By Adam Cmejla, CFP®
May 18, 2022
One of the most important things a business owner can learn and understand, not only about their business, but about their role in their business, is their revenue producing activities (RPAs).
Here is how to define RPAs, how to identify your own RPAs and then how to decide whether there are activities that offer less of a return on your time and money, which you should delegate.
What Are My RPAs?
For practice owners, this is an easy definition in the scope of clinical care: providing optometric care to your patients as their eyecare provider.
We can also break down other roles in the practice that are needed to provide clinical care to your patients. Whether it’s techs, scribes, opticians, or other team members, it’s easy to determine roles and responsibilities during patient care.
As a practice owner, though, the roles and hats one is asked to wear have more gray areas than that of your clinical responsibilities. Not only does the role you play in your practice change as the maturity of the practice evolves, but it also changes as the size of your practice changes.
In the beginning, it’s natural, dare I say necessary, that the practice owner assume the responsibilities of all things practice management. A young practice often doesn’t have the financial capital to allow for the hiring of a practice manager or chief operating officer. In addition, it allows you to create the systems, process and structure that you desire for your practice. It allows you to feel the pulse of the business, providing attention and resources where needed.
As the practice matures, the easiest decision and path of least resistance that practice owners can make is continuing to assume all of the managerial and operational responsibilities that come with running the practice. Making that decision, however, can also be the most expensive and stressful decision.
What Tasks Do I Do that Generate the Greatest Return on My Time?
Those who know me know that I am fanatical about time management and getting the best return on time that I can get with the hours in my day. Whether this is analyzed through the filter of what’s providing the best return on investment (ROI) through a return on time (ROT) in my businesses, or providing the best ROT by solving for joy in my life, I make every attempt to use each minute and hour of each day in the best way possible. A phrase that has been pivotal in my life of business ownership has been: “With more time I can make more money, but with more money I cannot make more time.”
Recently I was having a conversation with one of our favorite client relationships and our conversation shifted to how she was feeling about her practice, and thus, how she was feeling about life in general. She shared that she felt stressed and burned out by the practice, having to spend an extraordinary amount of time working ON the practice not only when she was physically on site, but also bringing work home with her and jeopardizing quality time with the people in her life whom she cares about most. She was starting to think about selling her practice.
As we drilled down deeper, I realized that much of this workload was due to her having turnover in her team, notably her office manager. While everyone is competing for talent in today’s business climate, she lives in a part of the country that adds another level of competition given the limited talent pool.
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Through our conversations we agreed that finding a rock star office manager would have the biggest single impact in reducing long-term stress and burnout in her practice. It would also remove the immediate temptation of wanting to sell the practice.
We jokingly referred to this additional cost of doing business as “sanity insurance.” It was the price to pay for the right person in the right role to deal with the “messy middle” of daily administrative tasks. While they can certainly be involved in some of the strategic planning and long-term visioning for the practice, a great practice manager serves as an Integrator, as EOS founder Gino Wickman describes in “Rocket Fuel.” According to Wickman, an Integrator provides critical value in a few key high-level ways:
• Running the day-to-day operations of the business.
• Being the steady force with a focus on organizational clarity, ensuring that people are communicating within the organization.
• Being the voice of reason, filtering out all of the ideas brought to the business from all team members to focus on the ones that are going to have a material impact in the business.
As we started working through the budget, we collectively agreed on the following strategy: pay at the upper-end of the spectrum, or even overpay, for the right person to fill the role. She already runs a well-run, highly profitable practice, and while paying at this level would initially cost her more in her business, we both agreed that it was a good investment in both the practice and, more importantly, her personally as it would allow her to have more balance in her life and agency in the practice to work on the high-level strategy of the business.
Can I Afford Not to Do It All Myself?
While practice owners might cringe at the idea of paying at the top of the pay scale, or even overpaying, for a position, we can alleviate this concern with basic math.
Glassdoor pegs the current median salary for an office manager at about $63,000 per year in all-in compensation. Hypothetically, if we go to the higher-end of the spectrum and pay $80,000, this creates a delta of $17,000 annually. If the practice is generating an industry average of $375/comprehensive exam, this means that the practice must “account” for 45 comprehensive exams per year to pay for the delta. This means either (a) allocating revenue from existing exams toward this increase in salary or (b) creating space in the schedule for the provider(s) to see an additional 45 exams.
If the practice owner is working 48 weeks per year (four weeks vacation/out of office), that’s less than one comprehensive exam per week. If your office is averaging more than $375/comprehensive exam, it’s even fewer exams per week.
My point is this: sometimes what seems like a big number isn’t so insurmountable of a challenge if broken down in to quarterly, monthly, weekly or daily goals, and then determining what you as the practice owner need to do to make those goals a reality.
One of the most important analyses that can be done in your practice is to evaluate how much time you are spending working on administrative, non-revenue-producing projects in the practice, and how much of that work can be delegated to someone else in the office. The next decision that needs to be made is what are you going to do with that time that you now have back.
In my example above, the practice owner was spending much more time, than the time it takes to provide one comprehensive exam, on projects that could otherwise have been delegated to a top-talent practice manager. As I wrote in this article, the business of optometry (or any business) comes down to three variables:
1. Revenue per patient
2. Number of patients per day
3. Doctor hours per week
As you’re looking at the way in which you’re spending your time in your practice, be cognizant of the return on time that you’re getting. Paying for the best talent to serve in your practice can be one of the best investments you can make in your business, thus generating a healthy bottom line that can be used prudently to fund other personal and professional goals.
Adam Cmejla, CFP® is a CERTIFIED FINANCIAL PLANNERTM Practitioner and Founder of Integrated Planning & Wealth Management, LLC, an independent financial planning & investment management firm focused on working with optometrists to help them reach their full potential and achieve clarity and confidence in all aspects of life. For a number of free resources, visit https://integratedpwm.com/ebooks/ and check out the “20/20 Money Podcast” to get more tips on making educated and informed financial and business decisions.
