Marketing by the Numbers: Measure Often for Success

Advertising & Promotion, Finance|Wealth, Marketing, Resources

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Many practices have marketing plans, but too few regularly measure the performance of those plans to see how effective they are. Establishing benchmarks and taking regular performance measurements can maximize your ROI (return on investment). Without such measurements–and without adjustments to fine tune the plan–you’re just conducting a guessing game. The key is to measure what works and what doesn’t, then you can home in on the right marketing formula to increase revenues and profits.

IDENTIFY MARKETING OPTIONS
Calculate and Track Marketing Campaigns
to Prioritize Marketing Spend1. Calculate cost of campaign.2. Calculate expected return on investment.3. Track activity related to marketing activity to determine how much money is coming in. Here is a formula to use to help determine ROI:Cost of marketing event or campaign X .33 = how much money you need to generate from the event or campaign just to break even.Example: Trunk show that costs $2,000 to market and organizeAssuming an average profit margin of 30 percent and a campaign, then you’ll need to generate at least $6,000 to pay for the campaign–just to break even: $2000/.33 = $6,000. Therefore, the trunk show used here as an example would need to generate at least $6,000 in revenues to yield $2,000 in profits–the amount you invested in the event. Otherwise, it is not worth to investing in. Of course, you want to make a profit and pay for the campaign so in this case you might want to generate $8,000 from this trunk show–yielding $2,400 in profit or $400 more than you invested in the event.4. Prioritize which marketing campaigns are worth investing in long-term based on which generated a return on investment.

Patient communications.Use e-mail, Facebook and other social media to deliver your messages.

Events. Host regular open houses/ frame trunk shows. Advertise in advance.

News event. Leverage a news event to contact your patients. Announce the addition of new equipment, products, services or staff.

Newsletter. Do monthly e-mail newsletters. Newsletters should be educational. Include an action that encourages patients to come in or call your office.

Business cards. Give your staff their own business cards with their name on it to hand out. This encourages them to meet people in the area.

Unique feature. Set yourself apart by offering a unique customer value added feature that also serves as a marketing piece. For example, some doctors offer chocolate bars with their name and logo.

MEASURE RESULTS BY MONTH
Actual
Minimum (promise)
Stretch Goal
Marketing costs
Number of leads generated
Sales (gross collections)

Take into Account Total Costs
The marketing costs measure only the direct costs related to the campaign: printing, food and entertainment. They do not include labor, rent or other general overhead costs. We also exclude cost of goods, and this is a function of the total gross sales. However, the sale price offer or promotion should be higher than your cost of goods. Also, any discounts on sales items could affect the profit and change your profit margins (break-even amount). Tip: Package materials in your promotion so the combined profit is still maintained. For example, discount frames only if combined with high-index lenses or a pair of sunglasses.

Evaluate the campaign every three months if a recurring event.
If the campaign spans a longer time period, measure results on a weekly basis.

Constantly evaluating the success of marketing via thorough measurement makes it more likely these efforts will result in more patients in your exam chair.

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How to Compute Net Cash Flow

ALISSA WALD, OD

Alissa Wald, OD, and her husband, Scott Daniels, own Practice Concepts, a firm that provides practice sales and coaching services. To contact them: 877-778-2020 or scott@practiceconcepts.com.

SCOTT DANIELS

Alissa Wald, OD, and her husband, Scott Daniels, own Practice Concepts, a firm that provides practice sales and coaching services. scott@practiceconcepts.com.

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Incorporating Vision Therapy Into Your Practice

Practice, Resources, Specialty Practice

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Vision therapy is a richly rewarding aspect of optometric practice. It provides opportunities to make a positive difference in the lives of old and young alike as you to equip them with the tools to learn, socialize, and achieve their dreams.
It also happens that vision therapy is a powerful practice-builder for an optometric practice. The strong family bonds you form in working with children and their families can provide numerous referrals that can grow your patient base exponentially.
In order to succeed in incorporating this optometric specialty into your practice, you need to acquire training and skills in the clinical aspects of vision therapy—and you also need to develop a professional network that provides you with a growing patient base. In this series of videos and links to resources, Review of Optometric Business provides a primer on “Vision Therapy: How It’s Done!”

Acquiring the Tools to Practice Vision Therapy”
To learn more about vision therapy, begin by building your knowledge base and skill level through a host of resources. >>Click HERE to View>>

“Vision Therapy: A Great Practice Builder”

If new in practice, or even if you are established, vision therapy offers growth opportunities. It is a revenue-builder as a fee-for-service specialty. It also is a strong generator of referrals for a patient population (children and young families) that often has yet to choose an eye doctor. Remarkably, one successful case in vision therapy can provide up to 50 referrals. >>Click HERE to View>>

“Key to Referrals: Work with Occupational Therapists”

To generate referrals, work closely with the occupational therapist that a child may already be working with. Inquire about this at intake, then ask the parent for consent to contact the therapist. The key is to work as a team with other professionals for the good of the child. Once you establish working relationships with occupational therapists, their influential referrals to your practice will prove to be a powerful patient-base builder. >>Click HERE to View>>

“Plan to Expand…and Offer More Services”

When you succeed with vision therapy, the need to expand comes quickly. Think ahead toward bringing in associates to provide more services and meet growing needs. Your alma mater or nearby optometry school may prove a fertile source of associates who share your values and work ethic. Further, in this mobile society, patients frequently move, and new potential patients move to your area. AOA resources can help you to locate and recommend capable optometrists who provide vision therapy in other areas of the country—and can help other optometrists to find you and refer families to your practice. In addition, embrace the AOA InfantSEE program to serve a vital need and build your practice in the process. >>Click HERE to View>>

