Practice Metrics

How to Collect Data to Create a $1 Million Practice

By Ken Krivacic, OD, MBA

Nov. 6, 2019

A couple months ago, I wrote an article about the ABC’s of practice management, focusing on the subtle ways ODs sell themselves to patients.

The first definition of the ABC’s is “Always Be Closing,” as it refers to the need for the practice, its staff, and its doctors to have the mindset of always be “selling.” We should be constantly selling our products and services, but we should also be mindful of selling ourselves.

In this article I will focus on the second “ABC,” in which we could add a “D.” The revised “ABCD” stands for “Always Be Collecting Data.”

How Dr. Krivacic Does It

Click HERE to download a spreadsheet template with the metrics Dr. Krivacic’s practice reviews monthly

Deciding on Which Data to Collect
Any business, optometry or not, can gain an advantage by collecting, analyzing and making decisions based on data. As independent optometrists, we need every advantage we can garner to stay competitive and profitable. In our practice, we have used data that we have collected to improve our practice and make us more profitable, and have done so for a number of years.

So, what kind of data do we collect? In our office we break the data collection into three areas:

• Office Metrics
• Patient Feedback
• Employee Feedback

Before providing an overview of these different areas and what we collect, let’s talk about the process involved in data collecting. Instead of just collecting data, you should have a reason to collect that data. The reasons could range from financial, “How do we keep our cost of goods under 30 percent?,” to customer service, “How do we make our patient’s experience the best it can be during their visit to our office?”

What Information Will Most Help Me Make Decisions?
Once you know what you want to focus on, you can hone your data collection down to those variables that help you make a decision in what processes you need to implement or what changes you need to make. For most businesses, the more data available the better decision can be made.

Now, Analyze It & Look for Patterns
Once you’ve collected the data, you need to analyze it. For example, if you are concerned about cost of goods being too high, look at that data. How do sales compare to cost? Am I pricing my products in accordance with what I want my margins to be? Am I getting the best possible price on the products we are selling? Do I have too much inventory in stock? Any of these variables could make the difference in your cost of goods being out of control.

The next step would be to look for patterns. Were there some months where the cost of goods were in line or better than you expected? If so, how do those months compare to the months where cost of goods was higher than expected? What variables stood out during your research? The more data you can collect in these areas, the better. Remember, data is knowledge.

Taking Action Based on the Data
Now we can use the knowledge we have gained to make a decision to solve our issue. In the example above we had an issue where our cost of goods had been escalating over several months. We collected the data pertaining to cost of goods. This included revenue from all goods including frames, lenses, contact lenses and any ancillary products we sell.

From there, we broke it down to the individual areas listed above and reviewed revenue and expenses for those areas over the past year. In our research we noticed that the largest increase was in our spectacle-lens costs. As we dug deeper, we noticed that our lab had not been giving us the promised discount on our products. We notified the lab and worked through getting those credits that were owed to us, which eventually brought our costs back in line.

Share What You Learn With Staff
The last step in the data-collection process is sharing the data with your staff, or at least with the staff that are most involved in that area of your practice. In our office, we share it with all staff since part of our staff bonus compensation is based on how well the office does as a whole, and is not broken down into different departments.

Involving the staff also helps in collecting, analyzing and making the necessary changes to carry out your goals. I could not imagine trying to collect all the data needed in our example, and then analyzing that data to come up with the solution on my own.

To summarize, data is knowledge and knowledge can lead to better decision making. Eventually this all leads to a better-run and more profitable practice.

 

Ken Krivacic, OD, MBA, owns Las Colinas Vision Center in Irving, Texas. To contact him: kkrivacic@aol.com.

 

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