Insights From Our Editors

Questions to Determine the Health of Your Practice

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

August 12, 2020

Most practices were strained financially during the shutdown of routine eyecare in the spring. Here are key questions to help you gauge how well primed you are for regaining, and sustaining, profitability.

Questions are important to give insight into what is happening within a practice. These questions are a good place to start evaluating your practice for its strengths and weaknesses.

Let’s start by identifying what the practice looks like with respect to patient population and staffing.

PATIENT POPULATION
What does your patient population look like?

• How many total patients have you seen in your practice per year for the last three years in each of these categories?
o How many Established patients?
o How many New patients?
o How many Reactivated patients (i.e.: established patients that did not return within three years)?

• What is your average % breakdown for each of these categories?
o What % of your patient population is Self-pay?
o What % of your patient population uses Vision coverage to pay?
o What % of your patient population uses Medical coverage to pay?

• You can get more information by answering these questions:
o What are your patient demographics?
Age?
Location?
Places of work?

STAFFING
How many staff members is it taking to handle the patients coming through your practice?
• How many full-time-equivalent doctors?
o What is the average number of clinical hours worked per week?
o What is the average number of administrative hours worked per week?
• How many full-time-equivalent staff members?
o What is the average number of clinical hours worked per week?
o What is the average number of administrative hours worked per week?

GROSS REVENUE
Now, let’s ask how effective is your team is at generating revenue?
• What is the total practice gross revenue collected for each of the past three years? (These numbers are better understood by looking at a three-year trend. In addition to the absolute number for each year, you can see the three-year trend to tell if the practice is growing or declining.)
We’d like to have more information to understand those numbers a little better still, so let’s ask these questions:
• What is the Total Gross revenue collected per year for glasses?
• What is the Total Gross revenue collected per year for contact lenses?
• What is the Total Gross revenue collected per year for the Clinic (e.g.: exams and medical procedures)?

EXPENSES
Now, we need to know what it costs to run each of the three engines that comprise the practice, so the questions to answer are:
• What are the Total Expenses for the entire practice?
o What are the Total Expenses for the glasses portion of the practice?
o What are the Total Expenses for the contact lenses portion of the practice?
o What are the Total Expenses for the clinic portion of the practice?

(To determine the total expenses for each of these three engines, calculate the total costs for each area. The costs would include rent, staffing, cost of goods, maintenance agreements, services agreements – the entire cost of that part of the practice.)

NET
Now that we know what revenue is generated and what the costs are for each part of the practice, the next set of questions to ask are what is the profitability of the entire practice and for each engine?
• What is the Net for the entire practice?
o What is the Net for the glasses portion of the practice?
= Total Gross revenue collected for glasses – Total Expenses for glasses
o What is the Net for the contact lenses portion of the practice?
= Total Gross revenue collected for contact lenses – Total Expenses for contact lenses
o What is the Net for the Clinic portion of the practice
= Total Gross revenue collected for clinic – Total Expenses for the clinic

OVERALL EFFECTIVENESS
One of the best ways to look at the overall effectiveness of your total team is to measure the Capture Rate. As in previous questions, the drill down questions give more insight than just asking the total practice question.
• What is the Capture Rate for glasses?
• What is the Capture Rate for contact lenses?
• What is the Capture Rate for the clinic (i.e.: if you prescribed it, did the patient get it in your practice)?

Now that you know more about your practice, you have the ability to see its strengths and weaknesses. This gives you a starting place to move your practice forward and make it even better.

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