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Tuesday / May 17.
HomemitwocentsThe Clock and the Bottom Line

The Clock and the Bottom Line

With Christmas on the horizon, it’s time to give your independent optometry practice a Christmas gift – more patients.

Two common complaints I hear from independent optometrists on a regular basis are:

  • Insufficient time
  • Insufficient income.

Let’s look more closely at these through the lens (no pun intended) of our average, sole practitioner independent optometrist.

There is good evidence to support the contention that our average sole practitioner will generate gross sales of about AU$700,000 annually and an average sale of approximately $360.

have you had a hard look at how you work?

Assuming Mr. Average works between five to five-and-a-half days per week, and taking into account 10 public holidays per year, Mr. Average is seeing between seven and eight patients per day.

Again, assuming Mr. Average spends 30 minutes on most of these eight consultations, we can calculate that just four hours of each typical eight-hour day are productive.

This suggests our typical independent’s complaint about being time poor is somewhat lacking in credibility.

I can already hear the cries of foul but wait, have you had a hard look at how you work?

Analyse Your Day

First, look at your appointment book. Look at last month and see how many appointments you had for an average day (the prior month will include walk-ins which would not be in the next month) and do the following calculations:

  • Average full appointments for the month divided by the full working days for the same month equals average daily full appointments = A
  • Multiply A by your average full appointment time (in hours) = B
  • Divide A by your typical number of work hours each day and show this as a percentage (C).

For example:

Last month’s full appointments = 150

Last month’s full working days = 21

Average appointments per day (A) = 150/21 or 7.14

Multiply A by the length in hours of your average full time appointment (say 0.5 hours) (B) = 7.14 x 0.5 or 3.57 hours

Divide B by your average full working day in hours (say 7.5) and express as a percentage (C) = 3.57/7.5 or 47.6 per cent

The result is your productivity or efficiency – the percentage of your day you actually spend producing income. As indicated earlier, the average for a typical independent practice is eight patients per day at 30 minutes each. Based on an eight-hour day that equates to 50 per cent efficiency, which by any measure, is not great.

Non-Productive Time

I noted earlier that you would have cried foul. That’s fair enough because the fact is, your day can never consist of only seeing paying patients. You have staff, administration, marketing, continuing education and answering mail among other issues to manage.

To be fair then, let’s say you reserve two hours daily (very generous in my view) for these administrative tasks.

Previously we said we had eight patients per day at 30 minutes per patient (insert your own numbers) plus two hours per day for administrative issues. That still leaves you with two hours of available time or four full time appointments to fill.

Based on an average patient sale of $360 this equates to $1,440 per day or $360,000 per year based on a five day working week. In my world that is better than a 50 per cent increase in sales on your average $700,000 base. Not bad.

What’s the Opportunity?

Is an increase of four patients per day even possible? Let’s look at the opportunity on a sliding scale. If we could increase appointments by:

  • One patient per day we would increase sales by $90,000 per annum
  • Two patients per day we would increase sales by $180,000 per annum
  • Three patients per day – $270,000 per annum
  • Four patients per day – $360,000 per annum

How do you get there?

Business managers talk in terms of “low hanging fruit” when looking for opportunities for growth, so what is the low hanging fruit in your practice?

Advertising

Have you considered placing an A-frame sign board outside your practice stating “eye tests available at xx am/pm”? You will be amazed at how many walk-ins this can create.

What about advertising? That may appear to be an expensive strategy but even if advertising costs $30,000 per annum and only brings in one patient per day, that will still result in a $33,000 net increase in gross profit (assuming a gross profit margin of 70 per cent).

Recalls

Then there are recalls. I am absolutely amazed at the number of independent practices who are at best haphazard with their approach to recalls. Surely this has to be the most obvious, the cheapest and the most significant source of repeat business. Are your practice’s recalls sent out weekly or do you send them out when you get around to it? Does your practice follow-up recalled patients who don’t respond to their first call? What success rate do you have with recalls and if it is low, try to understand why.

Reminders

Look at your no-show rates. Even one per week equates to $18,000 lost income per year. Do you have an appointment reminder system for patients? SMS messages to mobiles the day before an appointment can dramatically reduce no-shows and the old excuse that elderly patients don’t have mobile phones no longer holds true. SMS reminders can be set up easily in your practice management system so they do not take up valuable time.

Use It Or Lose It

But, of all the opportunities that present themselves, none is as reliable and productive as the ‘use it or lose it’ promotion. Many practices consistently add 50 per cent or more to their monthly sales in November, December and yes, January. To run a successful ‘use it or lose it’ campaign, you need a plan. It is simply not good enough to tack a ‘use it or lose it’ poster in the window (although even this can help).

Your practice management system can tell you which of your patients has extras cover on their private health insurance, so why not direct mail those patients who have not been in the practice in the past 12 months, inviting them to ‘use it or lose it’ by updating their spectacles? Go one step further and write to those with health insurance who have attended your practice in the past 12 months and make a special offer on prescription sunglasses. The opportunities are almost endless and, believe it or not, the vast majority of patients are not aware that they lose their optical benefits at the end of the year or that they refresh at the beginning of the year.

Given this article is published in early November this is the time to get your ‘use it or lose it’ campaign started. Don’t delay. Use your time wisely and you can easily increase your bottom line without spending a fortune.

Michael Jacobs is a business consultant and columnist for mivision. He was the former Chief Executive Officer of Eyecare Plus for 10 years until early 2015.

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