In order to successfully run and grow your optometry practice, learning and understanding how to use key performance indicators (KPIs) to evaluate your practice and how to act on these numbers are imperative.
When it comes to understanding productivity and profitability, the optometric industry has a number of industry-standard key metrics and KPIs you can compare your practice to in order to understand where there is an opportunity for growth or where your weak points are.
What are key performance indicators?
Key Performance Indicators can help you understand many things about your practice like:
- Whether you're on track to reach goals
- What area of your practice is generating the most revenue
- Understanding potential lost revenue
- Where you are underperforming
- Identifying specific areas you can implement change
- Determining whether your practice is growing year over year, or if it's stagnant or declining
Not only is it critical to have an understanding of these KPIs, but you also need to understand how to analyze them and make informed decisions. These decisions can ultimately make or break the ability of your practice to grow.
There are critical reports every optometry practice should be running in order to understand where their practice stands against industry set benchmarks.
These reports are critical in helping business owners understand the health and potential growth that might exist for their optometry practice. In this article, we’ll outline these reports and detail how to analyze them and what decisions can be made from them.
All of the reports in this article were generated from EDGEPro, a product of GPN Technologies. GPN Technologies focuses on empowering independents to be profitable and competitive by providing them with high-tech, business-critical tools, and data and analytics platforms and reporting.
1) Total revenue per exam
This is the ratio of total amount received for all sales and services divided by the overall number of refractive eye exams completed.
Understanding total revenue per exam can help you determine where you might be missing out on an opportunity, whether that is in your optical, or perhaps not offering enough in the way of services.
Figure 1: Average revenue per exam broken down by clinical and optical revenues
In Figure 1, you can observe the average revenue per exam in 2019 for this practice was $607.10. Additionally, this report can help you understand what percentage of revenue per exam is coming from procedures and services and what percentage is coming from optical sales. You’ll see that clinical revenue comes in at $312.58 while optical revenue accounts for $294.51. In the column next to that, you’ll find the results from 2018. Finally, in columns three and four, you can observe the change year over year in dollars and percent.
Figure 2: Average revenue per exam broken down by clinical and optical revenues—change over time
In Figure 2, you can quickly observe the year over year change in dollars and percent outlined in Figure 1 over a specified date range. One important thing to consider as you evaluate your average revenue per exam and how it is changing over time is where that revenue is coming from. A majority of practices might discover that most of this revenue per exam stems from optical sales. The optical is typically a major source of revenue for many optometric practices. One place where most practices might consider room for growth is when it comes to fees for services. There are a variety of ways to increase your clinical revenue per exam, by either offering additional specialty services or by practicing more of the medical model of optometry. This can help increase your out of pocket fees and medical exams and procedures typically reimburse at a higher rate than most vision plans.
Figure 3: Ranking in terms of collections per exam
One major advantage of EDGEPro is that it can give practice owners an inside look at where they stand compared to national and regional trends. This can quickly help you understand if some of your challenges or weak points are specific to your practice, or rather a consequence or representation of something larger that might be impacting the industry.
When it comes to analyzing your average revenue per exam, understanding the year over year change is key to understand not only if your revenue per exam is increasing, but where most of that increase in revenue is coming from.
For example, if your optical revenue per exam is really low, that might tell you that there is room to improve doctor driven dispensing, or perhaps you should be working with your staff on selling second pairs, year supplies of contact lenses, or premium products.
Conversely, if your clinical revenue per exam is really low, then this might be a sign as mentioned earlier, that it is time to add more medical services and procedures to your practice, or bring in new technology that might allow you to offer screening or wellness testing to complement your exams.
It is also important to consider if you have the right mix of insurance plans in your practice and how those insurance plans impact your ability to generate revenue. For example, if you see a heavy patient base specific to an insurance plan that typically reimburses very little for both services and optical merchandise and most of those patients avoid out of pocket costs, then it might be difficult to see an uptick in revenue no matter what kind of new doctor driven dispensing techniques or strategies you implement.
