Photo courtesy of Erich Mattei, who is seen here (left as you look at photo) with Dr. Adam Ramsey at an Akrinos Business Builder practice management workshop. Mattei shares specific ways to better manage costs in your practice during unstable times.
Managing costs in unstable economic times
By Erich H. Mattei, MBA
August 13, 2025
How is your practice adapting to serve patients amid economic uncertainty and rising costs? With possible new tariffs announced nearly weekly, it’s hard not to wonder what the impact will be on your patients and practice profitability.
Here, in part one of a two-part article, are tips for improving cash flow and boosting profitability across your business during uncertain times.
Rising Costs and Changing Patient Sentiment
According to the latest research from The Vision Council, prices on optical goods, equipment and most of the supply chain will increase as a result of new tariffs. At the same time, the University of Michigan Survey of Consumers 2025 reports that consumer sentiment is facing a roller coaster, with some of the lowest levels ever recorded since the study began in 1952.
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Identifying Key Areas for Practice Growth
Making changes that are both sustainable and profitable in your practice—especially when costs are rising and the economy is uncertain—requires careful analysis and strategy.
You need to find ways to capitalize on business opportunities. These opportunities fall into four main areas: financial metrics, operational key performance indicators, team productivity and market fit.
How to Use Benchmarking to Spot Opportunities
Financial benchmarking means comparing your practice’s performance with industry averages. One common approach is a common-size analysis, which expresses each financial metric as a percentage of a base figure—typically sales or assets.
A thorough benchmark analysis across all your expense categories, such as cost of goods sold, human resources, occupancy, marketing and overhead, can reveal chances to cut costs or grow revenue.
When you build a common-size analysis of your own finances, look at where you can make the biggest impact. For cost of goods sold, opportunities might include raising prices, selling down inventory or finding new products.
Understanding and Managing Chair Cost
Chair cost is the amount of overhead it takes to provide care to each patient. This number reflects fixed costs, not including doctor pay or cost of goods sold. Understanding your fixed costs is key. It helps you find your break-even point, set prices, choose managed care panels, establish goals and optimize your pricing on products.
For example, one practice found its expenses per patient were $169.78. To reduce fixed costs in your business, look at ways to save on human resources, marketing, occupancy and overhead. You might use technology to improve efficiency, reallocate marketing dollars based on return on investment, conserve electricity and supplies, go paperless or cut unnecessary spending.
Financial Ratios: Gauging Practice Health
Financial ratios use numbers from your financial statements to show how your business is performing. This includes liquidity ratios, measuring your ability to pay short-term debts; efficiency ratios, which show how well assets and liabilities turn into income; solvency ratios, which show your ability to meet long-term debts; and profitability ratios, which reflect your ability to generate earnings.
Gross margin is a key profitability ratio showing how much money you keep after paying direct costs for a product. This figure is crucial, especially with tariffs and price increases. Higher gross margins mean your practice keeps more of its revenue.
Boosting Gross Margin With Smart Product Choices
Analyze gross margins across your retail categories and brands. If a product’s margin falls below your benchmark, raise the price or consider removing it.
For instance, if your frame category benchmark is a 66.6 percent gross margin and you have a frame selling for $250 that costs $100, providing just a 60 percent margin, you should increase the price to $300 or discontinue it to meet your margin goal.
Tracking Patient Conversions to Increase Revenue
Consider why patients choose your practice, what they like and what they do not. Conversion analysis gives key insights as you look to protect and grow your business in uncertain times.
By tracking patient conversions — also called capture rate — you can see how your patients buy in different categories. Dive deeper by analyzing individual brands and products to see which are money-makers and which are not. Monitor conversion rates across optical, contact lenses, dry eye, aesthetics, diagnostics and other services.
In the table below, Lens A had a higher profit per sale ($174 versus $116) but Lens B sold more often, which boosted total cash flow ($4,093 versus $2,899 per 100 patients). In uncertain times, favor the products that generate more cash flow.
Making Inventory Work for Your Bottom Line
Inventory turnover shows how many times you sell your inventory in a given period. Low turnover can mean weak sales or too much stock. High turnover might signal strong sales or not enough inventory. Run this analysis in each retail area and for each brand and product. Identify which lines sell best and understand why, then focus on those. Move or remove underperformers from your shelves.
Solving the Problem of Excess Capacity
A typical optometry office sees 2,500 to 3,500 patients per doctor per year, which is about 1.2 to 1.7 patients per hour, or nine to 13 a day. This is below the preferred two to three patients per hour many ODs seek. Excess capacity happens when your office sees fewer patients than it could, often because of cancellations or no-shows.
For example, a senior OD may have 20.3 percent excess capacity, or 64 unused exams per month, and a junior OD may have 29.7 percent, or 50 unused exams per month. If all other factors are equal, prioritize filling the junior OD’s schedule.
Taking Action: Steps for a Profitable Future
To make sustainable, profitable changes in your practice when economic uncertainty and costs are rising, focus on the right financial metrics and operational key performance indicators (KPIs). Develop a clear strategy to take advantage of any opportunities you identify.
What’s Next: Team Productivity and Market Fit
In part two, we will explore how team productivity and market fit can impact profitability during uncertain times.
