Business executives today are increasingly looking to data to manage their enterprises, but most optometrists don’t gather much data or analyze practice metrics. Looking ahead to 2016, let’s change that and make data a bigger part of your management decisions.
Why look at data?
You should look at data because it tells you how you are doing and if things are changing. From a very practical standpoint, some doctors may think so what; what am I going to do about it anyway? If that describes you, your first step to a more successful practice is to stop thinking that you have no control over it. By analyzing data, you can easily see what parts of your practice are doing well and what aspects are underperforming. From there, you can try new strategies and procedures (see more below). As you implement new things, the data will tell you if they are working and should be continued, modified or dropped.
How to get data
One reason ODs don’t use data in practice management all that much is because it can be hard to gather. Some office management software programs make reporting too complex or the system was not set up properly in the first place (although the programs are getting better). But it really is up to the doctor/practice owner to spend some time exploring the report module built into the software. Run some sample reports with various parameters and see what you get. Makes notes when you figure out what you want so you or a manager can generate the report with ease in the future.
What would you like to know? Ask yourself that and figure out how to find it in your reports. You may have to add up a few items manually and do some basic math. Here are some ideas:
Number of exams performed per month
Number of screening retinal photos performed per month
Numbers of glasses and boxes of contacts sold
Gross collected revenue for the whole practice year to date
Revenue compared with same period last year
Revenue per doctor
Revenue per staff FTE
Revenue per office location
Revenue generated in optical products only
Revenue collected from vision plans
Number of patients with vision plans
Eyeglass retention rate
The other source for your data is your practice bank account ledger. Essentially this is your check register, even though payments today are typically made by auto-debit or credit card. Most practices use QuickBooks, Quicken or other accounting software to keep track of all this. When managed properly, this register is the basis for your profit and loss (P&L) statement and you can run it anytime you wish. It is an accurate record of all the money your practice took in and paid out in any given time period. If you code each payment with a category, you can see what you spent on cost of goods, rent, payroll or other items. When you express the payment as a percentage of revenue, you can compare your practice with a colleague or against national norms.
Third party software solutions
Several excellent companies exist in our industry to help you collect and analyze your data. These may be obtained on a monthly subscription basis or as part of membership in a doctors’ alliance group. These programs generally have access to your office management software and pull the data out in a more user friendly format. They do behind-the-scenes calculations of that data and present it to the practice owner on demand, often in a dashboard format or with charts and graphs.
Daily, monthly, quarterly, annually
You can decide how often you should run various reports. When you look at specific reports frequently, you will begin to know what is normal for your practice, and it is very exciting to see stronger than normal performance. The data will inspire you to enjoy the business side of your practice and to work on it proactively.
My staff sends me the daily production report at the end of every day. I like to see the revenue generated, insurance adjustments and the bank deposit. But one day is not enough time to determine trends. Monthly or quarterly is better for revenue per exam or Rx retention rate because the n value is larger. P&L statements can be run quarterly, but the annual one is really important because it includes payments that are annual and it evens out inventory purchases. Compare revenue and expenses for the current year with the previous year. How much did your collected practice revenue increase as a percentage?
What to do about it
Once you have data, the strategy for improving it is a management decision. There are many things you can do and there is not just one right way. Read practice management articles, hire a consultant, talk to your CPA, talk to your staff, talk to colleagues or chat on professional forums. Try whatever feels best for your practice, then analyze your data to see if it’s working.