2) Total revenue per doctor
Your total revenue per doctor simply allows you to analyze the money generated from each doctor in your practice. This metric allows you to directly evaluate the performance of each doctor in your practice.
Figure 4: Revenue per doctor broken down by optical revenue and clinical revenue where new business is total revenue
In Figure 4, you will see total revenues (new business) per doctor broken down by optical revenue and clinical revenue per exam. This can better help you understand where and how doctors are generating revenue. These numbers can be drastically influenced by the role of each doctor in your practice. If a doctor is mostly partaking in specialty care like vision therapy, or medical management of ocular disease, you might see clinical revenues are high while optical revenues are low. These are important considerations when it comes to using these numbers to understand performance.
When it comes to using revenue per doctor to make decisions, if you are expanding hours and want to assign those hours to a doctor that will likely be able to generate the most revenue, this report can help you make that decision. If you are paying your doctors based on performance, this report can give you the information you need.
Figure 5: Total revenue per doctor—in-depth overview and change analysis
As mentioned before, it is important to take a deeper look into numbers when it comes to analyzing revenue per doctor. In Figure 5, you can observe a detailed analysis of total revenue per doctor with a change analysis of time.
When it comes to performance reviews, this is a report that you can use to guide conversations with your associates and use it to discuss doctor-driven dispensing techniques or perhaps understand what other doctors are doing that are impacting performance. Again, this might have to do with what kind of specialty care some doctors in your practice are offering or what kinds of patients they are seeing and give you additional insight into guiding some of your weaker-performing associates.
This can also give you an inside look at that doctor’s capture rate. Are they comfortable with discussing products and recommending specific lenses and eyewear solutions to patients? This comes down to doctor-driven dispensing. This report can give you a better understanding if you should invest in this sort of training for your team.
3) Exams per OD hours
This is the ratio of the number of refractive eye exams per hour doctors are able to examine patients. This metric can help practice owners understand how much time is spent generating revenue and if more examinations could and should be added to the schedule.
Figure 6: Exams per OD hours
In Figure 6, you can quickly understand what your average exams per OD hours are and how that has changed over time. The line graph to the right of the table can give you a closer look at your stronger and weaker performing months that have impacted this number. By understanding when Exams Per OD Hours is highest, you can plan accordingly for future business decisions. For example, if you want to bring on an associate, when would be the best time to begin your search to ensure they are working and onboarded for your busiest season.
Perhaps even more importantly, you can look closely at what occurred during those months where Exams Per OD Hours was highest to understand trends that might have impacted that number. Did you do something specific in terms of marketing? Was your optical offering a specific promotion? Did you change your recall or patient communication system? These are just a few examples of things you can better understand by looking at and analyzing the table and graph in Figure 6.
When it comes to analyzing Exams Per OD Hours, if this number is low, there are a few ways to improve upon it. If it is a question of doctor efficiency, then perhaps additional support or delegation of doctor tasks in order to improve patient flow might help improve this number. You can also consider implementing or adopting new technologies that might help improve doctor efficiency or maybe even bring on an additional associate to help out.
If this number is low simply for a lack of patient demand, then it is worth looking at your marketing strategy. You can try to market in new channels or using new methods for a period of time and then run this report again to see if there was an uptick during those months to analyze whether or not it was effective.
4) Optical capture rate
There is no question that for a majority of practices, revenue is generated in the optical. Optical capture rate can be calculated a few ways; in this case, it examines the number of complete pairs of glasses sold divided by exams with refraction.
Figure 7: A sample of some of the advanced reporting metrics available in EDGEPro
In Figure 7, you will find an in-depth breakdown of your optical business. You can understand what percentage of your optical business is coming from frames and lenses.
When it comes to capture rate in the optometric practice, this metric can best be used to understand the effectiveness of staff sales techniques, evaluate effectiveness of doctor driven dispensing, understand if you are offering the best frames and lens options for your patient demographic, and determine in general if you are providing the best customer experience. All of these factors can impact and contribute to capture rate.
When it comes to taking a closer look at how capture rate varies across doctors, EDGEPro allows you to quickly and easily break down capture rate by doctor and also by insurance plan.