“Caring for Children: Helping Kids to Be the Best They Can Be”

In our society, children are greatly underserved when it comes to eyecare. By offering a comprehensive eye exam to the young, you can spot vision conditions that, if left untreated, can result in a child being labeled learning disabled—and this can hold them back in life. In many cases, vision therapy can turn that around. Equip yourself to give a child the visual tools that enable them to be a great student. >>Click HERE to View>>

ANDREA P. THAU, OD, FAAO, FCOVD

Andrea P. Thau, OD, FAAO, FCOVD, is founder of Dr. Andrea P. Thau and Associates in New York City. She is an AOA Trustee and past president of the New York State Optometric Association. To contact her: APThau@AOA.org

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Install a Referral System–and Track Your Growth

Marketing, Practice, Resources

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When new patients come in, we ask how they came to us, and an average of 50 percent are friends of patients, and 65 percent are family of patients. Surprisingly, about 25 percent come from search engines, and the remaining from insurance lists, and passersby. Before the advent of search engines and social media, our second-largest source of referrals were insurance provider lists.

Tracking referrals from patients to friends and family, and delivering service that impresses patients enough for them to spread the word about us, continues to bring new patients into the practice.

We started our practice cold 28 years ago. We started with the referral of our very first patient by a friend of a friend. Since then, we have always placed a high value on referrals. I believe it is the best way to bring in patients who are most likely to be loyal over time. We make a concerted effort to treat each patient like our only patient and try to make everyone feel like family.

The patient intake form Dr. Smith makes available for patients on her practice web site.

Dr. Smith says it’s important to ask new patients how they found your practice, and to encourage those who had a positive experience to let their friends and family know about your services.

USE EVERY OPPORTUNITY TO ASK FOR REFERRALS

Many patients make comments like, “I should bring my husband/wife in” or “I should bring my kids in.” This reassures us that we did a good job of marketing our practice during their visit because they want their family and friends to have the same experience.

When a new or existing patient calls for an appointment, our front office staff asks if there is anyone else in the family we could help make an appointment for. If a patient expresses appreciation for a job well done, then our staff says, “Thank you! It has been our pleasure, and if you or any of your family or friends need our services, we would be happy to help them as well.”

To increase the likelihood of people wanting to tell their friends and family about a business, that business should excel and stand apart from the norm. People vary in what things and experiences may impress them most. However, If you look at the most successful businesses, especially service-oriented businesses such as restaurants, hotels, and healthcare practices, it is undoubtedly the service that drives the most referrals.

Our practice mission statement is “Focused on your needs. Committed to excellence.” Our goal is to have our patients tell others that they had excellent, thorough care and that we provided great service.

We e-mail thank you notes and surveys to every patient after their exam. We currently have a 95 percent satisfaction rate with a “yes” when asked if they would refer others.

TRACK CONSISTENTLY

For the past 23 years, we have tracked where our patients come from. We have a Welcome Sheet, which we ask every new patient to fill out. If the answer to the question of how the patient found us is left blank, the front office staff is responsible for asking the patient directly. On the rare occasion that the response to that question is still blank by the time the patient reaches the exam room, I ask the patient directly myself. It is really a pleasure to hear that most of them are referred by friends, work colleagues and family members.

OFFER EXCEPTIONAL SERVICE & SAY THANK YOU

In California, where our practice is based, it is illegal for any healthcare professional to offer incentives for referrals. However, we make sure our patients are thanked and appreciated verbally for their referrals.

By focusing our efforts on providing exceptional care and service to our patients, we hope to earn their loyalty and the referrals of their friends and family. You can’t put a price on service and building relationships with patients. It is like putting a price on friendships. I believe that as old fashioned as this may seem, building a practice based on loyalty and referrals is far less expensive and time consuming than the cost of any type of ad marketing or media advertising. Our practice has not had much response from paid advertisements. It may be that the public does not respond to objective ads anymore with the advent of more subjective, personal internet ratings.

We used to have a large ad in the yellow pages, which was astronomically expensive. It was a big book of large ads for businesses, which made it difficult for consumers to decide where to go for services. Now, with internet reviews that are free for consumers to use, we virtually have free advertising by the reviews placed by our patients.

Approximately 25 percent of our new patients find us directly through internet search engines and reviews.That is a lot more than the number of patients who came in after seeing our yellow page ad, which was only about 5 percent.

RELATED ROB ARTICLES

Reach Out & Serve Hispanic Patients

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TRAIN STAFF TO OFFER A MEMORABLE EXPERIENCE

The majority of patient referrals are from happy, satisfied patients who report having had the most thorough exam, or best service, ever. We also receive many referrals from long-time patients. Other popular referral sources are patients who have not received successful contact lens fits elsewhere. Many refer their friends, colleagues and family members simply because our staff has shown them great customer service, and were able to develop a strong rapport with them.

I cannot over emphasize the value of a well trained staff in order for patients to want to refer others. The staff actually spends more total time with our patients than the doctors, so it is imperative that our staff is on board with our goals and objectives for growing the practice. Patients will stay with a practice or leave a practice very easily because of their interactions with the staff.

TAKE OPPORTUNITY TO PASS ALONG PRACTICE BUSINESS CARD

When a patient compliments our office, a front office staff member might give them a business card and say, “Thank you so much! We appreciate your compliment! Please take a business card in case you know someone who may need our services.” Most of the time patients take business cards, or ask us for our business cards, without any prompting, and this is really the best compliment they can give us!

