Dr. Lopez in one of his office’s exam rooms. He points out a few key areas of your practice that are most important to focus on to increase your income as an optometrist.
Financial strategies for optometry practice success
By Christopher Lopez, OD
Dec. 18, 2024
Historically, income and finances have been taboo topics. It is reasonable to have discretion when discussing personal things in public settings.
However, extreme privacy relating to money has created an environment in eyecare in which the majority of optometry students, new grads, and even seasoned ODs, struggle to understand important financial topics.
Similarly, many practice owners long for information on best practices for navigating business and reaching financial goals.
All of this is what led to the inception of ODs on Finance, a community of tens of thousands of optometrists aligned in a mission to achieve their own definition of success.
Through thousands of interactions with colleagues across the country, we have come to learn a great deal about strategies that the most prosperous practice owners implement to accomplish their goals.
This article will focus on three main categories eyecare businesses utilize to “win” at optometry.
Increase Revenue
A business owner can improve decision-making by homing in on revenue per encounter (RPE), which represents the average income generated from each patient visit to an optometry practice.
Some discrepancy may lie in certain ODs discussing revenue per patient (RPP) where they focus on income brought in per glasses/routine/refractive exam (while forgoing the medical visit component).
Regardless, RPE can help reveal how effective an office is at monetizing each patient interaction, highlighting the financial performance of a practice.
* TIP * – Another great, and possibly more useful, metric to measure is revenue per OD hour. Calculate this by dividing gross revenue by the number of OD hours worked in a specified time period. Tracking this can demonstrate how productive an OD is and how effectively they use their time.
So, we should all work to improve RPE, but how is this accomplished? Increase services and offerings that can be tagged onto patient exams.
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Many offices have added retinal imaging to increase out-of-pocket transactions while allowing for more comprehensive retinal evaluations.
Furthermore, the “wow” factor of showing patients awesome images of their eyes is a practice builder. Earlier detection of retinal conditions and enhancing the patient experience is a win-win for all sides.
Improving second-pair glasses sales is another effective strategy to strengthen RPE. Most optometrists struggle with second-pair sales as we don’t like to feel too pushy toward patients and often believe that one pair of optical correction meets all of a person’s needs.
However, this mindset undermines the idea of fulfilling all of a patient’s visual concerns. It can be difficult not to worry about a person’s pocketbook, but we shouldn’t assume that people wouldn’t pay for something they find value in.
How many patients regret buying custom shooting glasses, computer bifocals or clip-on reading lenses? The answer is very few. Why? Because they love custom options that enhance their quality of life!
In a similar vein, introducing consumables such as lubricating drops, eyelid cleaning solutions and supplements create ongoing revenue streams. Patients appreciate the convenience of buying these products directly from their trusted provider. Consumable sales can meet patient needs while boosting revenue.
Lastly, adding medical eyecare services provides an opportunity for optometrists to practice to a greater extent of their training while offering more comprehensive and convenient care for patients.
The full breadth of practicing medical eyecare is beyond the scope of this article, but suffice it to say that managing ocular conditions, such as dry eye syndrome, ocular allergies, glaucoma, and more, can significantly improve the bottom line while taking care of patients the right way.
Reduce Expenses
Managing expenses is just as critical to the profitability of an optometry practice as increasing revenue.
Identify opportunities for cost savings by regularly auditing profit and loss (P&L) statements. A thorough review of the P&L allows practice owners to pinpoint areas where expenses may be unnecessarily high.
By analyzing trends, data-driven decisions can be made like streamlining operations, renegotiating service contracts, or reallocating resources more effectively. Regular audits also minimize the possibility of missing opportunities for tax deductions.
* TIP * – Review your merchant services account to ensure you’re not paying outrageously high fees.
Another worthwhile expenditure reduction can occur when negotiating vendor discounts. Business owners can leverage their purchasing power with suppliers for better pricing, particularly if you are a loyal customer or purchase in large volumes.
Reach out to your frame, lens and contact lens suppliers to inquire about discounts, bulk pricing or loyalty programs.
Expand and Scale
Expansion and scaling are vital steps for optometry practices aiming to grow their reach and profitability.
Expansion can involve opening additional locations, acquiring other practices and absorbing patients into a single location, and more.
Scaling, on the other hand, focuses on increasing efficiency to handle more patients without proportionally increasing costs.
Implementing robust systems for appointment scheduling, electronic health records and billing can improve workflows, reducing bottlenecks and freeing staff to focus on patient care.
Training employees and doctors to take on expanded roles and responsibilities ensures consistency in service as the practice grows. A key problem owners run into in scaling is not delegating enough or appropriately, and not having systems in place.
Additionally, leveraging data analytics to monitor key performance indicators provides actionable insights to refine operations and maximize profitability.
Lastly, practice owners who work toward the goal of spending more time focusing on running the business and less time in patient care tend to have more time to home in on optimizing business decisions.
Bottom Line: Remember Your Ultimate Goals in Implementing the Above Strategies
Remember the main goals that most optometry practice owners have: Enhancing business acumen to improve quality of life and deliver the highest standard of care to patients. Utilize the strategies outlined in this article to do just that.
Christopher Lopez, OD, is a practicing optometrist and Career Director at ODs on Finance. To contact him: christopher.lopez.2013@gmail.com
