By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD
Dec. 14, 2022
Launching and growing an independent practice is highly challenging. Here is what we have learned from our decades as practice owners, and experience as optometry practice management consultants, about creating a practice that delivers a high level of care while growing profitability.
Looking back over all the practices we’ve evaluated over the years, here are the top five most important lessons we’ve learned.
1. Make Sure Each Team Member Knows & Effectively Manages What they Produce.
In most practices, when we asked individual team members, “What do you produce for this practice,” the most common answer was a description of what they did – not a description of what they produced. This central misunderstanding leads to a team member who works hard, but works ineffectively.
The easiest example is the person who does recall (getting established patients to return for care).
WHAT DO THEY DO? What this person does is manage a recall system which communicates with established patients to get them to return for care.
WHAT DO THEY PRODUCE? What this person produces is patients in the chair. Note: Their product is not a scheduled patient; their product is a patient who keeps the appointment and is in the office. A scheduled patient is an imaginary patient until they show up in the office for care.
An effective practice is one in which each individual team member knows exactly what they produce and manages that product most effectively and efficiently.
2. An Effective Practice is a Collection of Well-Designed Systems.
Most practices lack systems design thinking. Take an office meeting to track each step an established patient takes from contact by your recall person to the end of the office visit. Identify each time the patient stops along that path and what you want to occur at that step. Create a system for each of the stopping places so that you ensure that what you want to happen happens.
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Do this same process for a new patient.
Now repeat this process for glasses and contact lenses, as well as any specialty care you deliver in your practice.
The next time a problem occurs in your office, don’t just fix the problem. Go back and find out where the system broke down and fix that. If you don’t fix this step, then you are doomed to repeat having to fix the initial problem over and over.
3. Manage the Practice by the Numbers.
Too many practices manage the practice by feelings. Everything feels good, so the practice must be doing well. This is a very subjective way to run the practice. A better way is to manage by the numbers. From a business perspective, one of the best ways to think about your practice is as an engine that produces a net.
A simple way to think about it is: money comes into the practice, money goes out when you pay bills, and the money left over is the net. How good is your practice at producing a net? If your practice has 30 percent of the gross revenue collected as your net, then you are an average practice. If your practice net is 20 percent, then you are below average. If your practice net is 40 percent, then you are above average. Seventeen percent of the practices we’ve initially evaluated have a practice net that is 45 percent or higher. Is the net in your practice accidental or intentional? Where are you?
A caution here is helpful. From an executive perspective, don’t just measure things in a practice because you can; only measure those things that are helping you make executive decisions.
A key point is that every team member should be measuring what they produce so that they can be continually working on being more effective and efficient. This helps you as an executive determine how effective each team member is at managing their job. This helps you when participating in employee evaluation meetings.
An easy solution to this is to purchase one of the business dashboard programs, such as ABB Analyze Powered by Glimpse or EDGEPro. The value to this is that you get your own practice numbers, plus you get them compared to other practices.
4. Manage Third-Party Relationships.
Seventy percent of the gross revenue collected in the average practice comes from third parties. Since this is such a high number, it should occupy a large part of your thinking within a practice. Too many practices just give up and complain about third parties.
Rather than accept what is, how about taking a different approach? How about looking at third parties from the perspective of, here are companies that bring us patients? What we do with them is our issue. What systems can be put in place to maximize the revenue that is collected from them?
Here’s a thought: Have you explored how to maximize your reimbursement with VSP by utilizing Coordination of Benefits?
Here’s another thought: How many times do you recommend glasses to patients with major medical conditions? Here are a couple of examples:
· Patients experiencing glare and flare from medical conditions.
· Patients with macular degeneration or with family members with macular degeneration.
Make a list of medical conditions where glasses would help in the total care of those patients.
5. Create the Culture You Want in Your Practice.
Here are a couple facts that helped us understand the importance of this concept:
· You spend more time at work than you do at home in waking hours.
· Whatever is going on at the office is going on in your home (e.g.: money problems, problems communicating with each other, etc.) and whatever is going on in your home is going on in the office.
The concept to understand is that you create the environment that lives in your practice. Just like we talked about with practice net, is it accidental or is it intentional?
An important fact to know is that relationships are key. If team members know that you care about them, they will usually stick with you through tough times.
A caution here is that team members cannot view that you have favorites.