Driving Growth: Strategies to Reverse Revenue Decline in Eye Care

by | Apr 18, 2024 | Business Management

We have all heard the phrase that “time is money”, but sometimes the application of that statement alludes us in the chaos of the daily grind.  From the moment that we flip the open sign each day in the window, demands are being made on our time.  When we speak of measuring revenue, we may not realize how much of the equation is related to time.  We may consider revenue per day, week, month, or year. It is the context of time that helps us comprehend the value of each of these revenue numbers. For example, consider the number $10,000. This number has no value without the context of time. For the average sized practice, a $10K month would be devastating, but a $10k day would be fantastic.

How Revenue is Generated

In an eyecare office, revenue-creating interactions typically begin with an appointment for an eye exam.  Much of the office revenue each quarter will have a direct link to the number of revenue-creating interactions that took place in that specific time frame. Increasing the number of interactions (or appointments) typically has the largest direct impact on total revenue.  

Another portion of the revenue performance will be related to how productive each of those interactions were.  These are the two largest categories impacting revenue: how many interactions there were, and how efficient each interaction was. While this may seem like an elementary concept, identifying the underlying issue and creating a solution may be less obvious.  Let’s look at potential scenarios in these two categories.

Scenario 1:

Total Revenue is down for the quarter and total exams are down 102 exams for the quarter.

Often, several factors combined may contribute to the reduction in the number of exams, and for each practice location these factors may be very different.  In this scenario, begin by asking the following questions:

  1. Was a physician on vacation during this quarter?
  2. Have physicians’ schedules changed?
  3. Have no-show rates increased?
  4. Are we processing exam recalls and reminders in a timely manner?
  5. Have we lost a certain group of patients due to external forces such as insurance panel changes?

Strategies to Improve: Scenario 1

As you consider these questions, begin to think about which facets you can control or influence to increase the number of interactions within a given period.  Each question above may have multiple potential solutions:

  1. If a physician was on vacation, could another physician cover for their workload?  Could physician vacations be scheduled during natural slow seasons?
  2. If the schedule has changed, analyze ways to maximize the number of exams each week on the schedule.  Consider whether adding an additional physician or telehealth exam lane would solve the shortage.
  3. If no-show rates have increased, review procedures for patient reminders and your scheduling policies.
  4. Consider adding follow-up communications for recalls with no response.
  5. Consider ways to reach new customers by joining new insurance panels.

Scenario 2:

Total Revenue is down for the quarter, but total exams have increased by 10%.

Again, several factors may be contributing to the decrease in revenue despite the increase in number of patients seen in the quarter.  It is important to uncover why the revenue per exam is down in the office.  Begin by considering the factors related to optical revenue per exam and ask the following questions:

  1. Is there a need for staff training on selling premium products?
  2. Is there a need for better communication between physicians and opticians during a patient hand-off?
  3. Is there enough staff to handle the additional load of patients?
  4. Is capture rate down?
  5. Are all billings and collections up to date? Is every procedure properly invoiced and billed?

Strategies to Improve: Scenario 2

As you answer each of the questions, you can begin to formulate a strategy to increase revenue per exam.  Again, each of the questions above may have multiple causes and corresponding solutions:

  1. Identify which premium eyewear options are being sold less. If you have an optical dashboard software, you may be able to view productivity by staff member for premium lenses, premium lens options, second pair sales, and premium frame sales. Once you identify an area needing improvement, you can formulate a training plan.
  2. Listen to interactions within the office to identify communication issues that are hindering sales.  Carefully coach the staff and physicians on the types of narratives that would increase sales.
  3. If the staff is overburdened with the increase in the number of patients, consider ways to alleviate the pressure. Begin by identifying unnecessary or duplicated steps in your daily office processes. Identify all non-revenue-creating tasks and determine their level of necessity within the office.  If necessary, consider the addition of either part-time or full-time staff.
  4. If capture rate is down, then consider whether there are internal or external conditions affecting capture rate. 
  5. If billings and collections are falling behind, you may consider outsourcing a portion of your billing.

Taking Action

The purpose of the questions around each possible scenario is to increase total revenue and productivity within a certain amount of time.  Most have heard of the acronym “SMART” related to goal setting.  This acronym reminds us that effective goals must be: Specific, Measurable, Attainable, Relevant, and Time-Bound. In terms of practice management, we must first measure what is happening in the office to make SMART goals. Your PMS system in conjunction with a dashboard software can supercharge your ability to measure progress and set goals. When we think of measuring revenue, “time” is a key part of the measurement. By increasing the attention given to productivity within specific time frames, the office will be able to increase overall revenue.

The purpose of measuring each metric is not to create a culture of micromanagement, but to define a clear path for the practice.  In fact, a study by Rice University uncovered that employee satisfaction often increases with well-defined goals.  Goal setting can unlock a competitive and productive spirit within staff if properly communicated.  Set goals in a positive tone within the practice to be most effective.  Since time is something that no one can control, it should be the goal of every individual to be more profitable and productive with the time we have each day.  Strive to maximize the number of interactions and the quality of each interaction.


References

Openstax: Principles of Management

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