don't have one. Identify where you are, set realistic goals, prioritize those goals and go after them.

Develop the big picture of where you want your practice to go. Start that journey by analyzing where you are now and how you compare to national benchmarks (see "National Benchmark Summary" below). The backbone to your entire business future lies in the strategic plan. It takes some time to develop, but this may be the best spent time of your professional life, so take this planning seriously. "Business Plan Items" (page 54) lists some of the basics of a business plan.

For information on step-by-step business plan development or on strategic planning, go to

It's important that your strategic plan is fluid, yet durable enough to serve as your reference plan throughout the year. In terms of everyday management, do you need more time to manage your practice? If you're waiting to develop marketing, pay bills or even to return phone calls, then you may want to consider scheduling an additional hour or two every week for management time. If you want your practice to grow, then you need to manage the business. Profitability is a product of efficiency and effectivity. And part of that applies to the operations of your practice.

Operations overview

Operations comprise many parts of your practice ranging from personnel to the physical property to the financial proceedings of your practice. (Because of space limitations, I can't expand on each point that follows, so please refer to Dr. Neil Gailmard's weekly management tips at om_mtotw.aspx to get more detailed information.)

Personnel. The most important asset/investment of your practice is indisputably your staff. They have a dramatic effect on the ultimate success of your plan and your practice. They can make your practice awesome, average or abysmal. The following are a few quick ideas on improving your personnel situation:

► Develop a personnel manual. Though a time-consuming process, its purpose is to set fair and equal guidelines in print for all to abide. It's the practice playbook detailing specific practice policies, as well as enforcement, thereby preventing any misinterpretation, miscommunication or ill feelings. This manual should reflect only the concerns that affect your personnel. A companion policy and procedure manual should cover everything else.

For more information on developing policy and personnel manuals, go to

► As it comes time to expand your practice, the most important investment you can make is to identify, recruit and hire your next outstanding staff member. Just follow these two general rules:

1. Hire personality and train skills

2. Be patient and hire well.

It's more difficult (and painful) to terminate a difficult staff member than it is to hire one. I suggest a 90-day trial employment period. If a new hire isn't impressive within that period, then she likely never will be. Don't settle for substandard; demand excellence!

► Once you've hired the right candidate, furnish her with the tools to meet the practice goals and motivate her to achieve them. This is one way to put your management skills to the test. Ask yourself, "What's this employee's reason for doing her job?" Following are a few ideas on retaining your staff and promoting your practice:

Communicate. Your staff needs to feel as though they're a part of the team and the process if you want them to take ownership and make the practice grow. Conduct weekly or bi-monthly staff meetings to discuss current policies or procedural changes, ways to improve the practice and provide training.

Flattery will get you places. Everyone likes to hear that they've performed well. Show your appreciation when the practice has a good day. A few deposits in the emotional bank account go a long way. Conduct annual reviews to give and receive constructive comments on an individual basis. Doing so allows for private, focused time on what the practice can do for the staff and vice versa. Take their criticism to heart as it's often an indicator of the trouble areas of the practice.

Encourage growth. Challenge new employees to grow by developing a training program so your staff has a format with which to expand their knowledge level. The more they know, the more they can assist you and ultimately, increase your practice efficiency.

Delegate. Staff underuse can prove just as devastating to morale as overuse. Empower your trained staff to improve practice efficiency. The side effect: Staff members take ownership of projects, initiative to create new solutions to old problems and work better as a team. It also frees up more of your valuable time to manage the practice and increase productivity.

Give incentive. Undoubtedly, a bonus program is an expensive but valuable part of your compensation program if you want to keep your exceptional performers. A benefit program may include paid time off, health benefits, time sharing, uniforms, a bonus program, etc. Be creative, but make sure the rewards are performance-related! Don't limit the bonus opportunities unless you want to limit your growth.