BEVERLY JUE-SMITH, OD, MBA

Beverly Jue-Smith, OD, MBA, is the owner of San Ramon Family Optometry, Inc., in San Ramon, Calif. Dr. Jue-Smith also is owner of Optometric Consultants, a private practice consulting firm. To contact her: srfoptometry_drb@yahoo.com

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Cornucopia of Practice Prosperity Tips

Practice, The Patient Journey

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KEEP THE SMALL PROMISES

If your patient is seated and hears your staff say, “The doctor will be right in to see you,” yet it takes 15 minutes before you enter the exam room, your patient may wonder if this failure to meet expectations pervades into other areas of service. With this in mind, if the little promises aren’t met, don’t be surprised if your patient feels uncertain about buying those $500 premium progressive lenses. So, as a team, set realistic expectations for your patients and aspire to meet or exceed them with consistency.

FERTILIZE THE FLOWERS SO THEY CROWD OUT THE WEEDS

Your practice is like a garden. You want flowers, not weeds. Some patients are like weeds in their behavior, yet it’d be inappropriate to kill them by spraying Roundup. In these cases, the better approach may be to water and fertilize the flowers (the good patients) so they grow and crowd out the weeds (the bad patients). I’m not saying to be rude or to offer poor service to the weeds, but refrain from going above and beyond in service because you don’t want to encourage them to refer their friends, family and co-workers, who will likely have a similar demeanor to them. Sure, you can also dismiss a patient, akin to pulling out a weed. Yet indiscriminant dismissal of patients can unnecessarily inflame feelings, especially if these patients were already not planning to return.

DIRECT ATTENTION WHERE IT’S NEEDED

Have you noticed how young children often do not know how to react to the air puff tonometer until looking at their mother? If the mother is fearful and communicates this to her child, even if non-verbally, it can make it difficult for your assistant to obtain a measurement. Yet if the mother’s expression is nonchalant, as if it’s no big deal, the measurement is often readily obtained. Similarly, adult patients look to their doctor to know how to respond in several instances. If you ask your new contact lens wearer, “Are you having any problems?”, rather than, “How are you enjoying freedom from glasses?”, you may accidentally train your patient into looking for problems and being overly critical and turning into an unpleasant whiner. In the same way, if you spend a significant amount of time discussing the change in the numeric value of the patient’s glasses prescription, you may misdirect attention from the patient’s need for UV protection due to pingueculae and an incipient cortical cataract.

BUILD VALUE BY EDUCATING INCREMENTALLY

Throughout the patient care cycle, there are opportunities to incrementally educate the patient on the value of your practice’s service. Instead of your reception staff just telling Mrs. Jones to, “Please fill out this welcome form,” make sure the patient also hears, “… because it helps us better serve your needs.” During the preliminary exam sequence, don’t just have your technician say, “Put your chin here,” but also have the patient hear, “This instrument measures the fluid pressure in the eyes, which can help the doctor diagnose eye health problems.” It doesn’t take much additional time to build value with short explanations, and doing so can make patients feel much better about their exam and for selecting your practice.

UNDERSTAND YOUR PLACE

You are an optometrist–not a rock star, celebrity or sports icon. I’m sorry to break it to you this way, but this means that few of your clientele truly want to follow you on Facebook and Twitter. The reality is that optometrists are closer in this realm to gynecologists and psychiatrists, as there isn’t much organic consumer desire to follow these professionals through social media. Therefore, while you need an online presence, realize that your time and attention is still best directed toward patient care and the patient experience, rather than digital expressions of narcissism and self-promotion. Providing a high level of consistent service is arguably still the most powerful form of marketing since your delighted patients will promote your business and serve as practice ambassadors.

PURSUE A SMALL NUMBER OF GOALS AT ONE TIME

In your strategic planning for 2015, make sure that you set a realistic number of goals. In the field of psychology, “goal dilution” describes how the more goals you have, the less likely each of them will actually get done. So, at any given time, prioritize the top three initiatives, but probably not more than that, and concentrate and expend enormous effort to implement them and see them through.

BRIAN CHOU, OD, FAAO

Brian Chou, OD, FAAO, is a partner with EyeLux Optometry in San Diego, Calif. To contact him: chou@refractivesource.com.

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Managing Your Online Reputation

Digital Marketing, Marketing, Practice, The Patient Journey

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Proper online reputation management is key to protecting your practice’s image and attracting new customers. A huge part of online reputation management is not only about obtaining good reviews, but it’s also about actively monitoring and managing unsolicited reviews. Thankfully, there are effective strategies your practice can utilize in order to ensure when people go looking for information about your business online, they’re going to like what they read.

The Importance of Your Online Reputation

Reviews are an essential element of online reputation management and can have a huge influence on your bottom line. They serve as online promotions to boost your business; the flip side is enough poor reviews and your practice may suffer the consequences.

There’s plenty of data to support the notion that people not only look for online reviews before doing business with a company or brand, but also trust these reviews. In fact, Nielsen reports1 that 66 percent of people trust online opinions and reviews from other consumers. Another report by BrightLocal2 found that 80 percent of people trust online reviews just as much as they trust a recommendation from a personal contact. In other words, your reputation is always at stake online, and people’s opinions carry serious weight.

Monitoring Is Key

One of the most important areas of online reputation management is proper monitoring of your practice across channels, whether it’s Yelp reviews, Facebook posts, or Twitter comments. At the same time, it’s also important to keep your eye on the niche sites that relate to your industry or community, such as specialist websites that offer reviews on local doctors, forums where customers may be discussing a retailer’s products, or even the comments section of a local newspaper.

