Tag: Revenue

Breakdown of Primary Care Revenue Versus Specialty Clinics

Practice, Resources, Specialty Practice

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One of the key metrics we track in SIMI Analytics is Revenue Breakdown. What products and services are bringing in the most revenue? We compare this to how much time is spent to offer these products and services on the exams side to evaluate the effectiveness of the time invested.

According to SIMI Analytics, a healthy primary care practice brings in 26% of their revenue from exams, diagnostics contribute 10%, spectacles 50%, contact lenses 12% and miscellaneous (OTC products and optical accessories) 2%.

Detailed Breakdown

We often break this down further to look at how much chair time is being dedicated to services as compared to products. For instance, we always evaluate the revenue generated from contact lens assessments in comparison to how much revenue is being generated from contact lenses (both gross and net dollars). As contact lenses have become a commodity, it has become even more important to the financial health of the practice to ensure that the chair time associated with the care of contact lenses is covered.

A number of practices we work with have successfully introduced Specialty Contact Lenses, Vision Therapy, and Dry Eye Clinics as a means to both meet patient needs and increase revenue. In these practices, the Revenue Breakdown in SIMI Analytics looks a little different.

Here’s how you can expect to generate your revenue:

Impact on Staffing Decisions

Note in particular how primary care practices are much more dependent on optical sales for financial health. A practice offering Vision Therapy generates a much greater percentage of their revenue from the services of Vision Therapy versus selling frames and lenses. From this information, the practice can make more sound business decisions. For instance, if your practice is predominantly offering Vision Therapy as the main means of revenue, our recommendation would be to hire a frame stylist for the optical instead of an optician and concentrate your staff cost resources on hiring skilled and passionate therapists for Vision Therapy.

For practices offering medical contact lenses, such as Ortho-K and Scleral lenses, the differences to note are the increased revenue sources from both Exams and Contact Lenses. In this case, the products are much more profitable and it makes sense to expect more revenue from this source as compared to Eyeglass Revenue. Another metric we like to follow in our Contact Lens clinics is sunglass sales. Our expectation is that the revenue from plano sunglasses should be significantly higher. Again, staff decisions will be impacted by this information. Not only do you want to hire someone who is knowledgeable in contact lens care to assist your patients but you will want that person to also be passionate about sun protection. There is also an implication to your inventory decisions. This practice will carry a large selection of plano sunglasses.

The most interesting change in revenue generation for a Dry Eye clinic, besides the increased Exam revenue, is the increase in sales of OTC products. Drops, vitamins, wipes and make-up all contribute to increased revenue in this type of clinic. Given this, it is our recommendation to hire a dedicated staff member to be your Dry Eye Clinic coordinator. This is the person who will confidently explain all the products and solutions to each patient and follow through with after-care instructions.

Whether you choose to differentiate or remain focused on Primary Care, the key to success is to decide on one and stay focused. Keep track of the time it takes you to generate your income and use that information when making decisions about changing or adding extra staff, services, and products.

 

CHRISTINA FERRARI

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com

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Tie Your Staff Incentive Program to Gross Revenue per Doctor Day

Finance|Wealth, Human Resources, Practice Metrics & Benchmarks, Resources

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Any well-oiled machine works smoothly because all the moving parts work in synchrony with one another. So too does a  successful Optometry practice.

We are often asked what the best way is to motivate staff. Although there is merit to rewarding staff individually based on very focused goals and targets, one of the best ways to motivate for team effort is a group incentive based on total gross revenue.  The basic premise is that if everyone performs well at their assigned tasks, the team will meet their goals.

For simplicity’s sake, a practice can set monthly targets based on a percentage increase over the same month last year. A more strategic approach is to set targets based on revenue per “Doctor Day”.

Calculating Doctor Day Revenue
You can calculate revenue per “Doctor Day” by dividing the number of patients you see in a month by the number of days there is a doctor available for an entire day (7 hours) in a month.

Two doctors seeing patients in one day equals “2 doctor days”. For example, Dr. Opto generated an average of $80,000 each month and was in-office for an average of 20 doctor days each month.  Dr. Opto’s revenue per “Doctor Day” is $4000.  We recommend building in a 10% increase and then using this as your target. So in this example, the target revenue per “Doctor Day” for Dr. Opto would be $4400 per “Doctor Day”.

To get started, set up an excel spreadsheet with gross revenues targets for each doctor day in the office. The next step is to ensure that every member on your team understands how their efforts contribute to the attainment of the “Doctor Day” Revenue Goal.

Setting goals based on Doctor Days makes the incentive program fair, since we know that we need a doctor in the office. If the doctor takes two weeks off in July, then the targets should reflect this: some months like February are shorter with less Doctor Days, and March is a longer month with usually more Doctor Days. The targets need to match.

Fairness in the incentive program will enhance staff buy-in.

Link Behaviours to the Targets

Setting goals will only be effective if staff can see a direct link between their behaviours and the results.

Here are some tangible actions that can be established for each department:

Front desk staff

  • Understand and follow scheduling rules
  • Practice scripts to ensure they are ready to answer the more difficult objections and questions
  • Ask to book in family members that haven’t been seen in a while

Pre-testers

  • Anticipate who will need what testing
  • Check insurance coverage

Gallery staff

  • Make note of if and when the patient last purchased
  • Ask to give current glasses, including sunglasses, a “tune up”
  • Check insurance coverage

Lab Staff

  • Make sure jobs are ordered and received promptly.
  • Ensure jobs are delivered to patients in pristine condition

Doctors

  • Make notes on each patient on what tests and products you are anticipating the patient will need
  • Practice a solid hand-off to staff
  • Make solid, multiple-solutions recommendations from the exam room

Getting staff to contribute to this list and make suggestions to the above will further enhance buy-in to the program.

In the beginning, the owner of the practice should keep track of the results and share them with the team each day. This is a chance to rally the team spirit and encourage enthusiasm for the day ahead.   This is a great opportunity to reflect quickly on things that went well and things that did not go so well in the previous day. Once this routine is well established, many offices are able to successfully pass this role to their office manager.

It is key for staff to make the association between proactively engaging with patients to offer solutions rather than passively serving patients and improving the revenue per Doctor Day.

Lastly, when it comes to motivation, it is important to keep the reward and the positive result as close together as possible. We recommend either rewarding at the end of the month or quarter, but we wouldn’t recommend waiting longer than a quarter.

Sharing a percentage of the gross revenue at the end of the month is a great way to celebrate success!

 

KELLY HRYCUSKO

is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at info@simiinc.com.

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