For more on these issues, visit

Physical property. As you plan to grow your practice, consider meeting the physical demands of expansion. Invest in technology. Start with voice mail and a routing tree for your phones. The improved clinical efficiency is worth the cost. Check your current phone rates and shop for more cost-effective alternatives such as voice over Internet protocol call forwarding systems. Evaluate your computer system and network for security concerns, information backup, etc. Consider an electronic medical records (EMRs) program. (Read my article on EMRs at

On the topic of physical property issues, mood is everything. Do you like the look of your waiting room and do other people feel the same? Is it inviting, warm and friendly? Are your displays well-lit and inviting? Is your inventory up-to-date? That is, would you want to wear what's in your frame rack? Evaluate whether you need to upgrade any aspect(s) of your office. Regarding your clinic/optical area:

Financial planning is an important aspect of many of the areas that I just covered, so let's discuss this component of optometric practice in more detail.


National Benchmark Summary

Exams each day 9.6
Exams each hour  1.2+
Average Charges/exam (pt) $210 to $240
Average Collections/exam (pt) $165 to $175
% new patients (vision and medical) 10% to 12%
average optical sale/patient $175 to $200
revenue per staff hour $65 to $80
net 30% to 31%
cost of goods sold 29% to 31%
personnel 17% to 20%
marketing 2% to 3%
occupancy 4% to 8%
general expense  6% to 9%


Financial planning

Reports and benchmarking. Once again, evaluate where you are now and where you want to go. Compare your numbers to national benchmarks to focus on what areas you need to improve financially. Do you need to see more patients or collect more money from the patients that you have? After you've planned for your information technology, inventory or capital equipment needs, build your budget. Focus on the gross; the net will follow. You can increase gross by raising fees or average sales price. This approach also avoids the cutting-cost mentality.

Fees. You can obtain basic Medicare fees from your local Medicare carrier or many of the state optometric associations. Set your fees based on a percentage above the standard Medicare reimbursement or your best third-party payer. How you set your fees depends on your location, practice type, insurance penetration and competitive analysis. Create a comprehensive fee grid organized by CPT code and insurance plan as well as a list of noncovered services. You can derive these lists by reviewing the individual contracts (not the EOBs).

Billing, coding and compliance. Perform a monthly or quarterly in-house compliance review of your charts and billing procedures to prevent chronic fraudulent or erroneous submissions and to show that you're making an attempt to comply with current rules and regulations. Document the review dates and your findings (both positive and negative).

Marketing 101

When planning your marketing strategy, first set your goals of what you want to achieve, then make a marketing calendar to outline each month's goals and tasks for both internal and external marketing. Build the fees for these marketing strategies into your budget. Focus on your competitive advantages as well as what services and products serve your patients' interests. If you don't already know your patients' needs, ask. Patient perception is everything. They have to perceive value and if they don't, then you're not giving it to them.

K Internal marketing starts with customer service. This premise needs to penetrate your entire office and every staff member. Successful practices thrive on it and not-so-successful practices struggle with it. Below are some other items to add to your internal marketing campaign:

External marketing. What's your image to the general population? Advertise small in the Yellow Pages (it's a reference only, not a sales piece) and spend the extra money in your office on internal marketing, where it actually makes a difference.

It takes about $350 to recruit a new patient. It takes a lot less to sell to those patients who are already in your chair. You're more likely to bring in new patients from existing patients' referrals, so spend more time and money on those patients who are already in your office. Overall, try to build your practice through one step every day.

Putting the plan into action

Now that you've built the plan, implement it. The measure of your success will be strongly associated with your ability to build your plan, market your plan and manage your plan. Best wishes!


Business Plan Items


  • Executive Summary
  • Mission Statement
  • Market Analysis
  • Personnel
  • Services & Product Review
  • Operations
  • Financial Profile
  • Investment Strategy
  • Appendices


  • Patient Data
  • Competitive Analysis
  • Business Structure


  • Financial Status
  • SWOT (strengths, weaknesses, opportunities, threats) Analysis
  • Benchmarking
  • Provider Productivity


  • Setting Objectives (SMART)
  • Specific Actions & Responsibilities
  • Measurable (timelines and due dates)
  • Achievable
  • Relevant
  • Time Sensitive
  • Evaluate
  • Implement


Dr. Morris is the clinical director of Eye Consultants of Colorado, LLC and is a managing partner of Morris Educational & Consulting Associates. Reach him at (303) 250-0376 or at


Optometric Management, Issue: February 2005