BUSINESS

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Revenue Per Exam

How to calculate this key metric

DAVID MILLS, O.D., M.B.A.

The simplest, yet one of the most important, business metrics to measure is how much revenue is generated per exam.

This number can be used to directly measure the productivity of not only the providers, but also the ancillary staff. Be sure to include all optical and contact lens revenue associated with each encounter. When calculating revenue, remember to use the net revenue generated after insurance adjustments are calculated to ensure accurate data.

For the average practice, the number should be roughly $300/exam. However, it may vary depending on patient insurance mix, as well as specialties provided in the practice. For example, a practice that is heavily skewed to a Medicaid-type population would expect a slightly lower “number” due to the fact that service reimbursements, as well as optical sales (dispensing and handling fees) occur at a lower rate. On the other hand, a practice that has placed an emphasis on specialty contact lenses would expect a slightly higher number, as the services associated with fitting and following these patients tend to be high.

In practices that have embraced the “medical model” and have a significant volume of same-patient encounters within a year, this calculation needs to be modified; otherwise the calculated value will not be a true measure. To obtain the true number, you will need to calculate the net revenue generated per unique patient.

How to calculate

The simplest way to calculate revenue per exam is to divide the net revenue generated during the period (quarterly or monthly) by the number of patients evaluated. This method captures the total “blend” of patients seen during the period. For example, some patients may have been evaluated for what was determined to be a “low level” billing code; others may have been evaluated for a complex medical issue, such as dry eye disease or glaucoma, in which the revenue generated may be significantly higher. However, the averaging effect should work as long as the majority of encounters captured are associated with annual visits.

To calculate the revenue per unique patient, you need to calculate all revenues generated for the period in question. If you have EHR, you can query the number of unique patients examined during the period, as well as the net revenue attributed to each patient.

Steps to fix

There are a few remedial actions that can be taken to increase the revenue per exam and revenue per unique patient. Evaluate the fee schedule for both services and products, and be sure to adjust your fees to reflect market trends and current insurance reimbursement rates. Pay close attention to the frame and lens pricing strategies you have established.

Also, assess your optical performance as well as product purchases, starting with the capture rate. If your capture rate is falling, you are losing potential optical and contact lens sales. Review the product mix in the optical to be sure that it reflects the patient demographics of the practice. Calculate the number of “premium products” sold as well as second-pair sales. OM

DR. MILLS PRACTICES AT OCEAN STATE EYE CARE IN WARWICK, R.I., AND HOLDS A M.B.A. FROM PROVIDENCE COLLEGE. E-MAIL HIM AT MILLSD@NECO.EDU OR COMMENT AT TINYURL.COM/OMCOMMENT.