The optical in one of Dr. Whipple’s two offices. He says that, to blunt the impact of inflation, he slightly raised the prices of his products. He says patients have been understanding so far.
Specific actions that could lessen the negative impact of inflation.
By Ian G. Whipple, OD
Feb. 14, 2024
Every year offers an opportunity to learn what would work better, and then institute changes the following year to do much better. Here are a couple things we are doing this year to decrease the negative impact of inflation while continuing to provide great care for our patients.
Inflation Outpaced Growth
My offices grew 14.5 percent in 2023 in terms of revenue in (production), but our net profitability did not grow as much as it in 2022.
Cash flow was tight twice last year. Both cash flow crunches were in months that had three payroll periods instead of two. As I prepared for 2024, I found several relevant metrics and action plans to implement that I’m confident will restore our expected growth in overall net profit by the end of 2024.
Increasing Prices
To combat the negative impact of inflation, we have increased frame, lenses and contact lens prices modestly. COGS went up significantly in 2023. Some contact lens manufacturers raised prices in three separate instances this year. Is this poor planning or greed from the manufacturer? Either way, offices that don’t frequently look at their pricing might find that their net profit has shrunk considerably. Our office raised contact lens prices twice in 2023, and again starting in January 2024 as a response to the increase in our costs.
We changed our frame markup by adding $10-$25 on top of our traditional multiplier mark-up. While none of this is cool for patients, we have to do something to manage our costs.
Even with the price increases on our frame and contact lenses, our prices are still very competitive for our market. Patients have responded well when we tell them upfront that glasses and contact lenses are also subject to inflation, but that we are doing everything possible to maximize their savings with their vision benefits and in-office discounts.
The increase in prices of our products force the entire team to focus on the quality and experience of our office. I appreciate that the emphasis is not on cost alone.
Improving Average Optical Transaction Per Doctor
We started tracking additional production metrics between our two offices and among all doctors. Specifically, I’m more aggressively tracking the average optical transaction per doctor. I started sharing a f0ur-week and eight-week rolling average optical transaction amount with one of our associate doctors with the goal of improving the number by prescribing from the chair and making stronger product recommendations.
Other Articles to Explore
One of our associate doctors is less motivated by these metrics, so we are taking a slightly different approach by having our opticians circle back to this associate when patients don’t purchase from us. My hope is that this same-day feedback to our associate doctor will provide insight on what seems to be working and what falls flat as they modify their recommendation habits.
The focus on increasing the average optical transaction also helps our team offer add-on products and services such as contact lens solutions, over-the-counter eye drops, vitamins and Botox. It is our job to present options and help inform patients about what is available to them.
Setting Goals to See if Actions Taken Worked
My hope is that the average optical transaction amount will improve by $100 by the end of the year. As I write this article, we are two weeks into this new emphasis, and we’re up about $15 so far per patient. Additionally, our net on contact lenses is up roughly 2 percent since we increased prices again.
Ian G. Whipple, OD, is the owner of Vision Source of Farr West and Vision Source of South Ogden, both in Utah. To contact him: iwhipple@gmail.com
