By Margery Weinstein
Review of Optometric Business
Dec. 21, 2022
When a practice owner looks for ways to improve the patient experience and profitability, they need reliable reporting and benchmarks to gauge how they are doing. To answer that need, IDOC has launched a new and exclusive service feature for IDOC Books & Benchmarks: benchmarking charts on practice metrics designed to help ODs understand their business performance versus other independent practices.
Here is why this tool changes the game on how you look at growing your practice, including how one OD is using it to lower COGs in her practice, among the other practice goals she plans to use the benchmark reports to help her achieve.
An Already Helpful Service Kicks It Up a Notch
IDOC Books and Benchmarks had already provided a great service in relieving practice owners of the need to manage their bookkeeping and payroll themselves. Now, they have a tool for facilitating the needed improvements revealed by that bookkeeping. “To date, we’ve been providing professional bookkeeping with a unique chart of accounts tailored to independent optometry. Even with accurate and meaningful financial statements, owners still want to know, ‘How do I compare to other practices?’” IDOC Financial Consultant Nathan Hayes says of the addition of the benchmarking reports to IDOC’s Books & Benchmarks service. “That’s where the benchmark reports come in. They allow owners to easily visualize how they compare to other private practices across the country from an overhead, profitability and cash flow perspective.”
What Makes the New Benchmarking Reports Unique?
1. Easy to Understand: We show practice results on histograms, instead of percentiles. By showing the normal (or skewed) distribution of results, it’s easier for practices to put their own metrics in context. If a benchmark is tightly distributed, being in a high or low percentile isn’t as big of a deal.
2. True View on Growth Rate: We report benchmarks on a trailing 12-month basis. This smooths for seasonality and month-to-month volatility. It also gives a truer view of growth rate. Your last month being higher or lower than the prior year says something, but if your trailing 12-month revenues are up over the prior month’s result, you KNOW you’re growing.
3. Cash flow & Cash Management: We focus on cash flow and cash management, not just profitability. With all we’ve been through the past several years, it’s important for owners to have visibility to the free cash flow from their practices and have perspective on the right amount of cash to leave in the practice. Too little cash causes stress when big bills or payroll comes due. On the other hand, excessive cash reserves are just losing value in today’s high-inflation.
—IDOC Financial Consultant Nathan Hayes
Know When to Cut & When to Spend
The most common use of the new reports will be for practices to see that their overhead and profitability is within norms, and that they can stop worrying about cost-cutting and instead focus on growth strategies and investments, says Hayes. “For others, the reports will show where their expenses are outside the norms, so they can focus their attention on addressing the biggest opportunities for improvement. Our focus on cash management will help owners know how much cash to keep in the practice,” he notes. “We hope it provides a permission structure to take distributions for needed expenses more regularly. Our median practice is sitting on twice as much cash as we would recommend.”
A practice owner may not realize that their expenses and spending are not unusual, but the norm. “Most owners worry that their expenses are out of line, even though most practices look very similar, regardless of size,” says Hayes.
Implementing a Game-Changer
For Michel Maiers, OD, of Youngwood Eye Care in Pennsylvania, Books & Benchmarks has given her back time to focus on patient care and practice building. She says that the new benchmark reports, which she checks up to a few times per week, will help her better set goals like lowering her cost of goods sold (COGS).
” I started using the service at the beginning of October, and I have so much more time now to focus on other aspects of my practice and life. I love how I pay the bills and IDOC categorizes and reconciles my check book, it’s been a game changer,” says Dr. Maiers. “I had a rough estimate of my COGS percentage before and my payroll percentage, but nothing exact, so it’s really helped me see where my office needs work on cutting costs and what areas I could afford to spend more to make the practice even more successful.”
Break Through the Isolation of Private Practice Management
It’s easy to feel on your own when in private practice. The new benchmarking reports help put your own experiences in practice into the context of what other private practices are experiencing. “I sometimes feel in private practice I am on an island all by myself and you think you’re doing things the best you can. Knowing numbers from other practices gives me confidence that I am on the right track,” says Dr. Maiers.
In the effort to reduce COGS, the context provided by the benchmarking reports is especially helpful. “My favorite metric to track, if I had to pick one, is COGS,” Dr. Maiers shares. “It is unbelievable what we spend, but when it’s laid out in front of you, it’s so much easier to interpret and make changes and try to cut costs to save the practice money.”
Gaining the Peace of Mind of Knowing Exactly Where You Stand
It’s easier to relax when you know precisely what your metrics are at any given point, and don’t have to guess. Not having to guess about your key metrics means you also don’t have to guess about what you should do to stay profitable and grow. The bookkeeping help from IDOC Books & Benchmarks, combined with the new benchmarking reports, is the perfect solution for having a meticulous grasp of practice metrics while not letting management of practice finances overtake your life.
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“I used to spend the first week of every month on my two practice management days just doing the books and balancing, or trying to balance, my check book and putting in what wasn’t inputted in our daily report, but now I have a ton more time. I can access my QuickBooks online at any time, and I love that,” says Dr. Maiers. “I feel like IDOC Books and Benchmarks has made me a happier practice owner because I don’t have to stress out for hours on end, its all done for me”
IDOC Books & Benchmarks is available to all independent optometry practices for a fee, with IDOC members receiving preferred pricing. You can learn more about IDOC’s financial management solutions at IDOC.net/finance or by scheduling a call with our Practice Development Team.
Margery Weinstein is editor-in-chief of Review of Optometric Business. You can contact her at: email@example.com