Transitions Optical Releases Multicultural Initiative Report

A new report–Cultural Connections: The 2012 Multicultural Initiative Report–overviews Transitions Optical’s multicultural efforts to date, including research conducted; resources available to both eyecare professionals and culturally diverse consumers; and programs executed through partnerships with industry and cultural organizations. The initiative report also includes profiles of Transitions Optical’s Diversity Advisory Board members, who oversee all efforts and ensure they are culturally appropriate and relevant.

Transitions Optical’s multicultural initiative report is available free-of-charge through Transitions Optical Customer Service at CService@Transitions.com or (800) 848-1506. A printable PDF version is also available online within the “My Industry” section of MyMulticulturalToolkit.com and includes links to useful tools and resources for eyecare professionals.

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.

Management & Business Academy Staff Management Survey 2012 Now Available

The Management & Business Academy, sponsored by Alcon and Essilor, have released the Staff Management Survey: 2012. This resource features findings regarding staff hiring, compensation and management practices and OD desires for staff improvements.

 

Here are several of the survey’s key findings:

 

•Employment of non-OD staff by independent practice ODs increased 6 percent during the year ending June 2012, a rebound from a sluggish hiring environment during 2010, when optometric staffs increased by just 2 percent. Thirty-nine percent of practices added one or more staff members during the past year, while just 11 percent decreased their staff.
• Larger practices (nine or more staff members with an estimated $1 million+ annual gross revenue) account for 72 percent of current non-OD staff employment and were more likely to add staff during the past year. Larger practices accounted for 78 percent of the new hires for the year ending June, 2012.
• Average staff turnover in optometric practices was 14 percent over the past year, a decline from the 17 percent turnover ratio experienced in 2010 and the 20 percent ratio in the pre-recession 2007-2008 period. Presumably, in a high unemployment economy staff is less likely to seek new positions. Turnover is lower in larger practices, in which average staff turnover is 12 percent annually. Sixty-five percent of practices experienced some turnover during the past year. Thirty percent currently have one or more open positions. Thirty-six percent of staff members leaving optometric practices during the past year were terminated.
• Personal referrals are the leading source of new hires for optometric practices, accounting for 43 percent of people hired. Internet listings are the second largest source, accounting for 26 percent of new hires. Use of newspaper ads to attract candidates continued to decline in 2012. Larger and smaller practices acquire new employees in similar ways.

Are Eyeglasses More Fashionable Now than 5 Years Ago?

Most eyeglasses wearers (66.9%) recognize that eyeglasses are more fashionable now than they were 5 years ago. Only 1/7 of those who currently wear eyeglasses believe that eyeglasses are not more fashionable now than they were 5 years ago, according to The Vision Council VisionWatch Fashion vs. Function Eyewear Report.

When compared to other eyeglasses wearers, women, younger Americans, eyeglasses wearers from higher income homes and eyeglasses wearers who also use contact lenses were all relatively more likely to believe that eyeglasses are more fashionable now than they were 5 years ago. Also, it is interesting to note that the same demographics that view eyeglasses as more fashionable now are also the same consumer demographics that did not slow their purchases of Rx eyeglasses during the recession and weak economic recovery; their sustained purchasing activity has helped minimize the overall industry losses from 2008 through 2010.

In the average practice, the optical shop represents 60%-70% of the dollars coming through the front door. We need to pay attention to this area of the practice. Generally, our first thought about the optical side of care is to promote function over fashion. Our typical focus is to make sure the patient is able to function maximally at work, home, school and play.  But, the Vision Council Vision Watch Fashion vs. Function Eyewear Report reminds us to not forget fashion.

This Vision Council Vision Watch Fashion vs. Function Eyewear Report gives us valuable information. Fashion is important to our patients. It needs to be important to us as well. Based on this we need to question how well we manage fashion marketing in our opticals.

Fashion marketing goes beyond just merchandising. Fashion marketing involves positioning, branding, marketing mix, and, yes, merchandising. From the perspective of fashion marketing, go back and look at your optical and answer these four questions:

    1. Where have you positioned your optical?
         -High dollar
         –Medium dollar
         -Low dollar

     2. Have you branded your optical?
          -Do you have recognizable brands in your optical?
          -From just visuals, can a patient successfully navigate your optical?
          -Is there a theme in your optical?

