I've consulted with many optometrists about bringing on an associate OD and I've had much experience in my own practice as well. The term associate can have various meanings, but in this context it is another word for an OD who is an employee of the practice; not a partner or on a partnership track. There are many factors involved in the successful recruitment, training, and ongoing management of an associate doctor, but it is a valuable strategy that can greatly increase practice profitability. Building an independent optometric practice to the point that an associate OD can be added is a very worthwhile goal.
Once a doctor is in place, seeing patients and drawing a salary, the practice owner should monitor production. The whole point of hiring a doctor is to increase practice profitability. For that to happen, the associate must produce enough additional net revenue in the practice, after deducting cost of goods and all other practice expenses, to more than cover his or her compensation. Read on for how to evaluate this and how to increase it.
<strong>What kind of low production?</strong><br>
When I hear from a practice owner who tells me the associate OD does not produce enough, I need to understand which of the following two problems is occurring:
<li> The associate OD does not generate enough gross revenue.</li>
<li> The associate OD does not generate enough gross revenue per exam.</li>
There is a big difference between these two issues and the remedies are different as well. It is possible that both problems are occurring at the same time.
This problem is most likely due to insufficient patient demand for the new doctor. In my view, the practice bears most of the responsibility to fill the new doctor's appointment schedule. Of course, it is normal for this to take some time. It is not often easy to transfer patients who are used to seeing the senior doctor over to the new one, but there are many strategies that can be implemented to help the process.
The bigger challenge may be that the practice does not have enough patient demand to keep both doctors busy. This should have been considered before the new doctor was hired. It is advisable for the existing doctors in the practice to be booked solid well in advance before seeking an associate. Two weeks advance booking for a full time OD is a good rule of thumb. While hard to achieve, once that advance booking exists, the practice will almost always see an immediate increase in net income when the new doctor joins.
If the associate's low production is due to insufficient patient demand for the whole practice, the practice owner should work harder on marketing projects and also consider joining more vision plans, Medicaid or other vehicles for patient access.
<strong>Low revenue per exam</strong><br>
In some cases, the associate's patient schedule is fairly busy, but the gross revenue per exam is low. It is very important to measure this benchmark on a monthly basis and compare it to the revenue per exam of the senior doctor. Obviously, the popularity of one doctor over the other is no longer a factor in this metric. The senior doctor may be much busier and therefore would have much higher gross revenue, but on a per-exam basis, the two doctors' revenue production should be about the same. We might allow up to a 5% difference to be acceptable due to experience and differences in personality, but in my experience multiple doctors in the same practice are usually extremely close in this metric. The median gross revenue per exam in the United States is about $306.
If the associate is under-performing in this metric, we need to find out why.
<li> Start by reviewing the type of patients each doctor sees. A high concentration of vision plans or Medicaid could explain some differences. There may be fewer eyewear sales in an older Medicare group or in a pediatric group, compared to the 30 to 50 year olds.</li>
<li> Review some of the associate's charts. This is very important and I don't know why more practice owners don't do it. If you read the chief complaint and look at the habitual spectacle Rx or type of contact lens, and then review the exam data, you will be able to tell if you would have prescribed new lenses or not. Then look and see if the associate prescribed and if the patient actually ordered glasses or contacts. If not; why not?</li>
<li> Can you monitor the eyeglass and contact lens Rx retention rate for each doctor? They should be about the same and if they are different, we need to find out what one doctor does to drive patients away.</li>
<li> Were there additional tests that you would have ordered that were omitted? Any other treatment options that might have been offered?</li>
<li> If there is a pattern of under-prescribing and under-recommending, it is best to have a meeting with the associate in a private setting to discuss the differences of philosophy.</li>
<li> Proceed with caution as you question another doctor's professional judgment. You must always remain respectful and realize that you will not agree on exactly how to manage every case. Pick your battles carefully, because you want your associate to like working in your practice. But a senior doctor may be able to serve as a mentor for a new doctor if the discussion is positive rather than a complaint.</li>
<li> It is perfectly fine to educate the associate doctor about the business side of optometry and that he or she plays an important role in that. All I really ask is that all our doctors practice and recommend the very best eye care. I ask that they not focus on what they think the patient can afford; it is up to the patient to tell us that. It is our job to recommend and prescribe the best first, whether that is in medical eye care, eyeglasses, contact lenses or any other service or product.</li>
<strong>What about incentive bonuses?</strong><br>
Incentive payments based on a production goal might work or they might not. It is just not as simple as most people think. It's quite possible that an incentive bonus could cause the practice to pay the associate OD too much. It also might not be effective at helping to achieve the desired goal (low correlation). I've even seen bonus programs help create an undesirable office culture. It is a big topic and I'll cover it in a future tip article.
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.