BUSINESS

  BY THE NUMBERS

CAN YOU CALCULATE REVENUE?

WHAT ARE THE COMPONENTS OF REVENUE/SALES THAT PROVIDE INFORMED DECISIONS?

JAY BINKOWITZ

GROSS REVENUE per exam should be measured as two different components: optical vs. clinic. Each has its own unique operational costs and cost of goods. Whether you’re in the exam room or in the optical, the thought of being perceived as a salesperson can be distasteful for many of us. But let’s be candid, can you support your business without revenue? If you’re a not for profit, then the answer is yes. File for your 501C3 status with the government and you’re on your way! Let’s talk about “sales” because it is not a bad word, and let’s start with understanding how your sales need to be measured.

OPTICAL REVENUE PER EXAM

Optical revenue per exam measures the net production from the sale of frames, spectacle lenses and accessories (i.e. patient contribution + reimbursement from a third party, including dispensing fees) divided by the number of refractions within a time period.

For example in one month, all payments might add up to $20,000. If you provided 200 refractions, optical revenue per exam would be $100, or $20,000/200. This is low. An attainable goal is in excess of $200 for a practice that has a high penetration of plans. For those of you who have more private pay patients, the goal can easily exceed $500.

CLINIC REVENUE PER EXAM

Clinic revenue per exam measures the net production of all professional fees and the sale of contact lenses (i.e. patient contributions + reimbursements from a third party for professional fees and contact lens materials) divided by the number of refractions within a time period.

For example in one month, all payments might add up to $40,000. If you provided 200 refractions that month, your clinic revenue per exam would be $200, or $40,000/200. This is low, too. An attainable goal is in excess $300.

EVALUATE AND SET GOALS

Your overall goal should be at or above $500 gross revenue per exam. But you must know more than just the total number. If you get to $500 but only $100 of it comes from the optical, you are not even close to realizing your potential. This tells me you could easily be at $600 or $700. Your optical revenue per exam should go toe-to-toe with your clinic!

As you refine your business model by adding equipment and/or products and services, you will see how your decisions are contributing to your business and from where.

If you make a change in the clinic and the optical and one of the changes increased your results and the other decreased them, you could have a neutral or negative overall impact. In this case, you may think you made two changes and it didn’t produce any results — when in fact one of them did. But you would only know this if you are tracking both numbers. OM

MR. BINKOWITZ is president of GPN, an optometric consulting company based in Huntington, N.Y. He has had extensive experience in retail operations, merchandising and marketing. Email him at jay@GatewayPN.com, or to comment on this article, visit tinyurl.com/OMcomment.