Article Date: 10/1/2005

Look Past Numbers for the Answers
Your practice needs a budget, even if you've done well without one.

The 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 diagnostic equipment.

"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?

Informed decisions

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 solutions.

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