By Margery Weinstein
Editor-in-Chief, Review of Optometric Business
The pandemic significantly impacted the finances and growth trajectory of optometric practices. Forced to shut down all but emergency eyecare for two months, practice owners now must rebuild their finances. Consider tracking your key practice metrics to help optimize and grow your practice.
Data from the report was generated from over 500 independent practices participating with the ABB Analyze, powered by Glimpse dashboard service. Rather than self-reported estimates, data was gathered directly from billing codes within practice management information systems to offer true comparative benchmarks. All revenue categories represent gross billing figures per practice, prior to managed vision care (MVC) deductions. Other points to be noted about the data collected in the report:
- Gross Practice Revenue is revenue billed prior to managed care deductions (i.e: dollars billed, not dollars collected).
- The average number of doctors per location is 2.57.
- The average number of patients per doctor is 1,723.
- The Total Number of Patients is all patients not just patients that had a comprehensive exam.
- Revenue per Patient includes all patients.
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The key numbers shared in the report will give you guidance on the levels of profitability that are the norm for the majority of OD practices. This information may be helpful in creating a plan for your practice to help recover and grow.
To put these numbers into context, ROB spoke with Eric M. White, OD, of San Diego, Calif., about how he tracks the metrics provided in this report. And at the end of the article, we offer an action plan for optimizing key performance indicators from ROB Professional Editors, Mark Wright, OD, FCOVD, and Carole Burns, OD, FCOVD.
How Much Revenue Should I Be Generating & How Many Patients Should I Be Serving?
GROSS PRACTICE REVENUE
The total gross revenue per practice in 2019 averaged just over $2.1 million. This resulted in more than a 5 percent increase over both 2018 and 2017. The first half of the year was notably stronger than previous years and the highest performing quarter shifted from Q3 to Q2 for the first time in three years.
NUMBER OF PATIENTS SERVED
In 2019 the total number of patients served averaged 4,428 over the 12-month period. This was a 6 percent increase over 2018 and similar to numbers seen in 2017. Patient volume was fairly consistent throughout the year with slightly stronger numbers in Q1 and Q2.
AVERAGE REVENUE PER PATIENT
The average revenue per patient in 2019 was $484. Showing a 5 percent lift when compared to 2017, the average revenue per patient in 2019 remained stable when compared to 2018.
There are four key metrics Dr. White tracks in his San Diego practice:
1. Schedule, are we booked and what is the no-show rate?
2. Gross revenue a day as compared to last year.
3. Capture rate for glasses and annual supply of contact lenses.
4. Cash flow of the practice daily, weekly, monthly and annually.
What Should My Revenue Mix Be?
In 2019, the revenue mix continued to be dominated by product sales — which accounted for 54 percent of gross revenue. Eyewear continued to lead the mix at 37 percent, but was down from 42 percent in 2018.
Eye exams and contact lenses followed second and third place — with little change in the percentage mix over the previous years. Medical revenue increased from 12 percent in previous years to 14 percent.
COMPREHENSIVE EYE EXAMS
Contributing to the increase of gross revenue in 2019, earnings from eye exams were 20 percent higher than those in 2018 and 8 percent higher than 2017. This is likely due to an increase in the number of patients and eye exams performed as well as an increase in the average revenue per exam. Exam revenue per quarter was fairly consistent over 2019 and accounted for 21 percent of gross income.
In 2019 the number of patients receiving medical screenings/exams along with clinical treatments/procedures increased from 15 percent to 19 percent of the total patient base. The increase in volume resulted in a 28 percent increase of medical revenue over 2018 and was 21 percent higher than 2017. For the past three years, Q3 has been the strongest performing quarter.
OPTICAL DISPENSARY EYEWEAR SALES
Total eyewear revenue improved 5 percent over 2018, but still fell short of numbers seen in 2017. The total contribution of eyewear revenue to the gross revenue of practices continues to decline from 43 percent in 2017, to 40 percent in 2018, to 37 percent in 2019.
OPTICAL DISPENSARY CONTACT LENS SALES
Contact lens revenue was strong in 2019. Sales were 15 percent higher than 2018 and 11 percent higher than 2017. This is likely due to the increase in patient volume and an increase in capture rate.
This metric includes refraction test fees plus all product sales associated with patients who received a refraction. Similar to eye exams, 65 percent of patients received a refraction yet this group brought 90 percent of the gross revenue to the practice, totaling over $1.9 million in 2019. With a capture rate at only 50 percent, this reinforces how important it is for eyecare professionals to monitor and improve conversion in the dispensary.
Dr. White says carefully tracking his numbers is a key to helping his practice recover financially from the coronavirus shutdown of the spring. There are two metrics, in particular, that he is zeroing in on: “The daily collected for money in the bank, but even more important is the capture rate, so I can see how the health of the practice is going. A real positive is our schedule has been booked solid since we reopened, and we are booked for several weeks out.”
Industry data shows that health/vision plans and government programs heavily impact revenue, with nearly one-third of billings being paid by patients directly. The greatest opportunity to influence revenue is to demonstrate how convenient payment solutions such as the CareCredit credit card can bridge the gap between insurance and what patients truly need and want.
From clinical treatments such as dry eye, CRT and vision therapy to premium eyewear and multiple pairs to annual supplies of daily disposable contacts, promotional financing can help patients move forward immediately with the care and products that will enhance their vision health and lifestyle.
Dr. White notes the important role CareCredit has played in his practice over the years, and how giving patients a financing option enables him to help increase acceptance of recommended care and build revenues: “When a patient wants a second pair of glasses or glasses and contacts, or even wants refractive surgery, CareCredit is a wonderful option to be able to offer a financing option to do this. When a patient applies for the CareCredit credit card, they receive an instant credit decision. CareCredit has been a great addition to the office.”
With patient financing as an option, you have a game-changing tool to help patients get the essential products and services you have prescribed–and to help your practice fully recover from the pandemic.
Identify & Optimize KPIs
This content is subject to change without notice and offered for informational use only. You are urged to consult with your individual business, financial, legal, tax and/or other advisers with respect to any information presented. Synchrony and any of its affiliates, including CareCredit, (collectively, “Synchrony”) make no representations or warranties regarding this content and accept no liability for any loss or harm arising from the use of the information provided. Your receipt of this material constitutes your acceptance of these terms and conditions.