This can give you additional insight into who is performing the best perhaps as a function of doctor driven dispensing, as well as what insurance plans and patients your staff are having an easier time converting into sales.
Figure 8: Capture rate by doctor
In Figure 8, circled in red is capture rate broken down by doctor. As mentioned before, doctor-driven dispensing can play a major role when it comes to impacting this number. Are your doctors making specific recommendations based on patient need? Are your doctors talking about lens solutions in the exam lane? This will easily allow you to see who is prescribing from the chair successfully. By understanding what doctors are performing well, you can leverage some of their techniques or strategies to help those who might need some additional training.
No matter how high your capture rate is, increasing capture rate tends to be a primary objective of many practices. There are a few things you can consider in order to increase capture rate.
- Evaluate the frame/lenses you are offering patients
- Leverage visual merchandising in your optical
- Attempt to understand why patients are walking with their Rx and what demographic they encompass
- Provide a better customer experience
- Spend more time on patient education and the importance of premium products offered through your practice and ensure your staff and opticians are reinforcing that message
- Target your contact lens patients and be sure to offer them eyewear solutions as well and educate them on the importance of having up-to-date specs that they can utilize if they are unable to wear CLs
- Carry an appropriate mixture of unique and conventional frame lines and styles
Figure 9: Capture rate by insurance plan
In Figure 9, you can observe capture rate in column five, separated by insurance plan. This report is particularly helpful in understanding what insurance plans and associated patients are easier for your staff to convert to sales. Many practices who accept vision plans constantly struggle with understanding if it is worth accepting that plan. Oftentimes, practices will participate as providers with insurance plans despite receiving lower exam reimbursements with the thought that they can help make up that difference by converting optical sales.
While there is a lot to argue regarding the benefits of participating in plans regardless of what they reimburse as it can lead to other avenues of practice growth, this report at the very least can help you quickly understand what patients with what specific insurance plans are spending time in your optical. If you are having a hard time converting these patients in your optical, it might warrant a close investigation as to why. What about that specific insurance plan or patient allotted benefits is creating friction? Are there ways to improve upon this or reduce that friction? If the answer is no, then you might want to weigh your options when it comes to participating with that plan.
Top 4 features of EdgePro For Optometry Practices
5) Revenue per OD hour
Total revenue per OD hour is the ratio of revenue for a particular period of time to the total amount of OD hours worked during that time period.
Figure 10: Net revenue per OD hour where total new business = total revenue
In Figure 10, you can get a snapshot of Exams Per OD Hour in the very first row of the table, while in the last row, you can quickly understand what that translates into as far as collections or net revenue per OD hour.
By understanding revenue per OD hour, you can evaluate how much revenue each OD in your practice is generating per hour they are working. This can also help you determine just how valuable your chair time is.
If your revenue per OD hour is low, then this might be a sign that you need to work on doctor driven dispensing, sales, or consider taking on more patient volume. If you cannot increase revenue by offering additional services or increasing capture rate or sales for instance, perhaps this is a sign that increasing volume might be the best method for increasing net revenue per OD hour.
Revenue per OD hour can also help you make decisions when it comes to deciding what kinds of office hours you are offering patients. Are you offering hours that aren’t conducive to your patient demographic’s schedules? Is this causing exams per OD hours to be low subsequently impacting revenue per OD hour? This metric can also give you a general understanding as to what kind of return on investment (ROI) you are getting from your associates. Your revenue per OD hour has to make sense if you are going to continue employing an associate. If your revenue per OD hour isn’t enough to pay that OD’s salary along with your other overhead, then it is a clear sign that some changes need to be made.
6) New patient growth
Most practices would agree, attracting new patients is a primary marketing goal in order to generate new business. Growth rate of new patients will depend on how young or old your practice is, but growing your patient base can certainly fuel practice growth no matter what stage of growth your practice is in.
