How Do You Price Free Form Progressive Lenses?

Freeform progressives are commanding top dollar at many optometric practices, according to The Vision Council November 2012 Eye Care Professional Report. The most expensive progressive lenses being dispensed were free form progressives which sold on average for $413.14. Free form progressives were less expensive at smaller practices. Practices with only one location sold free form progressives for an average of $402.93, while practices with more than five locations sold free forms for $436.82 on average–over $30 more per pair. Free forms were also more expensive in the Midwest region of the US than other regions ($431.60 in the Midwest vs. $382.39 in the Mountain-Pacific region.

 

How freeform progressive lenses are doing in your practice?

If you have an average practice, you are seeing 2,200 patients for exams with refractions per year per doctor. Approximately 60 percent are getting eyeglasses–that would be 1,320 people (eg: .6 x 2,200 = 1,320). Of the 1,320 people who get glasses, approximately 50 percent are single vision and 50 percent are multifocals. That means 660 potential pairs of freeform progressive lenses per year could be sold in your practice.

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Reasons to Switch from Traditional Fax to E-Fax

Fax machines have become mainstays in most optometric offices. Despite the availability of e-mail and text messaging, your staff probably still relies on fax for tasks such as communicating with vendors, insurance companies and even some patients. If you haven’t done so already, consider updating this workforce office staple with an e-fax. Housed electronically, you and your staff can access the documents it gets sent anywhere anytime. Plus, if the e-fax service you use enables it, you can even automatically add the documents sent to the e-fax to your “cloud” storage, or online platform-based files or electronic records.

 

Here are some specific advantages of an e-fax:

 

1. You don’t need a dedicated phone line.
2. You won’t have a fax machine taking up space or breaking down. However, you will need a scanner (which will take up space and break down, but scanners are useful for other office needs, as well).
3. Electronic faxes show up in your office e-mail account so your office won’t waste paper printing faxes that don’t need to be printed.
4. You can see online contact lens vendor requests while you are out of the office via your e-mail. If you also have a cloud-based EHR system, you can make a decision to verify or not without having to call your office.
5. If you are writing a letter to another doctor or to a patient, you can simply upload the letter from your Word document files into the e-fax and then click fax. No need to print the letter, give it to your assistant, and then have her spend a couple of minutes getting it faxed.
6. All faxes sent to and from my office are sent both to our regular office e-mail address and to a personal e-mail account. This allows for easy record keeping in the event I need to check information from a previous fax.
E-Fax happens to be the company that provides e-fax service to my office, but I’m sure there are others. This has been a really good decision for my office and it may be a good decision for yours.

How Satisfied Are Patients With Exams at Independent OD vs. Chains?

Independent ODs are leaving a more favorable impression with patients than corporate-owned optometry chains, according to Jobson Optical Research’s 2012 Adult Consumer Eye Exam Experience. Fewer consumers who had an exam at a chain in the last six months strongly agreed with the statement that overall they were satisfied with the eye exam experience compared to those who had an exam at an independent in the last six months (45.3% and 58.1% respectfully). Indeed, just under half of those consumers who had an eye exam at a chain in the last six months (46%) said the exam was thorough, compared to 58.9% of those consumers who had an eye exam at an independent in the last six months.

Among consumers who had their eye exam at a chain in the last six months, 53.4% said they were extremely likely to return to the same place for their next eye exam. By comparison, 70.7% of those who had their eye exam at an independent in the last six months said they were extremely likely to return to the same place for their next exam.

Of the respondents who had their exam at an independent in the last six months, 63.5% reported that they are currently covered by a type of managed vision care or vision insurance plan. This is greater than the 53.9% who have a vision plan and chose to have their eye exam at a chain in the last six months.

iMatrix Launches Web Marketing Services for ODs and Dentists

Internet Matrix, Inc., (iMatrix) announced its expansion into online marketing for optometrists and dentists. iMatrix, based in San Diego’s Sorrento Valley, revealed that it will now offer optometric and dental web marketing solutions that include professionally designed web sites, social media management, video marketing, PPC advertising, and their advanced search engine optimization service called Dominator. According to a company spokesperson, the new online marketing services are designed to equip optometrists and dentists with the tools needed to reach a broader audience of potential patients online and increase local market share.

Optometrists now have a new resource for online marketing services. Optometry web marketing services are now being offered by iMatrix and are tailored to meet the needs of the optometry industry. The new services provided by iMatrix are Starter, Social, Media, Velocity and Dominator.

According to iMatrix, the Starter Service includes a professionally designed web site with a structure that is optimized for search engine crawlers. In the Social Service, social media for dentists or optometrists is included with the professional web site. The next service level up from Social is the Media Service, which includes the customizable web site and social media management, as well as video marketing for optometrists and dentists. The top two levels of web marketing services provided for dentists and optometrists are Velocity and Dominator. Velocity builds on all the features of Starter, Social and Media, adding pay-per-click (PPC) advertising and re-targeting campaigns. The premier-level service offered by iMatrix is Dominator, which encompasses an optimized web site, social media management, video and video advertising, PPC and custom SEO management.

Optometric practices that are interested in these new services can view demonstrations of the services or live chat with an internet consultant through the company’s web site: http://www.imatrix.com.

Who Does Better Financially? Solo ODs or ODs in Partnerships?

Optometrists who practice alone are up against greater financial odds than those in partnerships. Annual income for solo doctors averaged $144,125 last year. But ODs in partnership or group practices averaged $191,195—a difference of nearly 33%. Like other doctors, the report surmises, optometrists are under an ever-growing pressure to invest more in technological and practice costs; group practices can share these expenses and take advantage of efficiencies of scale. That can translate to more profit.