In short, your online reputation extends beyond the typical social media channels, and you need to understand where these potential conversations might be taking place.

A Note About www.RateMDs.com.  One of the most popular sites Canadian patients use for rating and reviewing is www.RateMDs.com, which allows patients to leave anonymous reviews of practitioners. The site gives eye care practitioners the ability to “claim” their page, which comes with a verified check mark and benefits such as posting images and responding to the anonymous reviews. In addition, for a monthly fee of $179 US you are able to “promote” your practice, increase visibility to patients searching for practices in your area and prevent competitors’ ads from appearing on your page.

 

With the “Promoted Plus” fee of $359 US per month, you receive the ability to hide up to 3 suspicious reviews. Some Canadian doctors have been critical of the website’s practices1, but it continues to be one of the first Google search results patients will see when seeking information about their doctor.

CHECK YOUR OWN RATING ON RateMDs.   www.ratemd.com 

1. http://www.cbc.ca/news/canada/manitoba/winnipeg-doctor-questions-online-rating-website-ratemds-1.3416530

Unfortunately, it’s not only difficult to find all of the conversations surrounding your business online, but it’s also extremely time consuming. That’s why it’s important to work with an online reputation management specialist. The right specialist can use software to track all conversations, analyze trends, and pinpoint or flag reviews that are unfair to your business.

How to Properly Manage Reviews

At the same time, it’s important to actively manage unsolicited reviews. While these reviews might be perfectly positive, others might really attack your business. Here are some ways to handle a negative customer review:

  • Speak with the administrators of the review website. For example, if you can provide proof a rival business actually left the review, the website will generally remove it as this practice is against the reviewing policy of many websites.
  • Address the review publicly, and build a solid argument that refutes the reviewer’s comments.
  • Try to message the reviewer privately and solve their problem. Many negative reviews are simple misunderstandings. Once those are cleared up, reviews can be updated to better describe the full interaction.
  • Use an online reputation management service which can help you develop strategies for dealing with negative reviews, promote your website through search engine optimization (SEO) to conceal bad reviews, and work with you to show your business in a positive light.

How Online Reputation Management Helps With Good Reviews

There are a number of strategies for generating good reviews. Of course, every good review starts with excellent customer service and a commitment to the customer. However, certain strategies can help build on those experiences and translate them into actual reviews.

First, don’t be afraid to ask your customers for reviews. Of course don’t tell them to be positive, but instead ask for an “honest” review. In general, try to focus on highly engaged customers. Create an e-mail list of your most loyal customers and target them.

Second, when you go above and beyond for a customer, let them know how important a review is for your practice. This is usually the moment when a customer wants to pay you back, and a good review is a great way to do it.

Third, analyze the positive reviews you already have. They can give provide you with strong insight about what kind of service delivers a positive customer experience or what features of your product appeal to your core audience.

Ultimately, when someone searches online, you want them to see positive reviews that reflect the quality of your practice. For online reputation management services that provide you with the right mix of protection and promotion, it’s time to work with professionals that can help your practice grow.

  1. Global Trust in Advertising. (2015, September). Retrieved May 10, 2016, from http://www.nielsen.com/content/dam/nielsenglobal/apac/docs/reports/2015/nielsen-global-trust-in-advertising-report-september-2015.pdf
  2. Local Consumer Review. Retrieved May 10, 2016, from https://www.brightlocal.com/learn/local-consumer-review-survey/

HOLLY HOWSON-WATT

iMatrix

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Writing SEO Content for Your Eye Care Practice Website

Digital Marketing, Marketing, Resources

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Custom, search engine-optimized content is crucial to the online success of your practice. In an internet survey conducted by Pew Research Center, 72 percent of participants said that they went online for health-related information in the previous year, and 77 percent of those began their search with a search engine.[1]

These statistics highlight just how important it is to rank highly on Google’s search engine results pages. Custom content is one of the most powerful ways that you can improve your online search rankings. With this in mind, how should you optimized your website content to be favoured by search engines?

The answer to that question involves implementing several search engine optimization (SEO) best practices that satisfy Google’s complex search algorithm. Recent updates to this algorithm have made custom content an increasingly important aspect of search engine optimization to focus on.

Consider the following factors when writing SEO content for your eye care practice’s website:

  1. Quality over quantity

A search engine’s main goal is to provide users with a list of website that are most relevant to what they are searching for online. Websites that lack substantial content are commonly determined to be spam and lowered in the search rankings.

However, using unnecessary filler text just to satisfy a word length goal, or posting low-quality content in order to make a certain number of blog posts each week is poor practice. In order to provide a valuable resource to visitors to your website and improve your online search rankings, aim to post consistent, informative and relevant content to your website.

  1. Keep the content useful and informative

Search engines are designed to return search results of websites that they have decided are most relevant to the user. Therefore, your audience is the most important factor to consider when you write content for your website. Who are you writing for, and what are they looking for? A simple way to answer this question is to identify if any currently trending eye care topics apply to your practice and patient population. Once you have identified topics that your patients will find interesting, you can then decide what information would be most valuable to them.

Plus, if you are still searching for some content inspiration, a Pew Research Internet survey recently revealed that the most frequently researched topics are specific diseases and conditions, treatments or procedures, and profiles of health professionals.

  1. Keep it credible

New updates to Google and Facebook give considerable weight to credibility of content as a ranking factor. Now more than ever, the internet is rife with misinformation and articles that are deliberately meant to look credible, but are, in fact, completely false. Pay particular information to the credibility of your sources when drafting custom content, and make sure that it is entirely accurate and up-to-date.

