1. Track the numbers
You may have heard the phrase “If you cannot measure it, you cannot improve it.” Fortunately, there are many things we can measure in an eye care business. Tracking the numbers allows you to set goals for improvement based on historic data and also compare your practice to industry norms. Key metrics to track include:
- Gross revenue per comprehensive exam
The median gross revenue per comprehensive exam is $306. This number is fairly consistent across all practice sizes. But the top 10 percent of practices average over $500 per exam. After tracking this for a few months, you’ll have a better idea how you compare with your peers. This number reveals a lot about a practice’s patient education process, product capture rates and effectiveness of your product mix and pricing.
- Glasses capture rate
What percentage of your patients are walking out without making a purchase? Granted, not every patient is a candidate for new eye wear, but the average capture rate for glasses is around 60 percent. If you isolate patients who were given a prescription for new glasses, the capture rate should be closer to 80 percent. How do you compare?
- Multiple pair sales
How effective are you at selling multiple pairs? The industry average for second pair sales is around 5 percent, but the top practices are closer to 20 percent. One of the main obstacles to multiple pair sales is that doctor and staff often fail to recommend or even discuss additional eye wear option, such as prescription sunwear or computer glasses. In many cases, doctors and staff are passive in this area, assuming the patient cannot afford more than one pair. An alternative approach is to recommend the best eye care options and let the patient decide what they can afford.
2. Manage your finances
The profit and loss statement, also called an income statement, is a summary of the income and expenses that occur in your practice. P&L statements are a useful way to measure the growth of your practice and be sure that your expenses are in line. Key categories that are tracked are gross revenue, cost of goods sold, staff expense, occupancy cost, marketing, equipment, general office overhead and practice net. Your take-home pay is directly impacted by your ability to effectively manage these categories.
3. Make marketing work for you
Many ODs ask what marketing strategies they should adopt for their practice. Up until very recently, most marketing campaigns were based on interrupting people with ads. This model is not dead, but it is broken. It’s difficult to stand out among all the noise. More importantly, technology has leveled the playing field for small businesses. Leveraging web tools like social media, email and online video allows optometric practices to reach the right people with the right message in a cost-effective manner. Focus your marketing strategies on educating, entertaining and connecting with people in your community who matter to the success of your practice.
4. Adapt to change
Change is inevitable in today’s competitive marketplace. Eye care is no exception. Managed care, discount retailers and the internet have become major forces shaping the future of eye care. A willingness to adapt to trend shifts and striving to remain ahead of your competition are serious competitive advantages for any business owner. Invest in your practice, pursue innovation and don’t be afraid to stray from the way things have “always been done.”
5. Become the CEO of your business
As an optometrist business owner, how much time do you spend working on your business as opposed to in it? In the early stages of owning an optometric practice, you will likely wear many hats–doctor, technician, optician, receptionist. As the practice grows, so does the level of complexity. Oftentimes, the excitement of growth is replaced by a sense of burden. At some point, it’s time to move away from the day-to-day tasks of running a business and assume the role of CEO. A business without a CEO tends to suffer from unfocused decisions, lack of direction and stifled growth.
Steve Vargo, OD ’98 pursued his passion for practice management by earning his MBA from the University of Phoenix In 2008. A published author and speaker with 15 years of clinical experience, he now serves as vice president of optometric consulting for Prima Eye Group in Atlanta.