Past Numbers for the Answers
practice needs a budget, even if you've done well without one.
THE EDITORIAL DIRECTOR, Jim Thomas
authors who contribute to Optometric Management are a vocal group when on the issue
of budgeting. And rightly so. Without a sound budget, how do you measure the success
of a practice? (The basics of planning a budget can be found in Dr. Jerry Hayes'
feature, which begins on page 63.)
Admittedly, there are those optometric practices
that earn revenues and generate profits even though they don't take the time to
plan and monitor a budget. I'd suspect their numbers are dwindling. It's too difficult
to understand the impact of managed care plans, new equipment, staffing and other
critical factors without measurements in place.
Without a compass
Recently while at an ophthalmic meeting, I
saw two doctors walk past the booth of a manufacturer that sold a piece of state-of-the-art
"That's a nice machine but it's too
pricey for me," said the one doctor.
"They gave a demonstration today,"
said the other doctor. "It looks like a great investment."
Either doctor could be right. The second
understood that cost is only one consideration. In a typical scenario, the practice
dedicates additional resources, perhaps staff training and marketing, to the new
piece of equipment. If these additional resources aren't reflected in a budget,
then the practice lacks understanding of the cost of its investment.
Of equal importance, the practice needs
the budget to understand and quantify the benefits of its investment. A budget can
provide insight into the following: Has patient care improved? Is the practice more
efficient? How many new patients did the practice attract? How much revenue did
the new machine generate?
By comparing numbers, the practice can answer
questions and then move forward and decide how to allocate staff, marketing efforts
and equipment. The practice can choose its direction and monitor its progress.
It's important to note that a budget
doesn't push the practice to focus solely on money. Increased revenue from a diagnostic
instrument should indicate improved patient care. A budget can reveal staff efficiencies
as well as the effectiveness of advertising and marketing. How are mail-order contact
lens resellers affecting your practice? Your budget can supply the answers and suggest
Today an optometric practice can work
in any number of directions. Regardless of the direction, a well-planned budget
assures that the practice works smarter.
Optometric Management, Issue: October 2005