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With the holiday season well behind us and the new year underway, let's look at
the big picture of your practice and analyze three of the largest management
issues facing eye care practitioners today. Which of these three problems is
challenging your practice... or maybe all of them? Admittedly, these factors are
complex and there is no easy fix, but I'll give you some thoughts on each one
that might get you on track
Gross and Net Income
The age-old question often revolves around which is more important, gross or
net, with many people concluding that the net is all that matters. I don't really
think there is a good answer to that question because they're both very
important. Sure the net is what really matters because that's what the owner
gets to keep, but one simply can't have a big net without a big gross.
Many cases of poor net income or expense categories that are out of line can be
remedied by increasing the gross. Remember that most expenses in your
practice are considered fixed costs; only your lab bill (optical and contact lens) is
considered a truly variable cost. With most expenses fixed, any increase in
gross revenue (after lab costs) pretty much falls straight to your bottom line! And
if an expense category seems too large as a percentage of gross, it will fall in line
if the gross goes up.
Benchmarks for gross income in optometry could be viewed from the standpoint
of annual income per full time practicing OD. In very successful practices, gross
revenue can exceed $1 million per doctor, but most would consider $600,000
and over as excellent gross earnings for one OD. We often look at practice net
income as a percentage of gross, with 30 to 35% considered as the standard.
The first thing to consider if you need to shore up revenue is your fees. Most eye
care practitioners (ECPs) charge too little for their services and products. The
current trend of looking to coding and billing of medical insurance plans as the
path to higher fees causes many ECPs to miss the point. Billing insurance plans
that pay decent fees is a nice service to offer patients, but many doctors take the
approach that only exams for medical eye problems are worth those fees. In
truth, all your exams are worth those higher fees, regardless of the diagnosis.
Patients will happily pay those higher fees if you offer excellent services. Of
course, if the patient has a vision plan that you accept then the fee may be
capped, but that's a business decision you made and must live with as long as
you choose to participate in the plan. It may be necessary to drop some vision
plans if they hold the practice back from strong earnings.
I do not agree with the various methods in common use today of discounting
exam fees for private pay patients, or differentiating between well vision exams
and medical exams. I would make the fee the same no matter who is getting
billed and no matter what the diagnosis.
Lack of patient demand is the biggest problem facing ECPs today, in my opinion.
This is closely tied to insufficient income, but I see it as a separate issue since
there are some practices that have plenty of patient volume but insufficient
income. We should judge volume by looking at the appointment schedule. It
should be full every day with appointments at a fairly rapid pace of about 25
exams of various types. Ideally, the schedule is booked a week in advance or
Building patient volume is one of the most difficult achievements for most
practices. It must be done over a period of time; there are no quick fixes. Since
most practices are built on word of mouth referrals, I believe the key to patient
volume is customer service and developing deep patient loyalty. Look within
your office policies and your attitude to see if there are ways to improve your
philosophy. Loyalty is built by satisfying patients' wants and needs, not the
An additional factor in building volume is to invest in your office facility,
instrumentation and frame inventory. You need competitive advantages to
attract people and fortunately some of those advantages can be bought.
This topic always tops the list of practice management challenges for ECPs.
Again, I can't offer an easy answer but I believe practice owners should embrace
the human resource management and try to get better at it rather than trying to
minimize the effort by keeping a small staff. A practice must have an excellent
and large staff to be truly successful. As the practice grows, the owner should
make more time for staff management duties in his or her schedule and also
appoint an office manager. Without leadership in this area, practice growth will
be stifled and will stagnate. If this administrative time decreases clinical
availability too much, an associate doctor can be hired.
The key to a happy staff with good attitudes is in the office culture. The owner
must care about the needs of employees and foster a workplace based on
respect while having firm policies that are administered fairly. A positive culture
is not developed overnight, but it starts with the practice owners and the example
I find most optometric practices are understaffed and many good things happen
when an additional employee is added.
Customer service improves because people are available to help.
Office and clinical efficiency increases with more assistants, so
productivity goes up.
Staff morale is enhanced because some of the stress is taken off
Marginal employees improve their behavior because they realize the
practice will survive without them.
Practice continuity and security is improved as more people learn to do
tasks that formerly depended on one person.
The practice is perceived as in a growth mode by employees and patients.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week
Dr. Gailmard's new book, Practice Management in Optometry: A Blueprint for Success Based on the Optometric Management Tip of the Week, is now available on Amazon.