In my consulting work with practices, I have found that most of us don’t know if our practice is doing well or not.
“How are you?” Everyone knows that in casual conversation, the answer to this question is, “Fine,”(or “Good,” or “Pretty Good”). We ask it, and we answer every day without much thought or consideration. It is really more of a polite greeting than an inquiry into one’s current status.
When we really want to know how someone is doing, we ask it differently. We may say, “I saw on Facebook that you lost your goldfish. Are you doing OK?” or “How have you been dealing with your new situation?”
More practice management: 5 tips to prepare for practice purchase
But what about when we ask it of each other professionally? It may be something like, “How’s the practice?”
What is your answer to that question? Usually it is the same type of generic answer that has minimal meaning; “Good,” “Pretty good,” “Fine.”
But in reality, do you even know how things are going in your practice? When I am at my best, I can tell you my capture rate, collection rate, cost of goods sold, and expenditures compared to budget. But there are other times that I can judge my practice’s status only by my ability to pay my bills. In my consulting work with practices, I have found that most of us don’t know if our practice is doing well or not.
So, how do you know how your practice is doing? The answer is, “It depends.”
To have any understanding of how your practice is doing, you must clearly define your practice vision or mission. You must clearly articulate what you are working to accomplish with your practice. For instance, if your mission is to provide all the eyecare needs to as many in your community as you can, your vision is different from that of a practice who limits its care to vision therapy.
More practice management: Affording OCT in your practice
Here are two examples.
Practice 1 is in a suburban/rural area next to the local hospital. The largest employers in the area are a wire manufacturer, an EHR development company, and a hospital. As a primary care eyecare provider, the practice strives to be the choice for eye care for every member of the family. It provides eye exams, contact lenses, specialty lenses, and surgical comanagement, and it provides a lot of medical eye care. Its vision is to earn trust by providing the highest quality care and products to patients. It works hard to grow 10 percent yearly, be a good member of the community, and feed its staff’s passion to care for patients.
Practice 2 has five locations in various strip malls around a larger metro area. This practice strives to create a consistent experience at all of its locations. All of its stores carry the same brands of frames, accept the same insurances, and are priced identically. As a primary care provider, it too provide exams, contact lenses, and surgical comanagement. For the most part, medical care and specialty care will be referred to practices that are more equipped. Growth is paramount with clear goals of adding two locations per year for the next decade.
Next: Find out where you're going
This is just two examples. There is really an unlimited number of ways that eyecare practices can be operated. Until you have identified your mission and made it clear to the rest of the team, your practice will just be “fine.” Once you have identified where you are going, you can monitor your progress. Then you can truthfully answer, “We are performing much better than we thought we would be at this point.”
There are too many metrics that can be measured in our practices to remain effective. If I wanted, I could calculate the amount of electricity being used per box of contact lenses sold. I am not sure of the value of that, so I do not measure it. Other metrics may be relevant twice a year, while others need to be monitored daily.
More practice management: How I prosecuted an embezzling employee
I recommend finding five metrics that help you determine how you are progressing toward your goals, and I recommend you look at those metrics a lot. Determine what is “good,” what is “not so good,” and what is “reaction worthy.”
For almost every eyecare practice, the amount of money being deposited into the bank needs to be monitored daily. Find how much needs to be deposited daily to keep the cash flow going. If you have several days in a row below that amount, do something. Other big metrics to watch ones include:
• Number of exams
• Income per exam
• Capture rate (optical)
• Collection rate (insurance)
• Percentage full (scheduling)
• Patient wait time
• Net promoter score
Next: Don't compare
Be cautious about comparing these metrics with your colleagues because the practice vision can dramatically affect these numbers. Practice 1 is likely to have higher staff costs than Practice 2 simply because of the variety of testing. Practice 2 is more likely to garner a higher capture rate because optical is more of a focus. The point is to continuing nudging your benchmarks in the direction you want.
More from Dr. Rothschild: 5 tips for planning a successful practice event
Early in the year is a good time to think diligently about the practice you are building. Once it is clear to you, you can share it with your team so you are all headed in the same direction. After that, you can measure success and when someone asks you, “How’s the practice?” you will actually know.
Click here to check out the latest in practice management advice