Figure 11: New patient growth
In Figure 11, you can quickly see the ratio of new to existing patients in your practice and how that compares year over year. Are you growing at the rate you anticipated? Is new patient growth stagnant? These are all questions that you can answer by quickly looking at the table in Figure 11. Some practices might not be able to accommodate new patients whether that is because of doctor efficiency, or maybe there is too much demand already from existing patients. If your new patient growth is low and you realize it is a product of being understaffed or inefficient, then perhaps it might be a clear signal that it is time to bring on a new associate or hire more staff or implement new technology to improve efficiency.
The line graph in Figure 11 will give you a deeper understanding as to what months you experience the most new patient growth. Understanding time of new patient growth, can help you draw conclusions regarding specific decisions you might have made during certain months of the year, whether it had to do with new marketing initiatives or perhaps new technology your brought to your practice, or just general trends in your community. Maybe you experience the most new patient growth during back to school months? This could be a prime opportunity to release hyper focused marketing campaigns during those critical months.
As you can imagine, it is important to understand how many new patients you are attracting to your practice year over year. EDGEPro does an excellent job of helping practice owners understand where they stand when it comes to new patients. Here is an example of an additional report that can help practices understand where they stand compared to industry standard benchmarks.
Figure 12: New patient ratio ranking and insight
In Figure 12, you can see how your practice ranks compared to the national trends when it comes to new patient growth. Additionally, EDGEPro will give you insight as to how they calculate these figures and how to interpret your ranking.
Figure 13: New patient exams to existing patient exams
Figure 13 is another way to analyze new patient growth, just by looking at the ratio of new patient exams to existing patient exams over a given time period and comparing it year over year.
As discussed previously, new patient growth may or may not be hindered by your ability to accommodate new patients. If you are turning patients away because you cannot handle the volume, this could easily indicate a problem with workforce or efficiency. If however you are actively attempting to grow this number without success, this might be an indication that you need to implement new marketing strategies to attract patients to your practice.
7) Understanding your optical
Once again, when it comes to most practices, the optical is a major source of revenue. Understanding your optical strengths and pitfalls is critical to generating new business and revenue. There are important things to look at like:
- Number of frames sold and number of frames sold per exam
- Best selling frames
- Best selling lenses
- Best selling contact lenses Snapshot
When it comes to frames, there are some metrics to keep in mind:
- Frames Sold
- Average Frame Sale
- Patient Owned Frame
Maximize your frame board profitability here!
Figure 14: Frames report for the optometry practice
In Figure 14, you will see a high level frames report that looks at the total number of frames sold, the average frame sale, and the number of patient owned frames that were used along with those frames associated with no generated revenue. On the far right there is also a chart that outlines the top frame brands sold in this practice and the given quantity.
Frames are just one way to generate revenue in your practice. We’ll look at lenses later on. When it comes to frames and this report, this high level overview can help you understand just how much your frame selection appeals to your patient base.
If you are not selling many frames, the first thing you might want to do is look at what frame lines you are carrying and whether or not that is the problem. Have you really sat down and thought about your patient base, and attempted to truly understand if your frame lines match your patient demographic? If the answer is yes, then there might be other things to consider. Are your opticians doing an adequate job when it comes to helping patients select frames? Are you using visual merchandising appropriately?
The chart on the far right in Figure 14 that breaks down top selling frames will help you determine what your highest performing brands are which will give you a clear indication as to what your best and worst performing frames are. Is it time to drop a frame line? Should you stock more of a certain frame line? What if your top selling frame line is that of a vision insurance plan? If that is the case, it might be a good idea to sit down and create training materials or strategies to help your staff and opticians convert those patients into other frame brands for additional revenue.
On the subject of vision insurance plans, it can also be helpful to look at this on a more granular level, and break frame revenue and sales down by insurance provider to understand which insurance plans are proving to be more profitable for your practice.
Figure 15: Frame revenue broken down by insurance plan
In Figure 15, you can see a breakdown of frames sold and revenue by insurance plan. By understanding what insurance plans typically result in greater revenue generation, you can better understand the value of a patient as it relates to their insurance plan and how that can impact your ability to generate optical revenue. This is yet another data point you can collect when it comes to deciding what insurance participation is most profitable for your practice.
Everything discussed thus far applies to evaluating ophthalmic lens sales.