Net is an interesting topic in the optometry world. There are actually two different “nets” we should discuss.

The Optometric Net is calculated by adding together all dollars paid to all optometrists (both employed optometrists and owner optometrists) for working in the practice plus any money left over after paying all other expenses. This is the number that is traditionally referred to as the “Net” in optometry. This practice is unique to optometrists.

A True Net is calculated by subtracting all expenses including what it costs to have optometrists in the practice from all money collected. This is the number that all other businesses in the world (except optometric practices) use to judge fiscal health.

Formula:                  

Money collected-Cost of Goods-Payroll-Occupancy-Marketing-Overhead=Optometric Net-Optometric Payroll=True Net

You need to know both numbers, the Optometric Net and the True Net. There are a two major reasons: tax consequences and future consequences.

It matters, from a tax perspective, how you remove income from a practice. This is a discussion you should have with your tax planner as soon as possible. It is your responsibility to pay any taxes that are appropriate, but if you have not had the discussion of how best to remove money from the practice with your tax planner, then that conversation needs to be scheduled now.

As the owner of the practice, how do you know how much you are going to be paid?  If you are just waiting to see how much money is left over and that becomes your “payroll” amount, then you are not treating your practice as a business. Hiring an optometrist to work in your practice is a business expense. If you are working in the practice, then you need to be hired by the practice to do that work. Every business needs to know its true expenses. You need to know yours.

Strategies to Take Your Practice to the Next Level

Building your practice takes more than increasing patient volume and practice revenues. The practice you strive for should allow you to make more money and work less while it continues to increase in value. Realizing this vision requires strategic planning and financial investments within the context of an overall financial plan.

Operating Efficiency

Practice operating efficiency can be defined as the amount of net cash flow that can be obtained from each dollar of collected revenue. Net cash flow is critical because it pays for debt service (if any) and the practice owner’s salary. Many ODs feel the only way to increase practice net cash flow is to increase revenue. Increasing revenue is about marketing, translating it into more net cash flow requires good management.

Expand, Remodel or Relocate Your Practice

•    Add a lane or two
•    Expand the dispensary
•    Add a pre-test area
•    Establish a lab

Purchase New Equipment

Instrumentation such as OCT and digital retinal imaging often are profitable long-term investments.

Purchase an Additional Practice

Be aware that many second practice purchases where the second locations are maintained can result in break-even or even negative cash flow.

Cash flow may be enhanced by increasing revenues, reducing expenses (consolidating certain jobs), vendor discounts or paying off debt. If you are currently working in your primary practice less than five days per week, then the economics are better because you can also work in the second practice without additional associate expense. Each transaction should be analyzed for short and long term economic benefit and the ability of the primary practice to carry a portion of the investment. Remember, you don’t get paid anything extra for a long commute! Instead, this would be an excellent opportunity to place an associate OD in this new practice.

A lucrative alternative is to purchase an “in-market” competitor and consolidate into one location (known as a “roll-up strategy”). Not only does this enhance cash flow but it also eliminates competition. Roll-ups are management intensive, but if done properly, combining locations can drastically reduce overhead costs, thereby increasing net cash flow. Greater vendor volume discounts may also be available. In many instances, the seller continues to work in the consolidated practice as a minority owner or associate to ensure patients make the transition.

Sell a Part Interest in Your Practice

Multiple OD practice benefits:
•    Backup when you want time off (vacation, health, etc.)
•    Additional specialties
•    Recent graduates are glaucoma-certified
•    The ability to grow beyond a five OD per week practice
•    Potential in-house buyer when you are ready to sell the practice
Additional benefits when multiple ODs own the practice:
•    Dedication to the practice–many associates want to own a practice. What would happen to your patient base if your associate left? What if they opened up down the street?
•    Limited patient transition risk when a senior OD retires and sells to a junior partner already in the practice.
•    Lower OD turnover.
•    The OD seller can raise personal cash from the sale of a partial practice interest. Funds can be used for purposes such as: your retirement fund, medical costs or a college education for the kids, etc.

Partial Ownership Acquisition Loans

Now you can retain your valued associates by making them a partner in your practice and avoid the non-economic situation of carrying the loan yourself. This can be accomplished through a knowledgeable financial institution.

Own Your Practice Real Estate

Instead of paying rent to your landlord, you may be able to build equity in your practice real estate through ownership. Real estate investments of this nature should be viewed over a minimum 20 year hold period to help avoid market cycles, increase the probability of long-term appreciation and provide time to pay off mortgage debt. Economic analysis should be performed with a knowledgeable local real estate broker and your accountant. Many acquisitions do not occur due to the impact on net cash flow. Mortgage payments often are much higher than rent, and most ODs don’t have the funds for the additional down payment to reduce payments. Down payments range from 10 percent to 35 percent or more. In certain locations the low price of real estate along with low interest rates makes mortgage payments roughly equivalent to rent.

Open a New Office or Buy an Existing Practice?

Once an OD decides to dive in and own a practice, one of the next decisions they need to make is whether to plunge into the pool of opening a practice or to buy an existing practice.

Practice and Building Owner

One of the advantages of owning the building is the possibility for expansion. After checking local zoning laws, it may be possible to add a second story to the building and reap the rental income from other medical or business professionals on the second floor.

Keys to Purchasing a Practice and Office Space:

-Take your time and shop around.

-Consult with a financial advisor for tips, resources and advice.

-Have a lawyer draw up a contract for purchase.

-Set up a business plan for the practice.

-Staff changes may be needed to put your vision into action.

-Advertise to let everyone know you’re the new doctor in town.