Practice data can provide crucial information in many areas of practice management. Statistics can help you make decisions that will improve your practice. Here are some of my favorite metrics to analyze. I'll include a description of each item along with ideas on how to collect it and what it means.
Collected gross revenue. This statistic is the easiest to track and it is very clean and not subject to variables. It is the total of all sales made in the practice over some known period of time. I watch it daily, monthly and yearly. This data point is only useful if we look at the money that was actually collected by the practice after insurance adjustments (write-offs). This could also be described as that money which is deposited into the practice bank account. That is the true gross. This is important because insurance write-offs have become very large. Your practice management system software (PMS) should be able to produce this number for you in a daily, monthly or yearly production report. This number describes the ability for your practice to generate income and it is the basic yardstick for how the practice is doing. It is useful to compare the current collected gross revenue to the same period last year to show your own growth. The average optometric practice with one full time OD generates about $650,000 per year.
Gross revenue per exam. This is a very useful metric that can be determined for the whole practice and per doctor. It is found by taking the collected gross revenue for a month (or a year) and dividing by the number of comprehensive exams performed. Both of these items are on the PMS production report Comprehensive exams are chosen because they are a convenient unit of service. This stat is useful because it removes the variable of how many patients are seen to produce revenue and instead asks how much revenue is generated by each patient. So a very busy senior doctor can compare her production with a new associate on a per patient basis. The national average for this stat is about $310, but many practices generate at or above $500 per exam.
Gross revenue per OD FTE. It is useful to look at gross revenue per doctor in the practice. To standardize how many hours a person may work, we use full-time equivalent (FTE). This simply uses the standard definition of full time as 40 hours per week. A practice that has one doctor who works 30 hours per week and another who works 20 hours has an FTE of 1.25 optometrists. The mean production for 1 FTE optometrist was stated above at $650,000 per year, but many single ODs can produce $1 million or more per year.
Gross revenue per staff FTE. If you calculate the number of FTE staff members you have (total number of staff hours worked per week divided by 40), you can divide your collected gross revenue by that FTE number and get this metric. Experts vary somewhat on what this number should be, but I like to use 1 FTE staff per $135,000 as the desirable rule of thumb. If your gross per staff FTE is more than that, you may be understaffed and if your gross is less than that, you could be overstaffed. Please realize this is a very rough guideline and does not take the place of a careful evaluation of staffing in action. Also realize that the practice can suffer if it is over or understaffed. Producing a very high gross per staff can cause stress and poor customer service.
Eyeglass Rx retention rate. This metric can help with many decisions, such as pricing of optical products. I covered it in full in Tip #590.
Practice P&L. The profit and loss (P&L) statement or income statement is a report that is generated from your financial management software (QuickBooks or similar) and it may often be generated as a service by an accounting firm. It covers all income to the practice and all expenses over a period of time. This set of data is large enough that I will cover it in next week's tip article.
Special metrics. There are many other very interesting statistics you can gather for your practice if you look at the reports your PMS can generate. You may have to do a little math, but here are a few examples:
Retinal photo screening acceptance rate. Divide number of screening photos by the total number of exams to get a percentage.
Multiple pair eyeglass purchase rate. You may have to track it manually.
Antireflective lens purchase rate. Divide total number or AR sales by total pairs of lenses sold.
No show rate. Many PMS can track this if you click on each appointment that is checked in or not.
Appointment fill rate. The total number appointments seen divided by the total number of appointment slots available.