Management Essentials

Goal Setting for Your Optical Dispensary

By Farrell “Toby” Tyson, MD, FACS

With Medicare cuts, looming inflation and the increased costs of doing business, one would think the sky is falling. These challenges are forcing all ophthalmology practices to reevaluate the way they do business. The optical dispensary, once thought of as a nuisance, is now growing in its importance to the overall health of practices. Since optical revenue has a large non-insurance component, its revenue base is less likely to be affected by the constantly changing insurance industry. An optical dispensary should generate 20% of your practice's profit and this percentage will need to grow with decreasing medical reimbursements.

Measuring Optical Success

In order to measure the success of your optical business, a thorough assessment of your dispensary needs to be undertaken. Evaluation should start with optical profitability, which should be over 30%. This gives you a quick baseline measurement on the general health of the dispensary. Next, look at what percentage of your optical revenue is dedicated to payroll. This should be 20% or less. If your payroll exceeds 20%, you need to determine the cause. It could be due to the average sale price — which should be above the industry average of $250 — or it may be that the number of sales per full-time equivalent is less than the industry average of five sales per day per optician.

Your optical capture rate (jobs sold/number of refractions) is another benchmark that can clarify concerns in your practice. Further analysis may be necessary to look at progressive lens percentage and antireflective (AR) coating penetration.

After these baselines are established it should be clear where you should focus your attention. If your average sale is lower than desired, consider bringing in industry to help train your opticians. Most of the spectacle lens manufactures have industry representatives who will come to your practice and help educate and train your staff not only on their products but also on how to sell. This should help increase your progressive lens percentage and your AR percentages, which, in turn, increase your average sale.

Other areas of concern are the sale of sunwear and second sales. These areas can be increased with the proper inventory and education of the optical staff. Frame manufacturers employ educational staff to help opticians understand products and facilitate sales through “value” selling.

If your capture rate is below 60%, you have to ask where your scripts are going. The last thing that you want is your scripts going down the street to another optical to be filled. Not only are you losing immediate revenue, but you can bet that the other practice is placing your patient in their recall system to get him back the next year.

To evaluate your capture rate, first examine your doctor-optician interaction. It is necessary that the optical staff and the physicians are in a symbiotic relationship. If the doctor does not write scripts and perform a good handoff to the optical, the optical will struggle. On the other hand, if the optical does not provide good service or loses sales, then the practice can lose needed revenue and drive away long-time patients.

Show Them the Money

Payroll can be a sticky subject — staff always wants more and management doesn't like talking about it. Basing your payroll on the industry average of 20% of collections removes the emotion from the discussion. When setting up your pay rates, remember that the 20% not only includes your opticians but also the lab staff and any other ancillary staff. Most successful opticals start with a moderate base salary with bonus that adds up to 20% of collections. This adds incentive, as the opticians are not limited in income and overtime is no longer frowned upon by administration, as it is part of the compensation program.

Monthly statistics should be posted for all the practice to see. It is a way to display business growth, allows for pride in one's work to be displayed and encourages improvement. It is best to present several of the different benchmarks mentioned above along with remake percentage, time to dispense and time to notify on these charts. As enthusiasm grows, it becomes endemic and permeates the rest of the practice. This leads to increased revenue in the dispensary and ultimately to the practice. OM

Farrell C. Tyson, MD, FACS, is a refractive cataract/glaucoma eye surgeon at the Cape Coral Eye Center in Florida. He may be reached at tysonfc@hotmail.com.