Years ago I read a quote from a business guru who was asked, “I want to buy a small company, how do I go about that?” His reply was quick and to the point; “Buy large one and wait.”
While I think there is a bit of tongue and cheek in his retort, there is also a large dose of truth. Large companies that no longer focus on their foundation ultimately lose their way and become smaller.
In the optical field we have the most unique opportunity of all the medical professions. We provide both a medical and retail experience. Ironically, when you talk with most doctors today they spend little time on the retail side of their business. With reimbursements dropping, doctors having to work longer days and longer weeks, one would think they would pay attention to the one stream of revenue they can ultimately control.
In many practices, there is about a 60%-40% split in revenue generation from medical to retail. Conduct a quick time study in your own office. Follow the doctor/owner around for a day, and I suspect you will find a 98%-2% split in their time. Meaning, 98% of the time, doctors are behind the wall doing medical, not out in front interacting with their patients/customers.
As an example; a $1.0MM practice that has a typical 60-40 split in revenue, $400,000 of income is coming from retail. Yet, as a manager/owner you invest only 2% of your time in making sure it is running effectively, efficiently and as profitable as possible? Are you waiting to become smaller?
There are three things a doctor/owner can do immediately to increase revenue, drive bottom line results and increase staff morale.
First, MBWA; Management By Walking Around. Get out of the exam lane and spend an additional 30 minutes a day in the part of your business that generates almost ½ of your revenue. Spend 10 minutes in the retail space of your office when you first open, when you come back from lunch and mid-late afternoon. Demonstrate to staff and patients alike that they are important to the success of your practice. Studies done in the 1920’s at Westinghouse showed that by just paying attention to employees while they worked increase productivity by 10%.
Second, Embrace, Recommend and Sell Technology. 10% of patients buy on price, yet we spend 90% of the time thinking about it. We are a nation of technology junkies and we are willing to pay for it. In the height of the recession the Ipad and Ipad2 are soaring off the shelves at an alarming rate. Ironically, they sell at the same price point as a higher end pair of glasses. If we think it’s cool and it will enhance our lives, we are willing to pay for it. Optical has cool technology solutions, but do we sell it as such?
At the practice level, one additional pair of photochromics or digitally surfaced lenses per day will bring in about $14,000 of net revenue per year. That’s a ton of patients seen for a $40 reimbursement! Set your goal for one additional pair of each and watch your bottom line grow!
Finally, People Respect What You Inspect. No one wants to fail at his or her jobs. The most simple why of keeping people engaged, performing and maintaining the momentum in their work is clearly define what you expect, measure it, report it, and inspect it regularly and frequently. Put a goal of 4 digitally surfaced lenses a day on the white board in the back. Every day keep score: who sold them, how many- then discuss with the team best practices to do more.
There are few things we can do to drive revenue into our practices. The one area that is neglected most often is sitting right outside our exam room. Take 30 minutes a day to engage and celebrate this part of your practice. You should. You own it.