Leaders make decisions. As the great quarterback Russell Wilson is noted for saying, “The separation is in the preparation.” If you want to separate yourself from the mediocre in the optometric business world, then you need to prepare to make decisions using both data and instinct. Like the fundamentals of a sport, the ability to make successful instinctual decisions comes with practice and reflection.
To make a good decision, an optometry practice leader
must have data that is accurate and in line with the performance indicators you choose to track. We believe there are four key performance indicators (KPI)
that set gauges on our dashboard for best decision making. Your gauges, or KPI, must be tailored to your understanding of your practice dynamic.
These trending indicators are my top four in understanding Wichita Optometry’s performance.
1. Schedule health
How healthy is the future of the business? Do we spend money on internal or external marketing?
To identify your schedule health KPI, first delegate to a staff member the task of counting all the available appointment slots for next week. That number becomes the denominator. Then, when the week is complete, the numerator is all the completed appointments.
If an appointment slot was utilized, it gets counted—whether it produced practice revenue
or not. Take the completed appointments and divide by the available appointment slots that week. This will be the health of your schedule by percentage.
2. Revenue/OD hour
How efficient and productive are your doctors?
In my opinion, there is no better marker for a practice, for comparison of doctors within a practice
, and for comparing your practice to other like practices in our profession. Any other KPI does not accurately compare.
For example, a doctor who does mostly medical and few refractions will have an erroneously high revenue/exam because the denominator is based on refractions. If the denominator is a constant that is comparable across your practice type or interests, then a comparison can be made.
“Ethics remained and should remain the same, but the way the doctor prescribed changed.”
When you track revenue per OD hour
, you can take that a step further and compensate your doctors based on revenue per OD hour. A general benchmark for efficiency would be $550/OD hour or higher—preferably higher, but this is a good start.
3. Collections by staff hours
Also, ask, Do we need more staff or are the staff we have sufficient but not working to their peer equivalent potential?
The number to hit with this is $87 for an acceptable middle of the bell-shaped curve (MBA Key Metrics 2018). We all battle with everyone telling us as practice owners that we need more staff. The metric reports
have been consistent for the last 10 years and the purpose is to assess if you are over- or understaffed.
4. Optical revenue per refraction
is a profit vertical that must be measured to understand if your practice is meeting the needs of your patient. If this is low there could be a number of reasons but most likely you have a disconnect between the doctor in the exam room and the optician in the optical
Doctors must understand the product and how to prescribe it and opticians must understand sales and how to transition prescribing into sales. This KPI encompasses multiple aspects of monitoring the data and gives a good overview to assess if you need to dive further into this number.
Here is a snapshot example of what the data says would indicate. For the practice below I would look further into frame and lens sales (EdgePro benchmark comparison).
National Sample Comparison
|Percentiles|| Revenue per refraction|
Choosing your KPIs
There are many great resources for choosing KPIs and monitoring them. My all time favorite is Scaling Up by Verne Harnish
. The details it provides in working on the business and understanding why KPIs are important was transformational in my approach to leadership and oversight of our company.
Whatever you choose to be your gauges for making decisions, know that if you measure it and invest in improving it then most likely it will improve. Great decision making is having the right data combined with the instinct
that comes through practice and experience. You can start now by finding the four KPIs (data) that best fit your practice and begin making decisions (instinct) to improve them.