Managing with Metrics: Start With Revenue!

by | Mar 7, 2024 | Pending | 0 comments

In the world of optometric practice, keeping track of metrics is essential for understanding and improving your business. Metrics are really just measurements. Like your clinical patient evaluations, business measurements give you valuable information that you can use to make decisions. Where your clinical measurements help you decide how to treat patients effectively, metrics describe your practice in terms of its business activities. They provide information that helps you – the business manager or owner – diagnose the health of the business. When you are using concrete information – rather than guesswork, assumptions, or feelings – as the foundation for business decisions, those decisions are much more likely to create positive outcomes. This article will help you get started with optometric business metrics by examining your most basic measurement: revenue.

Metrics as Routines

Just like everything else you do, metrics are most effective when they are part of a routine. We all know that exercising once a year doesn’t contribute much to physical well-being. Likewise, eating healthy once a month probably won’t make a big difference. Checking your business metrics also needs to be part of a routine to be effective. The trick is making sure it’s manageable, something you can do quickly and regularly. To build your first metrics routine, you’ll need to keep it understandable, accessible, and meaningful.

Start Simple: Check Your Revenue

With so many metrics to choose from, it’s hard to know where to begin. However, focusing on revenue—the money your practice receives—is a great place to start. Revenue forms the foundation of your business profitability, and the flow of incoming cash begins to describe your practice metrics.

Revenue is simply the total gross income your practice earns from providing eye care services and selling eyewear and accessories. It’s a key indicator of financial health and can help you predict how stable your business is. By keeping an eye on revenue, you can spot trends and begin to relate those trends to what’s going on in your day-to-day activities.

Optometric Revenue is Unique

Optometric practices have a special challenge because they involve both providing medical care and running a retail business. At EDGEPro, we refer to this has having two businesses rather than one single business. Balancing these two aspects can be tricky, but understanding how each contributes to your overall revenue can help you manage them more effectively.

Two Businesses in One Practice

To get a better picture of where your revenue is coming from, it’s helpful to break it down into clinical revenue (from eye exams and medical services and contact lenses) and optical revenue (from selling eyewear and accessories). This breakdown allows you to see which parts of your business are performing well and which might need some attention.

The Basic Routine

This first metrics routine is truly simple. Using an analytics program will help you accomplish this quickly. You’ll need to review your revenue, either month-to-date or year-to-date. Go a little further than just the overall revenue; check the totals from each of the two businesses as well: the Clinic and the Optical. If you have access to last year’s numbers for the same period, even better. Comparing what’s happening now to what happened at the same time last year will give you a trend.


Tracking Your Revenue with EDGEPro

For users who leverage the EDGEPro software, tracking revenue is very simple. After logging in to your account, simply select “Overview Summary” from the Business Overview menu. The first row of this screen will show you all three of the numbers you’re looking for: Total Revenue, Clinic Revenue, and Optical Revenue in month-to-date. You’ll also see an automatic comparison to last year’s figures.


Understanding What Your Revenue Metrics Mean

Optimal Revenue Distribution:

Ideally, you want to see a slightly higher proportion of revenue coming from optical sales than from clinical services, because optical sales involve discretionary spending. This means patients can opt to spend more out-of-pocket as they would for any retail purchase. This discretionary element can boost your overall revenue and profitability. Optical sales can be influenced by your staff to help to ensure a healthy revenue stream.

Reading the Trends

No practice’s revenue stays static from period to period. And it would be really surprising to see a trend that’s always upwards. When you being to watch the movement of these numbers on a day-to-day or week-by-week basis, you’ll begin to be able to see how the trend up or down relates to what’s going on in your office at that time. If you wait 6 months to check your numbers, it might be almost impossible to remember exactly what was happening when that dip in the revenue happened. However, if you’re looking at your numbers very regularly, then you can make those connections. You’ll be able to see immediately how your revenue is impacted when you’re short-staffed, or when the recall reminders don’t get made, etc.

One connection you definitely want to make is how you’re doing compared to this time last year. Most folks are pretty clear about what happened last year. The reports are in, the taxes are filed, we know what happened. We have a clear idea if it was a good year or a bad year. Leverage that knowledge and compare what’s going on right now to the same time last year. It will help you understand if your practice is growing, or if there’s trouble brewing.

Establishing Monitoring Procedures

Just as we discussed above, the key to making headway with your metrics is to look at them regularly. This short routine should only take a few minutes to complete, so make it part of your regular schedule, and commit to keeping it up. Start by tracking your total revenue and breaking it down into clinical and optical revenue streams. Do this consistently over a few weeks to establish a baseline and compare your results to past periods to spot trends. The 2 or 3 minutes it takes are the beginning of a healthy habit that will help you grow your business and become more confident in your decision-making.

Of course, managing with metrics doesn’t end with revenue. As we move forward in this series, we’ll help you learn more simple routines that will advance your skills so you can build a thorough understanding of your business metrics. Starting with revenue will lay the groundwork for a data-driven approach to practice management, setting the stage for long-term growth and profitability.

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