I get it. Most ODs who own an independent practice are so busy seeing patients, managing the day-to-day operations and trying to have a personal life, there is no time left to analyze practice data. While not ideal from a practice management standpoint, I’ll describe three practice metrics that will tell you a lot about your practice.
Gross revenue per OD FTE
Gross revenue has always been the key yardstick of any business, but here are the nuances to make the stat meaningful for optometric practice.
It is typical to express revenues on an annual basis when comparing to national norms.
We only care about collected gross revenues. The total of usual and customary fees entered into your management software system does not mean much because most insurance companies don’t pay that and you must write-off the difference. Find your collected gross revenue by running a software report after insurance adjustments or add up all bank deposits generated by services and product sales.
Gross revenue by itself is a good measure of how a business is doing, but it is hard to compare with other practices that have multiple ODs.
Calculate your OD full time equivalence (FTE) by adding up the average number of hours per week spent by all optometrists seeing patients. Divide the total OD hours by 40 (we consider 40 hours per week to be full time) A single OD practice with the doctor seeing patient four days per week means 32 hours / 40 = .8 FTE. A five doctor practice with each doctor seeing patients two days per week would be 80 doctor hours per week / 40 = 2 FTE.
Divide the gross revenue by the FTE.
The national average for this stat is about $680,000 per OD FTE. Many practices produce over $1 million per OD FTE. If your practice is producing below what you would like, ask yourself if it is growing from year to year. If it is under-producing and not growing much; you need to find a way to attract more patients.
Gross revenue per comprehensive exam
This data point is useful in a solo practice and also if measured for each doctor in a group practice. It removes the factor of patient demand and tells us how much money the practice generates per patient. If the stat is low, it may mean that the doctor is too conservative in prescribing or the fees are low.
Count the number of full eye exams performed in a given time period. You may have to add up a few exam codes from your office software reports. Include routine exams and medical eye exams, but do not include follow-up visits, brief office visits and contact lens checks.
Find the collected gross revenue for the same time period as the point above from all sources (all products and services are included).
Divide the revenue by the total exams.
The national average is about $307 but many practices generate over $500 per exam. Obviously, each exam did not actually result in prescribing all the products that were included in the revenue total. This metric is just an average.
Eyeglass retention rate
With e-commerce and all the other forms of competition, it is very important to keep a pulse on this metric. Measure it every month so you can see small changes early and adapt your product mix and price points.
There are two ways to measure the Rx capture rate:
The easy way
Total number of Rxs sold per month. Count lens pairs; not frames. Do not include outside Rxs and multiple pairs.
Total number of refractive exams per month.
A/B = Rx retention rate as a percentage of all refractions.
The national norm is about 60%.
The accurate way
Total number of Rxs sold per month. Count lens pairs. Do not include outside Rxs and multiple pairs
Total number of Rxs walked out per month. Must be managed carefully. A good way to track it is to have staff print two copies of each Rx to go; give one to the patient and file one for counting purposes.
Add A and B for total Rxs written.
A/C = Rx retention rate as a percentage of Rxs actually written.
The national norm is about 85%.
If your eyeglass retention rate is low, think about how to improve it. The best way to get patients to buy glasses from your office is to make your optical bigger and more beautiful. Also, survey your patients and find out what they want and need.