Insights From Our Editors

Find & Retain a Good Office Manager by Offering a Competitive Salary

April 27, 2016

How much do you pay your office manager? According to Jobson Optical Research’s 2015 ECP Compensation Study, office managers in independent eyecare practitioners’ offices in the Northeast are paid $61,671 on average, while those in the South are paid, on average, $47,797. ECP office managers in the Midwest are paid an average of $52,647, and those in the West are paid an average of $54,807.

Click HERE to purchase Jobson Optical Research’s 2015 ECP Compensation Study.

There are several ways to address how much you pay employees in an eyecare practice. You need to take all of these methods into your calculations for how much you pay staff.

20 Percent of Gross Collections

Start by taking 20 percent of your gross collections. That is the pot of money that you have to buy your non-doctor, non-in-house optical laboratory staff (those are the people that edge or finish lenses). If you have a $1 million gross revenue practice, then you have up to $200,000 to purchase those employees–and that is all the money it costs you to buy those staff members: wages, bonuses, benefits (e.g.: healthcare, vision care, vacation, sick leave, pension contributions, profit sharing), payroll tax, uniforms …everything.

In today’s highly medical world, the 20 percent number may slip up to 21 percent or 22 percent. In specialty practices like vision therapy or low vision, the number may even be a bit higher at 23 percent. In practices with gross revenue under $500,000 per year, and in younger practices, the number may be smaller at 15-18 percent.

Staff Hourly and Annual Salaries by Position Survey

Another way to examine your staff payroll is to compare it to the adjusted Staff Hourly and Annual Salaries by Position survey.

The original chart above was reported in the 2015 edition of Key Metrics, however, the numbers have been adjusted from the original survey numbers in 2009 to 2016 numbers. The above chart excludes benefits, assumes 2,080 hours annually, and assumes a 1.9 percent increase per year from the 2009 numbers. Both surveys and calculations have inherent problems, and calculations of surveys even more, but this chart should get you in the ballpark of reasonable wages.

Compensation by Role

In a previous Reach for Excellence we discussed optician compensation by realizing that the position of optician may be different based on an optician fulfilling different roles within the office. Different roles in the practice may require different compensation. This was teased out in the following chart.

Staffing Levels by Practice Size

Staffing levels vary in practices. In smaller practices, the doctor may do a larger portion of the patient testing where in larger practices staff does more of the patient work-up. (A significant factor often not considered in the smaller practice is that the doctor’s time is 4-5 times more valuable than staff time. When a doctor is doing an activity that could be done by staff, then cost effectiveness is sacrificed).

How much the doctor and the staff do in testing must be balanced with office flow. Overwhelming the optical with patients coming out of the exam room is one of the five deadly sins of practice management that should always be avoided.

The next chart showing Staffing Levels by Practice Size was reported in the 2015 edition of Key Metrics. Review this chart and compare your staffing to what others are doing.

Average Employee Productivity

And we can’t forget to look at average employee productivity. Divide the practice annual gross revenue by the number of full-time equivalent non-doctor, non-in-house optical laboratory staff. At a minimum, that number should be $140,000. If your number is higher, then go with the higher number. When thinking about bringing on a new staff member, the question to ask is: How will this new staff member help the practice achieve an additional $140,000 per year? Will we be able to see more exams per hour? Will an optician be freed up from administrative work to enable additional sales of $140,000, or more, per year? If the answer is yes, then the new hire is justified. If the answer is no, then the quality of life improvement for doctors and staff had better be worth it.

Local Market Wages

Having given you average information for the country, let’s go back to the Fast Fact for this week. The key point of the Fast Fact shows us that different parts of the country have different wages for the same position.

It makes sense that different parts of the country would have different wages for the same position. The cost of living in different parts of the country is different. For example, the cost of living in the Bay Area of San Francisco is significantly higher than the cost of living in rural Ohio. Consider the cost of living in your part of the country when calculating wages.

There is help on the internet for you to use to find out local wages. An internet search for “wages for optician” gave the following helpful web sites:
http://www.payscale.com/research/US/Job=Optician/Hourly_Rate
http://www1.salary.com/Optician-Salaries.html
http://www.bls.gov/oes/current/oes292081.htm

If we take an average of the numbers reported in the Fast Fact, the average wage for an Office Manager is $54,231. That’s $6,000 more than our calculated number in the adjusted Staff Hourly and Annual Salaries by Position survey given above. And using the internet references above, it also shows there is disparity in the numbers from different sources and calculated different ways.

The Price for High Staff Turnover

A significant fact to keep in mind is that there is a high cost to the practice for high staff turnover. Training costs and opportunities lost are among the two highest costs for high staff turnover. If staff is constantly leaving you for more money somewhere else, then it might be time to reevaluate what you are paying.

Conclusions

So, what conclusions can we draw from all of this?
1. It’s best to pay for quality staff to provide the best care for patients.
2. Staff needs to be productive. Your average $/FTE staff member should be at least $140,000.
3. You should not be paying more than 22 percent for your non-doctor, non-in-house lab staff.
4. There is a high cost to the practice of high staff turnover.
5. You need to pay local market wages.

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