  1. Write high quality and engaging content

As search engines learn more about how internet users make decisions, they do a better job of delivering exactly what users are looking for online. Health-seekers in particular are looking for substantive websites that offer quality advice and general answers to their health related questions. Search engines understand this and take measures to keep “click-bait” (websites that offer little value and are designed solely for getting clicks) from ranking highly on search engine results pages.

Click-bait sites are usually superfluously stuffed with keywords in order to gain favourability with search engines. It is okay to use some keywords, but try to keep the focus on quality and providing engaging information.

Wrapping up

Previously, high-quality content played only a secondary role in SEO strategy. It is now one of the main ranking factors used by search engine algorithms to judge whether or not a practice website is worthy to be displayed on the first page of results. If you lack the time to write your own content for your practice website, it is instrumental to the success of your practice to entrust a professional content writer with the task. Now is the time to start focusing on the online success of your practice.

 

Find out how the SEO experts at iMatrix can provide professionally written content designed to drive more potential patients to your practice website and convert them into treating patients by calling 877.596.7585 or visiting us online at imatrix.com/OPTIK216.html

[1] http://www.pewinternet.org/fact-sheets/health-fact-sheet/

RANDY TRAN

IMATRIX

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Four Steps to Prepare to Sell Your Practice

Buying-Selling A Practice, Practice

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When selling your practice, you can make more money if you prepare your practice for sale well in advance–and utilize the expertise of a broker.

Of the roughly 40,000 ODs in the US, only a minute portion fit the demographic who would be interested in buying a practice, at the exact time you decide to sell it, in your exact location. In other words, the buyer market is small; so small that you must take the proper steps to ensure your practice not only sells, but brings you the value you deserve.

SELLERS ARE POORLY PREPARED

As a practice broker, I have encountered countless OD practice sellers who contact me a few months before they are ready to sell with little-to-no preparation, having never spoken to a practice broker/appraiser/transition consultant. Or they had an associate who was supposed to buy the practice, but decided not to. Whatever the case, I cringe knowing that had the owner just contacted me at least a few years prior, their practice would sell better, faster and for more. It brings to mind the saying:“Proper prior planning and preparation prevents poor performance.” In this case, “performance” can be replaced with “practice purchase price.”

To end the injustice of practices selling for less than they should, or not selling at all, here are five key preparations practice owners should take as they ready their practices for sale:

Maintain the Proper Asset List: Practice appraisers calculate the fair market value of your assets based on useful life, whereas your accountant typically depreciates assets rapidly for tax benefits. Your accountant often won’t keep an itemized list of your assets, especially after they are depreciated. So, if you’d like to avoid searching for equipment receipts from 10+ years ago, I highly advise keeping itemized records of your assets in a simple, organized worksheet including the asset type, manufacturer/model number, date of purchase and cost basis. I’m happy to provide a blank Excel worksheet, partially depicted below, upon request:

Medical equipment tends to have a useful life of 15-18 years! So, start this asset list as early as possible, and rest assured all your assets will be added to the appraised value of your practice.

 

Properly Label Expenses for Add-Backs: Your accountant’s job is to reduce your income as much as possible to minimize taxes. Your practice appraiser’s job is the opposite – to show the true earning potential of your practice. One way we do this is by adjusting your net income on tax statements for “add-backs,” which are generally discretionary expenses not fundamental to the continued operations of the practice,( e. g., owner cell phone, family health insurance, auto lease, etc.).Your bookkeeper should start carefully labeling and itemizing such add-backs at least three years prior to the appraisal of your practice. Otherwise the add-backs may not qualify or can be overlooked. Your appraiser/broker can review your tax statements and explain how best to adjust your bookkeeping to properly label add-back expenses.

Order a Practice Appraisal: A practice appraisal is one of the most important components used in the sale of your practice. A practice appraisal should cost about $2,500 – $4,000 for a single OD/single-location practice. It should be completed by the same company that will be brokering your practice for sale, otherwise the appraiser may put an unrealistic value on the practice if they are not responsible for selling it. The appraisal should include a comprehensive financial analysis using industry standard methodologies, as well as qualitative data and descriptive content to serve as the prospective buyer’s “bible” and main point of reference to make an informed purchase decision. Buyers will submit the appraisal to commercial lenders when they apply for practice purchase financing. Order the appraisal about one to two months before you expect to list the practice for sale. Each practice is different, and there exist too many variables to offer an average length of time a practice remains on the market. Gun to my head, I would say 9-11 months, but I’ve seen practices sell in two months and others on the market for years. To plan accordingly, ask your broker when you should appraise and list the practice, which will depend on your unique goals, the practice itself and other relative market conditions at the time.

Exit at Full Speed. Buyers like to see consistency, and love to see growth. Too many practice owners slowly retire, weaning hours, and allowing financials and production to decline. Sun-setting like this will only hurt the value and marketability of your practice. At the very least, operate your practice as you would normally. Don’t skimp on usual and customary expenses as your transition date approaches. If you have broken equipment, replace it. If you’re wondering whether to replace old but functional equipment, ask your broker. Among many factors, it depends on the type of equipment, timing and condition of your existing equipment inventory. Should you convert to EHR now? At this point, the answer is almost always yes, convert. Aside from the looming penalties, having an EHR in place can be one of the most marketable attributes of a practice for sale.

