There are two metrics that we always hear of in optometry: capture rate and revenue per exam. From my professional experience, ODs shouldn’t treat both the same when it comes to measuring your business success.
Revenue per patient is more important to your bottom line.
Capture rate vs. revenue per exam
In case you need a refresher, the capture rate looks at the number of patients who were provided a prescription versus the number of patients who filled their prescriptions at your practice. For example, if you do ten refractions (glasses and contacts) in a day and seven buy glasses, you have a 70% capture rate.
On the other hand, revenue per exam is the total collections for all products and services in your office divided by the number of exams. If your office revenue is $500,000 for the year and you had 1,000 exams, your revenue per exam is $500.
Capture rate decline over time
Let’s take a deeper look at the capture rate. It is probably the most misleading metric in private optometry as it doesn’t quite tell the whole story. For years, my staff calculated the rate at the end of each day. We had a capture rate above 80% on the daily report, but our actual revenue per patient was less than $200.
“And, to make it even worse, industry-wide capture rate has declined steadily over the years.”
Truthfully, private optometrists are dealing with threats from online, big box retailers, and other parties leading to a depressed industry average of approximately 50% to 60% in recent years (a 10 to 15% decline). In fact, many doctors are consumed with spending their time trying to get above the industry average.
What good is the capture rate if your revenue per patient is low? That means you will be working harder, not smarter.
Choose a focus on revenue
The fact that capture rate alone doesn’t equate to success, why not shift the focus to revenue? No doctor has ever come out of school and opened a practice saying, “I want to see 40 patients per day.”
Instead of increasing volume, how about increasing the revenue of the patients in your chair? In my practice over 2 years, we increased the revenue per patient by over 30%. We choose to work smarter, not harder.
Here is how we did it.
How we improved our practice's revenue
1. Quality over quantity
The instinct is to get more “bodies in the chair.” That runs contrary to how you achieve higher revenue per patient. We chose to focus on quality solutions for our patient’s visual needs.
When a doctor tells me they have a 75% capture rate, they tend to follow up with a low revenue per patient in a high percentage of cases. That is because, to capture every patient, you are likely sacrificing your revenue.
Here are two less-than-favorable scenarios:
- You sell glasses with no anti-reflective (AR) coating to get the sale.
- The sale encompasses “everything covered.”
- This is not an optimal solution for the patient, and it’s likely not doing anything for your business.
Figure 1 highlights how capture rate and revenue per patient can impact the bottom line of the practice.
Figure 1: Courtesy of Janelle Davison, OD
2. Shifting staff mindset
One cannot improve the revenue of the office without the staff buy-in. If the doctor is “just satisfied” with the staff selling whatever they choose, then the consequence of keeping the status quo will likely be that there will not be an increase in revenue.
But, if the doctor, top-down, impresses upon the staff that every sale is a quality sale, the brand of your office shifts with the revenue. Put simply, “the price is the price.”
The staff must be confident with presenting prices to patients—it’s not for anyone to assume or judge how much they can afford. If a premium product is what will work best for that patient’s situation, the staff needs to be comfortable with presenting that.
3. High dollar frame strategy
We increased our offerings of high-tier boutique eyewear lines as opposed to the “low cost/high frame facts” model. Our focus is on the margin dollars made from a sale. Cash is king.
For instance, you may buy a $5 frame and sell it for $180, but with insurance, the patient’s out-of-pocket will only be $30 with a $150 frame allowance and just a small reimbursement from insurance.
Conversely, with a higher-priced frame, your cash from the sale may amount to $200+ from just the frame alone. Yes, the higher-priced frames cost you more for the business, but the actual margin dollars on the sale will be greater.
4. Bundling of ALL sales
Imagine for a moment not selling a la carte. Routinely, we used to sell eyewear that provided optimal vision and protection for their investment. We slowly moved away from the model of just selling “what is covered.”
So what did we do? The most important change we made was bundling 100% of our sales—whether insurance or self-pay, we sell everything as a package. We offer packages defined as “Basic,” “Premium,” and “Trendsetter.”
By creating these packages, we set a floor for our office. When bundling the sale, it allows us to easily add other eyewear accessories and an extended warranty which has naturally increased our revenue.
Paradeyem Optical Software: the bundling software we created
Bundling has always been a way for my office to improve sales, and so it was natural for myself and the Chief Technology Officer (my husband) to come up with a solution that would work for any optician in our office. We created a software, called Paradeyem. It allows an office to really increase revenue and office efficiency.
Features of Paradayem include:
- Verifying insurance
- Calculating copays
- Creating a good, better, and best quote for you in less than 10 seconds per patient
Figure 2 compares the patient and in-office administrative dashboard for Paradeyem, which displays patients for the day, offers access to saved quotes, and provides an in-office optical performance dashboard to monitor staff sales tracking.
Figure 2: Courtesy of Paradeyem
What can Paradeyem add to your practice?
Since implementing the software coupled with the previously listed strategies, our revenue per exam has increased from around $324 in 2021 to $486 in 2022 and, so far, $587 in the first quarter (Q1) of 2023. As the business owner, it has also given me the confidence that calculations are being done correctly and that our patients are only being offered the quality products and add-ons I recommended.
“Paradeyem has allowed our staff to feel comfortable presenting options to the patient in a professional presentation.”
Our office uses the software to present three packages: Basic, Premium, and Trendsetter, which are custom to our office. Our opticians love it because it is simple, and Paradeyem gives them confidence that their calculations are correct. Also, the system lessens the back-and-forth scenario often seen between patients and opticians.
Figure 3 demonstrates Paradeyem’s quote feature, which provides tier options for patients (good, better, best) while considering vision care plan insurance copays and allowances.
Figure 3: Courtesy of Paradeyem
Final Word: Consistency leads to increased revenue
True, we implemented strategies, but the revenue shift didn’t happen immediately overnight. By staying consistent with these strategies, our revenue has increased drastically.
What’s more, our staff has also had to complete a “paradigm shift” that allows them to present multiple options to patients while staying within the packages offered by our office (we created our floor, but our ceiling was limitless).
It has given us the confidence that no matter who sits in the optical chair, our revenue will carry the day. When we chose to prioritize revenue per exam in 3 years’ time, we were able to change the trajectory of our optical and truly become the practice of our dreams.
Work smarter, not harder.
