If you’re one of those who longs for the “good old days” when your clinic was more profitable, you’re likely missing some key elements necessary in today’s successful practices. Sure, online sale of glasses and contact lenses, rising wages for employees, increasing cost of materials and all of the costs associated with the pandemic certainly threaten our profit margins. However, we also have more opportunities for profit centers than we did in the past (medical care of glaucoma, macular degeneration and dry eye, specialty contact lenses, myopia management, etc.). Another advantage available to all ECPs is affordable business analytics software, which makes it easy for us to understand where our revenue is coming from and serves as a guide to track our progress as we implement changes to improve profitability.
The Importance of Metrics
Nittany Eye Associates is a large group practice with 5 locations, 10 ODs and 70 non-optometric staff and a strong emphasis in medical care. About 5 years ago, I realized that it was critical to begin monitoring our profit margins and profit centers with analytics to uncover trends occurring in the practice so that we could make any adjustments necessary to maximize our profitability. We chose EDGEPro analytics software to provide that data because it fully integrated with our EHR and also because so many colleagues recommended it.
Assuring Return on Investment
Our practice is committed to delivering the best possible medical care to our patients. Investing in the latest instrumentation goes hand-in-hand with that mission. When purchasing equipment, we estimate how many times per day we will bill for testing patients with it. This allows us to determine goals that generate return on investment (ROI). Generally, our performance exceeds our estimates. Nonetheless, we do pay close attention to equipment utilization using analytics reporting to track how many times we bill each procedure code. We also drill down to the “By Doctor” level to identify the top one or two ODs in our practice for each procedure and then those top performers share best practices with the other ODs.
Identifying and Remediating Problems
Analytics also help us quickly identify and correct problems that might otherwise be difficult to pinpoint. For instance, we offer OCT wellness scans as an optional, cost-added service. We usually average $10,000 of revenue per month on these scans. When we saw this line item dip into the $7-8,000 range, we pulled the numbers By Doctor, which showed us that several of our newer ODs numbers had dropped, but our more senior ODs numbers remained stable. We had recently hired several new optometric technicians who typically work with the newer ODs. We found out that the newer staff were not comfortable with the verbiage of the scripts we had them using to encourage the OCT wellness scans. We then had our more experienced staff develop new verbiage for the script and also assigned the newer technicians to shadow the more experienced technicians for a while. These two simple actions moved our OCT wellness scan numbers back to historical levels. Had we not been monitoring these metrics, we would have known that our revenue was down, but it would have been much more difficult and time-consuming to know why. Every day that a problem with a simple fix such as this goes unnoticed detracts from the bottom line.
Managing Multiple Locations
We are careful to tailor strategies based on each location’s strengths and weaknesses. We purchased a portable AdaptDx diagnostic unit that travels to all branch offices. Although we were sending it to all offices equally, we realized that different branch offices were utilizing it at different rates. Our initial goal was 30 scans per month. We used metrics to track our utilization trends for the new instrument. After 3 months, we were at 20 per month and 4 out of our 10 ODs were ordering 80% of the scans from 2 out of our 5 locations. Based on this data, we created a strategy for improving utilization. We held a meeting with all of our ODs and shared the numbers. We also brought the vendor back in for OD retraining. He also spent some time in our branch offices that were underperforming. Thanks to the combination of leveraging analytical data and vendor support, we now average 35 scans per month with all locations contributing.
Returning Profitability to Contact Lens Sales
In addition to tracking utilization of the services we offer, EDGEPro also helps us make profitable decisions with respect to sales and cost of materials. Nittany Eye Associates has a robust contact lens practice including participation in contact lens research. As such, contact lens sales are an important part of our revenue. We pay particular attention to the % Annual Supply and % Daily Contacts numbers in the Clinic Overview Report/Contacts because increasing these metrics improves revenue while simultaneously improving patient outcomes. In 2017, 33% of our contact lens lenses were daily disposables. In an effort to move th
In addition to tracking utilization of the services we offer, we also leverage metrics to help us make profitable decisions with respect to sales and cost of materials. Nittany Eye Associates has a robust contact lens practice including participation in contact lens research. As such, contact lens sales are an important part of our revenue. We pay particular attention to our % Annual Supply and % Daily Contacts numbers because increasing these metrics improves revenue while simultaneously improving patient outcomes. In 2017, 33% of our contact lens lenses were daily disposables. In an effort to move the needle on this metric, we brought in our #1 and #2 contact lens vendors for OD and staff training. As a result, we steadily improved our daily disposables to 41% over the next 3 years, which was one of the primary factors leading to a $19 increase in clinical revenue per exam during that period.
We also monitor our Top Manufacturers for CLs to negotiate better pricing for our contact lenses. In 2017, our primary contact lens vendor had a 37% share of our contact lens sales. We negotiated specific rebates by hitting certain market share percentages with that vendor. Over a 1-year period, we increased their share to 55% while tripling our combined contact lens vendor rebates.
No matter what the size, specialty or demographics of your practice may be, the universal truth is that you have to increase revenue and/or decrease costs to improve profit. Today’s ECP also has the ability to combat the factors that are slowly eroding profitability by embracing some of the many options we now have to add specialty profit centers. Regardless of the path you choose, it’s critical to be aware of your business metrics and to use them as a guide when implementing processes in your practice that lead to enhanced profitability. Accurate practice data and metrics have been indispensable tools toward that end for Nittany Eye Associates.