Eyeworld

93 OPHTHALMOLOGY BUSINESS November 2016 digital.ophthalmologybusiness.org cataract practice, the typical range is $150 to $225 or slightly more. There are several factors influenc- ing this metric. The most import- ant are the underlying nature of the practice and the clinical and surgical assertiveness of the pro- viders. Practices serving an older/ sicker patient population will have a higher average ticket. Practices with a high primary care com- ponent will have a lower average ticket. 4. Surgical density. Various advisors measure this in different ways, but the convention we use is to divide average monthly patient visits (including postop visits) by average monthly surgical cases. In the typical, middle-of-the-road an- terior segment practice, we would find a practice with 500 visits and 20 to 40 cataracts a month, thus the typical surgical density range of 10 to 25 visits per case. A young surgeon just getting started may only have a mild surgical density of 50 visits per case and be perfect- ly normal. 5. Profit margin. While there are several useful conventions for measuring profitability, the most common for a medical practice is to divide total MD or DO annual profits (including wages, taxes, benefits, dividends, and the like) by total practice collections (again, net of drug collections). The typical range today in a general practice is 30% to 45%. A gener- ation ago, this was 35% to 50+%, so margins are falling. Aside from the obvious benefit to practice owners, a higher profit margined practice is a safer practice, with better odds of survival in the event of deeper fee cuts, provider loss, or competitor encroachment. 6. Staffing costs as a percent of cash flow. The highest cost center in virtually every practice is lay staffing. Add up all employment costs (wages, taxes, benefits), and divide by net practice collections. A $1 million practice spend- ing $300,000 per year on staff would have a 30% staffing cost. Norms are 28% to 32% in general practices, slightly less in retinal practices, and somewhat more in urban practices where wages are generally higher. If you are 35% or higher, the most likely reasons are overstaffing or excessive wages. Just like a patient's medical condi- tion, you will have to judge if you should treat the problem or live with it. 7. Established patient growth rate. This is one of the most overlooked opportunities discovered in the typical new client practice. In a general ophthalmology practice, the number of established pa- tients (total patients minus new patients) should be growing by about 5% per year. A practice with established patient growth rates below 5% (or worse, a negative growth rate) commonly has one of two chief problems: a flawed recall system or customer service gaps. If some of these key perfor- mance indicators stumped you, it's time to make up some flash cards and go back to school. EW Mr. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice man- agement consulting firm established in 1979, with offices in San Diego. His latest ASCRS•ASOA book, Simple: The Inner Game of Ophthalmic Practice Success, is now available at www.asoa.org. Mr. Pinto can be contacted at pintoinc@aol.com or 619-223-2233. Ms. Wohl is president of C. Wohl & Associates Inc., a practice management con- sulting firm. She earned her Masters of Health Services Administration degree at George Washing- ton University and has 30 years of hospital and physician practice management expertise. Ms. Wohl can be contacted at at czwohl@gmail.com or 609-410-2932. About the authors A S C R S

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