Now that we’re winding down 2019, practices and businesses are beginning to look ahead to 2020 and setting goals for growth and performance. How do you set your goals? Do you intuit a percentage to shoot for? Set a goal based on how much you want to earn? Do you just try your best and let the chips fall where they may?
I recommend a ‘master’ goal measured by gross collected revenue, because everyone in the office has an impact on that number. Most of your team have little or no impact on costs—and therefore profits—so focus on revenues. Set sub-goals based on the following formula:
Collected Gross Revenues = Patients Seen x Revenue Per Patient x Collections %
Growing your practice is about growing your patient base and increasing the amount of care your patients consume. Any business that isn’t growing its customer (patient) base is fundamentally unhealthy. Businesses are always looking to increase their revenue per customer encounter, because getting customers (patients!) in the door is hard. Make the most of each encounter. And, of course, getting paid in a managed care environment is an art unto itself.
Let’s look at some sub-goals you might consider, the concrete steps to hitting a revenue growth goal.
Schedule fill rate. If an OD is in the office, the schedule needs to be full. Aim for at least 90% of your exam slots being full every day. After all, it only takes 14 comprehensive exams, working 240 days per year (that’s 4 weeks of vacation!) at $300 per comprehensive exam to be a $1 million producer.
Online reviews. If you’re doing a great job, make sure the world knows it! Aim for 1-2 new reviews per month and be better than 4 stars. Debrief all reviews with your team: good, bad, or indifferent.
New Patients. Given that all practices will have some churn in patients, regularly attracting new patients is key to your long-term success. One rule of thumb target is to aim for about 30% of exams being new patients. If your new patient ratio is over 50% and you’re not a new practice or in a rapid growth mode, something may be broken in your recall or customer service (patients don’t want to come back).
Revenue per Exam
Measure it. National norms for collected gross revenue per comprehensive exam are somewhere between $310 and $375, depending on your source. Just remember, revenue per exam is the OUTPUT for how much care your practice prescribes, that your patients in turn consume.
Don’t make it just about getting patients to spend more money. Prescribe everything that will benefit patients; that’s what drives revenue per exam.
Eyewear Capture Rate. Historically, private optometry practices have averaged about 60% for their eyewear capture rates, but we are seeing capture rates erode in recent years due to online eyeglass retailers and nationally branded, low-cost alternatives. Measure your capture rate and compete to keep your patients’ prescriptions in your office.
Add-on services. No benchmarks here, but why not pick one new service or product line you’re going to add to your practice in 2020? Not only will it open up a new revenue stream, but it gives your team an excuse to recall your patients.
I’ll admit that this isn’t my area of expertise. But a few things to look at are:
Aging report targets.
Minimizing how much you bill your patients for after the visit.
Set a regular cadence of self-auditing your EOBs. Pull 5 per month to ensure claims are being managed appropriately.
Map the Path
For many staff (and ODs, for that matter), a percentage revenue goal is too abstract to really latch onto and work towards. Use sub-goals based on patient growth, revenue per exam growth, and improved revenue cycle management to map the concrete steps it will take to grow your practice in 2020.
My best wishes for your continued success.
Nathan Hayes is the Practice Finance Consultant for IDOC. He is a 10-year veteran of the eyecare industry, working at HMI Buying Group and Red Tray, Prima Eye Group from its inception and now IDOC. In his current role, Nathan helps OD practice owners manage their overhead, grow practice revenues and profits, and maximize their personal income, free time, and professional satisfaction. For questions or comments about this article, please contact firstname.lastname@example.org.