visionomics ®

4 FORENSIC STEPS

Visionomics®, a series of COPE- and ABO-approved business-building courses, will be held at this year’s International Vision Expo East show. The courses focus on strategies for assessing and maximizing practice profitability. In this series of articles, Eyecare Business—the official trade media partner for Visionomics—will feature some of the program’s speakers. This month, Jay Binkowitz, president of the consulting and mentoring firm GPN in Huntington, NY, discusses his course, “Forensic Study to Grow Your Profits” to be presented at Vision Expo East.

Are you part of the majority of independents who still measure cost of goods as a percentage of your overall practice revenue? Do you track benchmarks for production and profit and are still unsure how to really impact them? Or better yet, do you teach your managers and staff to know how to impact them? Would you like to know the impact of your decisions and how they influence your profitability on a monthly basis versus waiting for your accountant to let you know how you did or did not do at the end of the year?

If you answered yes to any of these questions, or if you are the type of practice owner/manager who judges how well the business is doing by how much is left over in the checkbook at the end of the month, you need to change how you analyze your business.

The Forensic Study philosophy can help you understand the net profitability of both your businesses: the clinic and the optical dispensary. It involves separating your expenses as they relate to all of your operational costs. In short:

1 IDENTIFY AND CLASSIFY EXPENSES. Break down your general overhead and operational expenses, cost of goods (frames, lenses, contact lenses, vitamins, accessories, etc.), and payroll (for each staff member and associate, including cost of benefits).

2 YOUR REVENUE. This figure includes an individual break-down of your professional fees along with frames, lenses, contact lenses, and any other products you may sell.

3 EVALUATE INFORMATION. The difference of how much you pay yourself versus what you would pay another doctor should be classified as profit. Similarly, if you own your building, what you pay yourself for rent versus the fair market value is classified as profit.

4 CLINICAL VERSUS OPTICAL. Operational costs and profitability should be separated. To do this, figure the square footage of the practice and how much of it is allocated to the optical versus the clinic. Using this percentage, split the expenses the same way.

For the staff, allocate a percentage based on their role and how much time they spend in either the optical or clinic.

When properly analyzed and evaluated, practice managers and owners should be able to pinpoint exactly what their break-even numbers are and what their profits are in any given area of the business. EB