How Big Practices Are
Can an optometric practice really make
a million dollars?
was giving a lecture in Chicago recently when a young O.D. in the front row gave
me a quizzical look and asked with perfect sincerity, "How can any optometrist
can possibly gross $1 million a year?" Good question, but I was a little
of things go into building a million-dollar practice that cannot be easily
addressed with a short answer, or in a one-page column for that matter. But
there is a simplistic response. "All" you have to do to gross $1 million is see
14 exams a day and generate an average of $300 in revenue per patient, five days
a week, 48 weeks per year: 14 x 5 x 48 x $300 = $1,008,000.
Of course, I know from
experience my readers are disappointed when I give a numbers-based response like
that. You generally like more tangible advice such as, "Buy a certain retinal
camera; Send thank you notes for referrals and offer one-day service on
Comparing the million-dollar practice
Exams per hour
Revenue per O.D. hour
Median exam fee
Avg. revenue per exam
Source: Hayes Practice
Index and CIBA Essilor MBA Program
Big practices are different
No doubt, certain equipment and
management activities are vitally important elements of building a large
practice. But I do think the numbers can teach us something if we compare the
performance of so-called average practices with million-dollar practices in four
key areas: exams per hour; revenue per O.D. hour; median exam fee and average
revenue per exam. (See chart below.)
It's pretty clear that
million dollar practices, as we expect, are busier. But something we possibly
didn't expect: they charge more. So what can you take away from this if you are
grossing $500,000, but would rather be doing a million?
First, if you want to
see nearly two exams per hour, you can't do it all yourself. You have to
delegate most steps of the patient care experience. Yet, in their heart of
hearts, many practice owners are simply not comfortable with that. They enjoy
doing every test themselves or don't trust their staff to provide an acceptable
level of care. However, as the numbers clearly tell us, a practice that depends
on the doctor to personally perform every test will be hard pressed to grow much
past $500,000 in revenue.
Second, you must have the courage to charge fees
that support the level of gross you want. The fear, of course, is that if you
charge too much, your private-pay patients will seek a less expensive provider.
If you plan to compete on price, that's probably true. But for those who choose
to compete on quality and service, our chart should reinforce your decision. It
shows million-dollar practices tend to charge more per exam and generate more
total revenue per patient than small practices. The simple reality is that
higher fees don't keep patients away from those practices.
Are your obstacles mental?
It's my experience that obstacles
to practice growth are usually internal limitations that won't be alleviated by
new equipment or the right recall system. Before you count on any of those
tangible things to help you grow, you need to adopt two important mental traits
of high volume optometrists: a willingness to delegate more and the courage to
charge what your time is really worth.
A REGULAR CONTRIBUTOR
TO OM, DR HAYES IS THE FOUNDER OF THE HAYES CENTER
FOR PRACTICE EXCELLENCE AT SOUTHERN COLLEGE OF
OPTOMETRY IN MEMPHIS. SEND QUESTIONS OR COMMENTS
Optometric Management, Issue: March 2006