Increasing Practice Net Income: There Are Only Five Ways
April 25, 2012
The overriding goal of any business, including a professional practice, is to increase income to its shareholders. As optometrists, we do that by providing excellent eye care services and products, but let's look past what we do and concentrate on the revenue. It is extremely helpful to step way back and see the big picture in its simplest form.
It turns out there are only five ways to increase practice net income:
See more patients per day.
"Sell" more to each patient.
Raise fees (or reduce discounts).
Avoid costly errors.
When we break down the profitability goal in that way, it seems quite achievable! Each of those five factors will make an excellent topic for the next five tip articles. Rather than choosing one or two of these profit generating methods — let's develop a plan for you to improve in all five of them.
The challenge of seeing more patients
Lack of patient demand is a huge problem for most eye care providers (ECPs), but let's acknowledge that there is a practical limit to how many patients per day a doctor can see and some practices have achieved that. There will be some variation of opinions on what that per day number should be, which is understandable, but I think most ODs place the number way too low. Based on advancements in exam technology and the economics of managed care, I put the goal at roughly 25 exams per eight hour day per doctor. This would be a mixture of comprehensive exams and follow-ups, with about 75% the former.
If you are already consistently performing at that level, congratulations. The only way I see for your practice to increase patient volume is to hire more ODs and open additional locations. If you do not see around 25 patients per day, read on and try to determine which of the following situations best describes your practice. There are actually three different reasons why most practices don't see more patients. Once we determine the obstacle to you seeing more patients per day, we can go about fixing the problem.
Some ECPs think they don't want more patients
The reasons for this feeling may vary, but many ECPs are not that interested in net income. That's perfectly fine, of course; it is a personal decision. But some doctors come to this conclusion based on misconceptions, such as seeing more patients will require harder work, or create more stress, or will result in poor quality care. I disagree with those thoughts. Seeing 25 patients per day is no more work for the doctor than seeing 10, if you have enough good staff. And the quality of care can be excellent, if you have a good staff. You might think it is nearly impossible to build a good staff, but it isn't that hard if you are willing to spend some money. Where do you think the money will come from? How much additional cash flow is created if you see 25 patients per day?
Some ECPs don't have enough patients
This is completely true and a perfectly valid reason to see a lower number of patients, but let's consider it temporary! A practice like this needs marketing! What can you do to work on the challenge of creating more patient demand? You may have to invest in the practice to make this happen, but the return on that investment is historically excellent. Don't forget that the most important form of marketing is based on excellent customer service which creates more word of mouth referrals.
Some ECPs have plenty of patients, but can't see them
This situation is what I consider the low hanging fruit. If you have plenty of patient demand (you are booked with appointments well in advance), but you only see 10 to 15 patients per day, you can quickly generate much more net income. Begin with a plan to shorten your exam routine by delegating more of the data collection to qualified technicians. Analyze how much time is spent on other aspects of the patient visit and change it. If personal chit chat with the patient takes a lot of your time, try to delegate that as well. Think of your assistants as eye care professionals your patients can also bond with. Don't assume that patients love to hear long explanations about their eye problems or that they are super-impressed with all those tests in the phoroptor. Most are very polite to their doctor, but they would really like to get on with their busy lives.
Part of your new plan to increase efficiency and take advantage of your patient demand may include more exam rooms, more pretest rooms and a larger optical. You may need more automated instrumentation. That may also mean a larger office. Go for it. Your patient backlog is worth a lot of money.