Article Date: 9/1/2005

business advisor
When Busy is A Bad Thing
What's the real measure of a successful optometric practice?
JERRY HAYES, O.D.

There are three things practice owners love to brag about when socializing with optometric colleagues: how much we gross, how many employees we have and how far ahead we are booked for appointments. But none of those things define a successful practice in my mind. And, a full schedule can be particularly meaningless, especially if you're grossing less than $500,000 per O.D.

Money for nothing

Take Dr. Frank Fuller for example. He grosses $504,000 and is booked almost two weeks in advance on a routine basis. Dr. Fuller sees an average of seven patients per day, five days a week, for full eye exams, as well as a variety of medical visits and progress checks. At 48 weeks a year, that equals 1,680 complete exams (7 exams x 5 days x 48 weeks = 1680 exams per year). Even though the medical visits generate income that contributes to his total gross, we still calculate his average revenue per patient as the total practice gross divided by the number of complete exams. In Dr. Fuller's case this comes out to $504,000/1680= $300 per patient.

Given his backlog, I would advise Dr. Fuller see more exams each day. If he did ten exams per day instead of seven, the results would be dramatic. His gross would jump from $504,000 to $720,000 (10 exams x 5 days a week = 50 exams per week; 50 exams x $300 per exam = $15,000; $15,000 x 48 weeks a year = $720,000). Assuming his net is 31%, Dr. Fuller's net income would grow from $156,240 to $223,200. That's an increase of over 40%, a huge gain for seeing just three extra patients per day.

Accelerate your growth

Would the practice normally grow that much in one year? No. There will be some empty spots while Dr. Fuller changes his schedule to fit in ten patients per day. But, his practice growth would accelerate. The more people you see and treat well, the more referrals you will get and the faster your patient volume will grow. That's how $500,000 practices get to be $1,000,000 practices.

O.D.s who are grossing in the range of $400,000 to $600,000 and struggling to grow usually have one of two excuses for not seeing more patients. First, they question whether the demand is present. If you are really booked more than a week in advance, you're not fully meeting the already existing demand. In fact, it's likely you are losing patients because the purchase of eye wear and an exam is often an emergency or impulse buy.

Delegation is the key

Another reason many O.D.s in the $500,000 range think they can't grow: They feel like they are at full capacity. But if you want to see more patients, all you have to do is improve your facilities and your staff. I know O.D.s who routinely perform eight to ten quality exams before lunch every day. You can too, with a pretest area, two fully-equipped exam rooms and a willingness to delegate a significant level of patient care to well-trained assistants.

Practice success is circular. The more patients you see, the more money you make. The more money you make, the more you can invest in the kind of equipment and staff necessary to provide the highest quality of care to your patients.

THE FOUNDER OF KNOWYOURSTAFF.COM AND HAYES CONSULTING, DR. HAYES IS A REGULAR CONTRIBUTOR TO OPTOMETRIC MANAGEMENT MAGAZINE. REACH HIM AT JHAYES@HAYESCONSULTING.COM.

 



Optometric Management, Issue: September 2005