Check Your Competition, but the Best Benchmarks to Beat Are Your Own

by | Jun 19, 2023 | Business Management, Metrics

You want to be competitive and build a competitive business. But how do you determine what “being competitive” really means? Does it mean you’re offering lower prices, better customer service, or a wider selection of frames than the practice down the street? Assessing your performance compared to others is challenging. Every practice is unique, with different factors like staff, patient base, and insurance plans making it hard to determine your competitiveness. In my opinion, the best statistics to beat are your own. Improving your status quo opens up the best avenue to make your business stronger – and more competitive.

Benchmarking Against Other Practices

If your business isn’t the same size as the next guy’s, you really can’t compare Key Performance Indicators (KPIs) like the number of exams, number of frames sold, or total revenue. However, there is a benchmark that can provide valuable insights: Revenue per Exam (RPE). By understanding this metric and focusing on specific areas within your clinic and optical sections, you can uncover opportunities for improvement. Let’s dive into how you can use benchmarks to enhance your optometry practice.

When it comes to evaluating your practice’s profitability, Revenue per Exam (RPE) is a crucial benchmark. Many experts consider this to be the absolute measure of a practice’s health and viability. It allows you to assess the expected revenue generated from each refractive exam consistently. Anything that can be measured “by exam” immediately gives you an apples-to-apples comparison with any other practice. There may be more doctors or locations, but those “by exam” statistics mean you’re measuring the outcome from each patient, and that’s useful information.

When you’re comparing your KPIs with other practices, it’s important to consider your region’s specific circumstances, as performance can vary based on the local demographics. Don’t just check the national standards, make sure you review your own region as well. (For EDGEPro users, you’ll want to review your practice performance using our EDGERankings – see the tutorial section at the end of this article.)

Understanding your RPE

To turn your RPE into meaningful information that you can take action on, you’ll need to break it down into the two businesses in your practice – your clinic and your optical. The clinic encompasses exams, services, and contact lens sales, while the optical section focuses on eyeglass sales, including frames and lenses. Again, we just keep looking at these measurements “by exam.” If you find your clinic revenue per exam compares favorably to others, you may want to focus on building your optical revenue per exam, or vice versa. Whatever you decide, those benchmarks will help you find the key metrics where you can make a big impact on your bottom line, especially if you find you’re lagging behind the industry benchmarks.

When I work with a practice, there are a few KPIs that are almost always ripe for improvement. I’ll share the three clinic benchmarks and the three optical benchmarks that I find are the most effective for building that all-important RPE figure.

3 Steps to Build your Clinic Revenue Per Exam

1. Selling Annual Supplies of Contact Lenses: Encouraging patients to purchase annual supplies of contact lenses not only increases revenue but also (hopefully) offers the most cost savings to patients. If your practice isn’t selling many annual supplies, review your pricing to make sure your annual purchase discount is appropriate. If your staff is uncomfortable recommending the higher-dollar investment of an annual supply, help them understand that it’s a) far more economical and b) significantly more convenient for the patients. Want more information on doing this effectively? Check this article by Dr. Ryan Gustus.

2. Charge Refractions Correctly: Ensure that your fees for refraction are appropriate, not just for your market, but for your practice. If you’re charging less than $25, you may need to re-evaluate. You can research what other doctors in your area charge by making simple phone inquiries. Do a little homework on what the going rate is, nationally and regionally. Make sure you understand local market rates and what your participating plans consider proper U&C, to make informed decisions.

3. Non-Covered Screening and Wellness Services: To make the most of services like OCT and other screenings that insurance may not cover, aim for a capture rate of 65% for these services. Charging around $39 for each service ensures comprehensive care while maximizing revenue potential. (Again, your pricing has to be appropriate for your practice and your market.)

3 Steps to Build Your Optical Revenue Per Exam

1. Address Patient’s Own Frame: Patients who reuse their old frames and just purchase new lenses are almost always an easy revenue lift. This is especially important when patients have insurance coverage that includes a choice of covered or heavily discounted frames. Work with your staff to develop scripting that encourages patients to use their old frames as backup eyewear, and frame your warranty to encourage the purchase of a new frame.

2. Sales of Zero-Dollar Frames: Some patients’ frame purchases are fully covered by insurance, leaving them with no out-of-pocket expenses. We call those zero-dollars sales. Train your staff to help patients think of their coverage benefit as a substantial discount rather than a freebie, highlighting the value of their insurance benefits. If you find you’re still struggling in this area, consider rearranging your frame merchandising to emphasize fully-covered frames less and beautiful frames that will be discounted by insurance (instead of fully-covered) more. You may also want to look into strategies that help you find the perfect price point for managed care.

Premium Progressive Lenses and Lens Products: While offering good generic lens options is important, you can boost premium sales by emphasizing the benefits of higher-end lenses right in the exam room. This approach helps your staff close more sales for premium lenses. Your patients will wind up with eyeglasses that work well for them, and your bottom line will also thank you. Just a note here, I generally find that photochromics are the biggest un-realized opportunity for premium lens add-ons right now. If you want to work on that KPI, consider asking your lens or lab rep to come do a training in your practice to help your staff learn more about the product and sell it more effectively.

Elevating the Bottom Line

By focusing on these key areas, you can enhance your overall Revenue per Exam (RPE) and help your practice become competitive in the most important sense – profitability. Most practices can easily increase their RPE by $20 in either the clinic or the optical by making these adjustments. If you address both areas simultaneously, you have the potential to double that result. If you’re doing 100 exams a month (just for round numbers), that additional revenue adds up quickly. It can completely change the outcome for your business.

Leveraging Existing Patients

Improving performance isn’t just about “beating the other guy” or acquiring new patients. The most effective strategy revolves around maximizing the potential of your existing patients. Start by improving the quality of your sales, ensuring that every exam is optimized for the best outcome. Once you’ve fine-tuned these areas, you can explore expanding your patient base and increasing appointments. When you do, you’ll know that you’re going to get the best possible results.

By Patti Warren, ABOC

Official "Lens Geek" who helps practices find their best profit opportunities.

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