Above are just several preparations one should take when approaching a practice sale. Many more come into play, such as negotiating property lease renewals; managing retail inventory before and during the sale; tracking patient demographics and production; and much more. These are all matters that should be carefully planned in advance with the support of a qualified optometric practice broker to enhance the marketability and value of your practice. Remember, “Proper prior planning and preparation prevents poor practice purchase prices!”

 

RELATED ARTICLES FROM REVIEW OF OPTOMETRIC BUSINESS

Purchase an Established Practice–and Grow It
Retirement Planning Options: Staff Retention Tool
Setting Goals for Your Future: Achieve Your Optometric Visions

ERIK FERJENTSIK, MBA

Erik Ferjentsik, MBA, is president and principal consultant of Visionary Practice Group, LLC, an optometric consulting and brokerage firm consisting of attorneys, MBAs, CPAs and OD practice owners and management experts “specializing in providing practice appraisals, brokerage, and consulting services for optometrists to bring ODs the most successful results in practice sales, purchases, partnerships, and transitions.” CONTACT: erikf@visionarypracticegroup.com.

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Revenue Before Cost: Focus on Revenue-Generation, Not Cost-Cutting

Accounting Basics, Finance|Wealth, Practice, Practice Metrics & Benchmarks, Resources

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Creating value for our patients is a key to success, but we also must capture profit. We can increase profits by increasing prices or volume, or both, or by decreasing costs or reducing assets. Michael Raynor and Mumtaz Ahmed, the authors Three Rules: How Exceptional Companies Think, have discovered that exceptional companies have a common way of increasing profits–by putting revenues before cost. This means that when exceptional companies increase revenue, they do it by increasing investment in their company, rather than by cost-cutting, even if it means incurring higher costs.

This article is based on the rule, “Revenue Before Cost,” highlighted in the book, Three Rules: How Exceptional CompaniesThink, by Micheal Raynor and Mumtaz Ahmed.

These authors set out to discover how some companies survive and thrive while others fade away and die. They analyzed 45 years of data on nearly 25,000 companies for their research, and used data from 1966 to 2010 to determine why some companies grow and others go out of business. They discovered three rules of management that differentiated profitable from less profitable companies.

I recently showed, in the ROB articles, Three Rules to Make Your Practice Greater, and Better Before Cheaper: Profit in Investing in Quality, how I have applied the concepts in this book to my own practice.

I like the three rules because they simplify things. As owners and leaders in our practices, we have a myriad of decisions to make every day about how best to run our practices. Use these three rules to guide you in your decision making processes, and make your practice life simpler and more profitable.–Ken Krivacic, OD, MBA

INVEST IN ADVANCED OPTICAL PRODUCTS

Carrying upscale, advanced products in the optical usually generates greater profits. A simple example would be frames. A wholesale cost of a frame that you purchased for $25, and marked up 3x, results in a profit of $50. Compare that to a frame you purchased for $50 and marked up 3x. That frame garners a profit of $100. In this simple example, doubling your cost resulted in doubling your profits.

Of course, there are exceptions to the rule. You could purchase even less expensive frames and mark them up much higher, such as a $10 wholesale frame. You would have to mark the frame up 11x to equal the profit of marking up the $50 frame 3x. Raynor and Ahmed note that once you start playing in the lower-end categories there usually is someone who will come along and undercut you. It can be done, but it is much wiser to compete on non-price factors to build your practice.

In our practice, for example,we brought in a low-end frame line that we coulddo a hefty mark-up onand still offer as a low-end cost alternative. We did this for several months, but discontinuedthe frame linedue to patients returning frames that broke or constantly needed adjustments. Sure, we could have continued the process because the mark-up was good, but we decided to discontinue the frame line because our opticians complained about the above-average amount of time involved with working with patientswho bought those frames.

We also worried that selling an inferior brand or product would lessen our brand. It had taken years to position ourselves as providers of nicer frames, and wedidn’t want to undo all that work because we wanted a low-end alternative for our patients. In effect, we said: “If you want something cheap, you’ll need to buy it somewhere else.”

INVEST IN HIGH-PERFORMING STAFF

Staff costs are one of the largest costs a practice incurs, usually second only to cost of goods. There is a temptation to cut staff during tough economic times. Yet what kind of message does that send to our patients? Are they going to have to wait longer than usual because we are short staffed? Are they going to have a less-than-stellar experience because you have hired someone you could pay less than the topnotch candidate for the position? Will patients sense the tension in the office due to being short staffed?

I prefer to look at employees as an investment, rather than an expense. What do I mean by that? A good employee can earn more for a practice than they are paid by growing both the practice and the practice revenue. Here are some tips for aligning the investment in employees with the theme of Revenue Before Cost:

• Hire the best person for the position, not the one you can pay the least.

• Don’t cut employee hours to reduce payroll, look for ways to make staff more efficient.

• Track revenue-per-staff payroll. Most metrics say that should be in the vicinity of $150,000/per staff person per year.

• If you do have to cut a staff member, replace them with a better, more efficient staffer, and constantly invest in your staffby offering:

    • Training – both clinical and customer service
    • Regular weekly staff meetings
    • Regular bi-annual company retreats (full-day offsite meetings)
    • Bonus plans and pay
    • Regular and spontaneous reviews
TRY TO AVOID CUTTING COSTS IN CHALLENGING FINANCIAL TIMES

“There Are No Other Rules,” another concept from Raynor and Ahmed, emphasizes that when times get tough, or profits are shrinking, you want to avoid the natural inclination to hunker down and carry less expensive products or cut costs in other areas, and, instead, to reaffirm your investment in quality products, staff and patient experience.

