In order for your practice to grow and thrive, it has to be profitable, efficient, and still able to provide quality patient care. Balancing all of this to create a sustainable business model demands a thoughtful financial strategy. To help, we’ve created a primer for you to consider the main areas of your business and how to create a simple plan for giving your practice a financial success guide. We’ve divided the article into three core sections: Financial Metrics, Expense Management, and Revenue Enhancement. To get the most out of this primer, read through each section to grasp the broad strokes and then follow the “Next Steps” recommendations at the end to dive deeper into areas that particularly resonate with your practice’s needs.
Financial Metrics: The Pulse of Your Clinic
Understanding your financial metrics is akin to diagnosing a patient—it helps you understand the complete health of your practice. To begin with, keep an eye on the Profit and Loss (P&L) statement. A P&L report provides an overview of revenues, costs, and expenses over a specific period. This report is your go-to guide for spotting financial trends, identifying operational inefficiencies, and making informed business decisions. It should tell you where your money is going and where it’s coming from, helping you to understand how money is flowing through your business and what is left over at the end of the day.
Key Performance Indicators (KPIs), like revenue per patient or average transaction value, offer another layer of insight. Monitor these KPIs at least quarterly and set achievable targets. Regularly monitoring your P&L statement and updating KPIs helps keep the practice in tune with financial objectives and ensures you’re hitting your operational targets. Also, consider monitoring liquidity measures, like the “current ratio,” which compares your current assets against your liabilities. The higher the ratio, the better ability to cover short-term fees as they come up. Additionally, benchmarking against industry standards or other optometry practices can also shed light on the overview of your financial health. This 2019 report shows the average revenue per patient at $484 a year, and the average number of patients served each year at 4,428. Using metrics like these can help you gauge your own performance better.
1. If you’re new to financial metrics, consider taking a basic course on accounting for healthcare. Some econologics financial advisors offer specialized courses focusing on the optometric profession.
2. Subscribe to a money newsletter or podcast like ‘Optometry Money Podcast’ for regular insights on financial planning considerations.
3. Investigate benchmarking by using data from sources like the American Optometric Association to understand how your practice compares to industry averages.
Expense Management: Trim the Fat, Keep the Muscle
Managing the expenses of your optometry practice is a balancing act that involves a variety of costs, from staff salaries and equipment to consumables like contact lenses and cleaning supplies. While it’s essential to frequently review your P&L statement for a comprehensive overview, additional expense categories also require attention. Regular financial audits are your go-to strategy for identifying potential inefficiencies and areas for improvement. For instance, consider reviewing supplier contracts, especially those related to vision care products and equipment, to renegotiate more favorable terms.
Beyond contracts and supplies, staffing is often the most substantial cost for any healthcare practice, including optometry. It’s important to monitor your staffing needs in line with patient flow and the variety of services you offer, such as routine eye exams or more specialized eye care. There’s a tightrope to walk between being overstaffed, which eats into your gross income, and being understaffed, which can affect patient satisfaction and possibly even compromise quality of care. Specialized financial planning firms like Econologics Financial Advisors can offer valuable insights on optimizing staffing costs while maintaining service quality. Also consider a BPO to help relieve some staffing requirements while making sure your patient-facing staff stays focused on the patients’ care.
1. Audit your supply expenses this week. Check if any consumables are overstocked or underutilized and adjust future orders accordingly.
2. Conduct a review of your expenses from the last three months to pinpoint areas for cost reductions that won’t impact patient care quality.
3. Consult with a financial planning firm specialized in optometry to get a tailored staffing strategy that aligns with your financial and service quality objectives.
Revenue Enhancement: More Than Just Patient Visits
Increasing revenue can come from unexpected places, such as outsourcing to lower costs. Beyond simple steps like improving the merchandise offering in your clinic, consider additional opportunities outside the norm. Telemedicine is an emerging trend that could open up new avenues for revenue. By offering virtual consultations for routine follow-ups or basic eye issues, you can serve more patients without requiring physical office space, effectively broadening your geographic reach and customer base.
Another advanced strategy involves partnerships and affiliations. For example, partnering with local fitness centers, corporate offices, or schools can lead to a consistent referral stream. You might offer a discount for eye exams to gym members or a free first consultation to employees of a partnered company, fostering community engagement while attracting new customers.
1. Investigate telemedicine platforms that comply with healthcare regulations and consider a small-scale pilot to test their effectiveness and acceptance among your patient base.
2. Identify potential local businesses or organizations for partnership and draft a mutually beneficial agreement.
3. Evaluate your patient database to identify gaps in services or products offered and focus your marketing efforts on addressing these gaps effectively.
The Future in Focus
Crafting a financially sustainable future for your optometry or ophthalmology practice is complex. From understanding critical financial metrics to managing expenses and optimizing revenue, the strategies outlined here aim to offer you actionable insights for immediate implementation. Remember, financial planning is an ongoing process. By focusing on these key areas, you’ll create an environment where both patient care and business success can flourish. Here’s to the future success of your practice!