    3. Do you manage your marketing mix?
          -Do you show the same frames as other opticals in town?
          -Do you have a minimum of 25 frames in each brand on the frame board?
          -What do you do with your non-performing frame lines?

    4. How well does your optical manage frame merchandising?
          -Do you highlight brands?
          -Are your displays focused (i.e.: not too many products on one display)
          -Are your best sellers at eye level?

Don’t just think about this, instead walk into your optical and ask yourself if you’ve achieved the fashion marketing objectives described above. Do you have room for improvement? Create a fashion marketing plan today to make your optical the best it can be.

Are You Running a Modern Billing Department? If Not, Here’s How

Use the latest technology and third-party services to make insurance processing more efficient for your practice.

There are many aspects to utilizing technology, software and people to modernize billing and tracking of both vision and medical insurance. Your practice can make the most of such technology to make billing more efficient and profitable. Here is how you can do it.

Recognize 5 Keys to Optimizing Billing Technology

SOFTWARE THAT GENERATES REPORTS: Utilize practice management software that is capable of generating reports on billing status.

EDUCATE STAFF: Educate staff to be dedicated to efficient use of insurance. Education of a key staff person to coordinate vision benefits and medical benefits is imperative. It is also necessary to train front desk employees to capture insurance information prior to the patient being seen by the practice.
 
PREVIEW INSURANCE INFO:  Provide insurance information to the doctor prior to seeing the patient. The doctor needs to be aware of medical as well as vision benefits for both professional fees as well as ophthalmic materials.

DELEGATE: Assign a single individual the final responsibility of making sure claims are filed and accounts receivable reports are up to date.
 
USE A CLEARING HOUSE:  Utilize a clearing house (a third-party company that you send your paper claims to for transference into electronic claims) to achieve maximum efficiency.

The modern practice and its billing department can benefit from the innate efficiencies of a clearing house. VisionWeb could be your clearing house of choice, however there are several to choose from such as Gateway, and Eyefinity. Having implemented VisionWeb/Emdeon many years ago in our practice, you may enjoy the following benefits:

Centralized Claim Filing
It is possible to file claims online without using a clearing house, but this method is far from ideal. Filing claims electronically without a clearing house means going to multiple sites on the Internet, with varying user interfaces, to get the job done. Advanced billing departments realize there is a better way. Clearing houses are a go-to solution for practices because the clearing house software allows employees to do all of the following in one location:

  •    Check patient eligibility
  •    Submit and track claims
  •    Process secondary claims
  •    View detailed reporting information
  •    Manage Electronic Remittance Advice (ERA)

Efficient Management of Reporting and Analytics
Even the most efficient office will have denied claims. The way we keep a close eye on our claims is through detailed reporting and analytics that cover every aspect of claims, such as:
-The number of claims that have been rejected vs. accepted
-Top payers that are rejecting claims, by amount
-Timeline of claim submission for tracking
-Top rejection reasons
 
Optimized Practice Management Systems
Good practice management software is the brain center of a practice. Practice management software is a significant investment, and yet, practice owners are putting them to work, especially for claim filing. Technologically advanced practices utilize their practice management system claim filing functions to:

-Create batch claim files directly within the system
-Upload the batch claims and submit directly to payers
-Reduce redundancies associated with re-keying claims
-Generate reports quickly and easily on demand

Utilize Electronic Remittance Advice (ERA)
Billing departments become more efficient when they avoid paper claims. EOBs, especially, since payers have migrated to electronic payment methods, are processed more quickly via the internet.  Electronic Remittance Advice is common among progressive practices. Filing via your computer simplifies the reconciliation and secondary claim filing processes by:

-Providing remittance information in a searchable, electronic format
-Making it easy to search remits by payer,  date or provider  
-Giving users the ability to print only the information they need for secondary filing

Utilizing the most efficient electronic format increases the productivity of your personnel and your practice. Change is often disruptive initially, and yet, we adapt and change or we continue to fall behind. Make the insurance processing technology changes your practice deserves!