In our practice, we have tried to continue to be true to our focus. By that I mean if you are a high-end practice, stay high end when economic times are difficult. Resist the temptation to start promoting cheaper services or products. This will only dilute your brand and confuse your existing and potential patients. By contrast, if you are a lower-endhigher-volume type of practice, do not suddenly try to sell high-end products. There is more than one way to be successful in practice, but you need to stick to what works and not confuse your patients and staff on what the practice is known for.

An example of this philosophy happened for us a few years ago. We made the decision to upgrade our phoropters to the new digital phoropters. If we had based our decision on cost alone we would not have made this purchase as these units are much pricier than a standard phoropter, yet they helped grow our revenue by improving our practice image. Patients commented on the new equipment and how they had not ever had an exam with that type of equipment before. For the patient, it showed that we keep up with the latest technologies and our office wants to ensure that they have the best optometric experience possible.

From the perspective of the practice, even though we spent more on a piece of equipment that does a basic function, we have gained by a consistent increase of revenue in our optical sales. Our optical department has revenues of just over 1 million per year that has grown by just over 3 percent ever year that we have had the new digital phoropters. Granted, the phoropters were not the only reason for the growth, but they have helped and they have enhanced the image of our practice in the patient’s eyes.

Related ROB Articles

Six ROI Winners for Your Practice

Four Ways to Add Direct-Pay Products & Services

Six Steps to Achieve and Maintain a High Per-Patient Revenue

KEN KRIVACIC, OD

Ken Krivacic, OD, is the owner of Las Colinas Vision Center in Irving, Texas. To contact him: kkrivacic@aol.com.

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Six Steps to Achieve and Maintain a High Per-Patient Revenue

Practice, Practice Metrics & Benchmarks, The Patient Journey

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Our practice consistently achieves a high per-patient revenue (PPR) of $400 to $410 every year. Six steps keep our PPR high.

CALCUATE PPR

We use a very simple formula to track our PPR daily. Total receipts divided by number of refractions = PPR. I understand that this is a big picture number and that it does not separate out the medical visits or contact lens follow-ups from the routine eye exams.

DOCTOR PRESCRIBES FROM EXAM CHAIR

My staff of three and I practice chair-side doctor recommendations. I always recommend AR and Transitions to everyone. AR is standard on all lenses and is only not on lenses unless the patient specifically states they don’t want it and understand how they will be negatively impacted. When the lenses are presented to the patient we name all of the lens benefits without naming the brands.

The optical dispensary in Dr. Click’s office makes eyewear very accessible to patients.

We educate the patient how each benefit will directly impact their lifestyle issue or complaint. We also let them know the amount of savings they will have by using their vision benefits. If a patient decides they don’t want a specific item then we tell them what feature they are giving up. Most of the time patients decide not to downgrade their lenses once they understand what it means to their daily life. But sometimes they do and we try to make sure they truly understand everything, and aren’t making their decision based on misconceptions.

 

TALK PPR IN STAFF MEETINGS

We talk about the PPR at our weekly business meetings. I always believe the entire staff should know what all the goals are and how we are tracking because each staff member directly impacts the total patient visit. In our staff meetings, we teach the front desk to set the stage with a friendly, positive attitude. When the patient perceives that it is a warm, friendly and professional office, the patient is more likely to purchase glasses and/or contact lenses from us. I think the more knowledgeable each staff member is about their role, the more competent we are, and thus, the higher our perception of value.

PROVIDE NEEDED STAFF EDUCATION ON PRODUCTS

Everyone is encouraged and supported to obtain as much CE or courses as they can. The insurance specialist attends webinars and seminars about insurance updates. The optician and technician attend classes to keep their certification up to date. We also have vendors come in at least once a quarter to educate us. We recently had a Nike sunglasses seminar and we have a scheduled Transitions meeting in a few weeks. I have the entire team attend a portion of the meeting so that they know that we offer the product and know who to refer to within the team for more information if needed. My goal is to make sure that every team member knows what we are capable of doing for our patients even if they won’t be a part of the resolution.

HAVE VENDORS HELP STAFF PRESENT NEEDS-BASED SOLUTIONS

All the vendors are great in helping the practice improve PPR. Essilor is excellent at staff and doctor training for needs-based solutions. Needs-based solutions are where the entire team is recommending products that fit the patient’s needs. It involves everyone being more involved with the patient by asking detailed questions that lead to conversations about what people do for work, fun and hobbies. Every team member who works with a patient is encouraged to have three questions that they ask the patient to facilitate conversations.

Contact lens vendors are great in strategizing ways to increase annual supply sales, and our frame vendors help with frame board management so we can make sure we have fashionable and good quality frames. Our frames have a built-in two-year warranty, which increases the value of the frame because patients know they are covered if something unforeseen happens.

KNOW & ADDRESS COMMON CULPRITS BEHIND LOW PPR

I have found two main reasons for us having a lower PPR than expected some days. The first occurs when see a lot of patients who do not have a prescription need. We try very hard to educate all parents on the importance of children’s eye exams and we do see a lot of kids annually who don’t have a prescription need.

Fortunately, patients who have not had a prescription change still often purchase new eyewear because we reference our vision treatment plan from the previous year and base our recommendations on the part of the plan that wasn’t filled.

The second situation in which we see a lower PPR is when the practice is under-staffed. It is very important to have a well trained team as we have seen it negatively impact our bottom line.

