A Bigger Piece of Pie
Provide more options and increase your net income at the same time.
By Richard S. Kattouf, O.D.
Q With most optometric practices servicing more patients with fixed fee vision care programs, net profit is more difficult to achieve. What can an optometrist do to ensure significant increase in net income?
- - -Dr. S. L. Brooke via the Internet
A Dear S. L.,
My consulting companies concentrate on many areas to ensure my optometric clients a 38% net-to-gross income. Below are the areas that we look at in evaluating a practice:
- proper patient volume
- proper percent of salaries to gross
- staff control
- training staff to be income producers
- proper cost of goods ratio
- control of embezzlement of time, money and goods
- unit sale per patient
- maximizing major medical and medicare reimbursements
- patient control
- effective recall system
- proper internal marketing
- effective and measurable external marketing
- incorporating optometric specialties.
This list shows you that increasing net income is a complex and focused task. So let's concentrate on the point that's least discussed and written about -- optometric specialties -- which actually offer much larger servings than the general optometric pie that's much too small and limiting.
Dr. John Scholl (fictitious name) called because he was seeing more patients than he was previously, but his net income was decreasing. We attacked every issue on the checklist.
A major part of Dr. Scholl's consulting program consisted of adding the specialties of corneal refractive therapy (orthokeratology) and orthoptics (developmental vision).
Corneal refractive therapy
Laser-assisted in situ keratomileusis (LASIK) is an option for many patients, but not all. Some are against surgery, and the pediatric population hasn't been approved for LASIK treatment yet. Corneal refractive therapy is approved for children and offers an alternative to those who are weary of surgical procedures.
Dr. Scholl and I reviewed the necessary clinical skills for fitting the Fargo reverse geometry lens for reversing myopia and astigmatism. Using G.P. Specialties' DMP and EMCEE lenses, Dr. School was able to control myopia. Two other major manufacturers of reverse geometry lenses are Contex and Scioptic.
Adding corneal refractive therapy to his practice enabled Dr. Scholl to perform professional services with fees as high as $2,000. As the community became aware of this alternative type of care, Dr. Scholl's radius of draw increased. General optometric practices have a limited radius of draw, but when they offer specialty services, patients travel farther to benefit from those services.
In the first year of introducing this new specialty, Dr. Scholl's office grossed more than $100,000. His net from this portion of his practice was 50%. Because these are private pay procedures I call the optometric specialties "our refractive surgery."
After Dr. Scholl learned the clinical aspects of performing vision therapy, it was time to properly equip his office. One of the primary pieces of equipment we ordered for Dr. Scholl's practice was the Computer Orthopter by R.C. Instruments, Inc.
I demonstrated to him how to market to schools, psychologists and administrators, and the program became a huge success. His practice grossed more than $100,000 from this specialty alone within a year.
A winning combination
The addition of both specialties raised Dr. Scholl's net income by 7% in 1 year. When Dr. Scholl called for his initial consultation interview, he was netting 22% of his gross income. In 2 years, he was up to 38% -- a swing of 16%. Other factors from the checklist played a part, but the specialties were integral to the increase.
To my brothers and sisters in optometry: The general optometric pie is much too small. The specialty pie offers much larger servings for those who want permanent solutions to low net income. So what are you waiting for? You have the extra ingredients you need to really serve yourself a nice slice of the profession!
Dr. Kattouf is in private practice in Warren, Ohio, and he's president and founder of two management and consulting companies. For information, call (800) 745-EYES or e-mail email@example.com. Note: The stories in this column are based on actual consulting case files. All practice data are real; the names are fictitious.