Practice Consultants

Practice Management by the Numbers

Gary W. Ware

To improve the financial condition of a practice, the practitioner needs to know what must be improved. The practitioner also needs to know what is working well, so as to be careful not to change those traits. Collection of information is crucial. Once the practitioner has the information, knowing how to use it is the key to improvement.

Collecting Information

In the battle between complacency and improvement, a practitioner needs to be armed with the right information. To start, just use tally sheets and handwritten
To keep a practice growing, a practitioner needs to be armed with the right information. Here are the data every practitioner should collect every month.
lists. (Computerization of the data is nice, but it's not important.) Here is what every practitioner should collect every month.

Total Revenue and Revenue by Department (Professional Services, Dispensary, Contact Lens, and "Other," such as vision therapy, loe vision, etc.)
Number of New Patients
Total Patient Visits
OD Hours Available for Patients
Total Staff Hours
Revenue Billed to Patients
Frames Sold
Frames in Inventory
Expenses by Department (Cost of Goods Sold, Non-OD Wages, Occupancy, Advertising/Marketing, and Other)

Keep a running tally sheet for each of the items (Figure 1 provides an example of a tally sheet for frames sold).

To some, this sounds like more data collection than a practitioner might be able to undertake. The great majority of practitioners, however, even those that may believe they are starting their data collection effort from scratch, already have most of this information. Most practitioners just do not compile it in a systematic and productive manner.

Using the Information

With data for the practice in hand, the practitioner can now begin to assess practice performance through comparison against both the history of the practice and external benchmarks. On completion of the data collection each month, the practitioner should compare the information for the month just-ended with the practice?s data for: - The previous month - The same month last year The practitioner may then also wish to compare the practice data against aggregate data available through national databases such as: - Surveys in national eyewear or eye care trade publications - The author?s new Practistats service Practitioners can assess data simply by browsing the numbers on each sheet. While certainly workable, this method has three notable drawbacks. It is very difficult to get a sense of trend or cycle. It is hard to absorb the relative magnitude of differences month-to-month. And it is boring.

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