MAINTAIN ADEQUATE STOCK OF KEY INVENTORY

The effort to increase per-patient revenue starts in the exam room with the doctor and is then reinforced in the optical. But you have to have a good selection of merchandise inventory. It is disappointing when a patient is excited to buy and then decides not to when you don’t have the frame look they want.

Our goal is to have a 3x turnover per year per frame. So, a smaller practice like mine has about 400 frames in inventory as our goal of refractions is 1,200 this year. In contact lens inventory, we stock 100 one-day boxes: 50 from two individual vendors. In contact lens trials, due to space, we have trials of the lenses that we prescribe the most. If someone wants or needs a different brand, we order in the trials as needed. The trial sets are big and different sizes; we don’t have the room to have all the fit sets available, but we make sure that we can always give patients something at the date of their exam.

Related ROB Articles

Annual Financial Review: Scrutinize Expenses, Fine-Tune Profits

Measure Your Capture Rate to Compute Your Profit Potential

Institute a Pricing Strategy to Maximize Profitability

RACHAEL CLICK, OD

Rachael Click, OD, is the owner of Preferred EyeCare Center in Mount Pleasant, SC. To contact her: drclick@preferredeyecarecenter.com.

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What Do Patients Think of You? Hint: There’s Room for Improvement

Practice, Resources, The Patient Journey

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Now that I’m retired, I can ask people the question that we optometrists would like to ask, but are uncertain if we would get an honest response: What don’t you like about your optometrist or the optometric experience? Some of the responses I got were expected, but some were a surprise.

Optometric literature is big on the doctor delegating tasks to staff members to free up time. One friend said that when she lived in New Jersey, her optometrist did all of the exam himself. He only had staff do the visual fields test when necessary. When she retired to Florida, her new optometrist delegated the majority of the exam procedures to his employees. My friend was not too thrilled about that. She said she felt uncomfortable with technicians doing procedures that her last optometrist did himself.

A major concern of my friend’s was how much training the technicians had. Did they have formal schooling or did they just learn on the fly from another staff member? “It is a little unsettling to not know how qualified the person is who is testing your eyes is,” she said. “Maybe it is my fault for not questioning it/them, but I have to wonder if I am the exception or the rule on not being familiar with their qualifications.”

New Jersey’s doctors seem to have a leg up on Florida’s. Another friend mentioned that her New Jersey eye doctor let her know what tests he was preforming and the reason behind each test. Her Florida doctor does not. She preferred to be informed and not left in the dark.

Equipment and technology are also a concern for some of my friends. Some people like up-to-date technology, while others feel that some of the “machines” are a waste of their time. One friend said he felt that he was exposed to a certain procedure just so the doctor could bill his insurance to pay for his new expensive machine. He was supposedly the only eye doctor in Florida with this new machine, so obviously most doctors did not think this procedure was necessary for a routine eye exam. Evidently, he was not impressed with the latest and greatest technology.

He, and other friends, mentioned a few pieces of equipment, in particular, as sources of irritation. The visual fields test was boring (“something has to be done to speed it up”), the bio-microscope is a poor design for a well-endowed woman (a friend said she felt like she was getting a mammogram having to push into it). No surprises with this one–NCTs should be retired. NCT haters would much rather have their eye numbed and have the tonometer probe pushed into it.

The optical also generated a few comments:

“Why do you have to ask for your prescription? Shouldn’t they just automatically give it to you like your medical doctor use to do before EHR became the norm? The staff makes you feel uncomfortable asking for it.”

“Why are glasses so expensive at the doctor’s office when you can get two pairs and the exam for $59 at another establishment? What gives with that?”

“If you do purchase at the doctors office, they like to push extras on you; whether it be second pairs, prescription sunglasses, specialty glasses or extra lens treatments.”

Perhaps having your optical staff on commission, or eligible for bonuses based on sales performance, is not a good thing if your patients feel they are being pressured to buy more than they had planned.

One friend noticed that she experienced a difference in treatment if she had a prescription problem with glasses she purchased from the doctor whose office she was at, versus if she purchased them from another source. If the glasses were purchased from the doctor, she got immediate service. A staff member would recheck her vision and verify the prescription. This was not the case if she had her prescription filled elsewhere. She felt she had no recourse if the prescription was wrong, but not purchased at the prescribing doctor’s office.

The optical is not the only place where the hard-sell can be a problem. One friend commented that her eye doctor has an interest in an eye vitamin business. ”He really pushes patients to purchase his ‘wonderful’ vitamin product,” my friend said. “They are quite pricey ($50 a bottle, I believe). I don’t ever remember being solicited at any other eye doctor I’ve been to, and since I don’t really like a hard-sell approach from sales people in general, I don’t appreciate being strongly encouraged to buy eye vitamins from him when I am in there for my routine eye exam.” It sounds like this doctor needs to back off a bit. No patient wants to be strong-armed by their doctor into making an unwanted purchase.

Finally, my friends mentioned that they felt strongly that insurance plans should not dictate their eye doctor. They said it’s frustrating to really like a doctor and then have their employer change insurance plans to one their eye doctor doesn’t accept. In addition, they noticed the inconvenience of being referred by their eye doctor to a specialist who is not on their insurance plan, and, therefore, not feasible to see.

Overall, I don’t think we fared too poorly. Some of these issues could probably be resolved by taking the time to explain things better. Others, like the insurance complaints, we have no control over.

“I have no negative issues – would just go elsewhere if that happened,” one friend told me. That’s something to keep in mind.

DIANE PALOMBI, OD

Diane Palombi, OD, now retired, owned Palombi Vision Center in Wentzville, Mo. To contact her: dlpod1@hotmail.com

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