Finances

Set Goals to Grow a More Profitable Practice

By Ken Krivacic, OD, MBA

Practice growth doesn’t happen by chance. You need to formulate a plan–and work the plan. 

Do you have growth goals for your practice? Have you organized your goals into a growth plan, one with a timetable and a list of resources and actions to achieve your goals?

Our practice has three ODs and 21 support staff members, and we strive to grow every year. We believe that to survive, we need to continue to grow revenues.

Industry norms show that the average optometric practice grows at 3-4 percent annually. Our practice goal for this 2016 was to grow revenues by 5 percent, and we exceeded our goal.

Dr. Krivacic says setting goals, such as increasing revenue by adding new instruments like an Optos, is a route to planned practice growth.

Set a Goal

In constructing a growth plan, which we do annually, we begin with the end result in mind.

Our process begins with the practice owners sitting down at the beginning of each year and determining what our goals for the coming year should be.

Then we brainstorm how to get to that goal. Our metrics play a large part of this portion of the process. We look for areas where there was strong growth the previous year and determine how we can continue to foster that growth.

Goals Set…Goals Met

Last year we added a new Optos unit for retinal screenings, and our revenue from that instrument helped boost overall revenues. We have had the instrument for close to one year now, and average about 225 screening photos per month between 2.5 full-time equivalent doctors or about 90 screening photos per doctor per month.

We also look at other areas where we can improve. For example, last year we concentrated on reducing our no-show rate.

Reduce No-Shows: We were filling 92 percent of our appointment slots. We set as one of our growth goals at 98 percent. For us, that small percentage increase can be a large increase in revenue.

If we fill 92 percent of our yearly 6,000 appointment slots, that is a total of 5,520 exams, and with an average revenue per patient of $365, that comes to $2,014,800 total revenue. If we fill 98 percent of the available appointment, then total number of exams is 5,880 with a total revenue of $2,146,200.  In this case it was merely a matter of concentrating on one goal, and the practice netted an additional $131,400 without having to purchase any special equipment or add staff.

The goal was set by the practice leaders, but the next step was communicating that goal to the staff and educating them on the importance of attaining that goal. For this step we break it down into smaller steps. To say we have a yearly goal of a 98 percent fill rate is daunting with a large time frame. We break it down to monthly units and have small rewards (gift cards, lunch, one hour paid time off) if the staff make those monthly goals. Hit the small goals to eventually make the large goals.

Get Staff Input

Staff can often provide insight on how and where to grow in their particular area (optical, front desk, contact lens) better than we can because they are in those areas and see what patients want better than we can being in an exam room all day. Our weekly staff meetings are the place where we communicate our current status in reaching our goals. It’s also the place where we garner feedback from staff on what’s working and what’s not. We ask ourselves and staff: What do we need to adjust to attain our goals?

Ask Patients What They Think

We conduct patient surveys, and a recent one pointed to an area for improvement: how patients were notified if their optical products were ready. For products they need to pick up in office, glasses or contact lenses, there was a lot of feedback that they preferred a text message. Prior to this we had just been calling.

We changed our process and installed a system that now notifies patients by text. This saves us time in countless outgoing and incoming phone calls daily, and everyone’s experience, both patient and staff, is better. Will that change help growth? I believe so, yet that one is hard to measure. You may end up having some goals that are difficult to measure, yet which benefit the patients and the practice.

Measure to Grow

Practice metrics play a large part in practice growth because they provide us with the baseline from which we begin the process to attain our goals. For example, we started last year by looking at what our revenue was the previous year and then set a realistic, yet challenging, goal for the next year. That’s how we arrived at the 5 percent increase as it was slightly higher than the industry average. This may vary greatly among practices as a relatively new practice should grow much more rapidly in the beginning versus an established practice where growth is generally not as large on a percentage basis.

For example, a $300,000 per year practice should be able to grow by 30 percent. That percentage would be much more difficult when the practice is a million dollar practice. In larger practices it is beneficial to look at the actual dollar amount and not the percentage. In our example, the $300,000 practice growing at 30 percent has an increase in revenue of $90,000. For the million dollar practice to generate the same revenue it needs to grow at 9 percent.

We also track the metrics throughout the year to help us stay on track. If we begin to fall behind we analyze our metrics to help determine which portion of the practice needs to be adjusted.

Short-Term Growth vs. Long-term Growth Goals

We typically concentrate on the yearly goals as they are the easiest to track and monitor or adjust.

Our longer range goals, 5-10 years, tend to be bigger-picture items. These usually include goals like adding equipment, expanding the physical office, remodeling an office or adding another doctor. Some of these goals, such as remodeling or adding equipment, should be done and can be planned and budgeted for. Other things can be optional goals depending on growth, such as expanding the physical structure or adding another doctor.

Adjust Goals as Practice Evolves

All companies go through growth phases. In the beginning, there is usually rapid growth. As the practice matures, growth tends to level off. In my previous example I mentioned that it is much easier to grow a $300,000 practice 30 percent than it is to grow a one million dollar practice. There comes a time when the growth per doctor is limited. There are only so many exam slots available, so you have to look for other avenues to generate revenue. These would involve introducing products or services that do not require your time. You could add a higher-end frame line. You could promote specialty contact lenses. You could add another doctor to the practice.

As in any business, there are only two ways to grow:
Add more customers (patients)
Increase your average sale (revenue per patient)

We tweak our growth plans from year to year depending on what we believe is critical to maintain growth. The overall formula is the same. We ask these same questions every year: What can we do to continue to grow? What do we need to keep doing that is allowing us to maintain this growth? What do we need to change to help us grow? Are there new products or services that help us reach our goals? How can our vendor/partners help us in our growth?

>>Click HERE for Four Steps to Setting & Reaching Goals>>

Ken Krivacic, OD, is the owner of Las Colinas Vision Center in Irving, Texas. To contact him: kkrivacic@aol.com.

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