PRACTICE ADVISORS

Managing Managed Care

You can’t control the system, but you can control how you react by adapting…and even delegating refraction

Q: CAN ANYTHING GOOD COME FROM MANAGED CARE AND HEALTHCARE REFORM?

A. Several years ago, the Wharton School of Business at the University of Pennsylvania ran a course entitled, “The Chief Executive Optometrist.” The first concept it addressed was that one cannot change behavior, only how one reacts to it.

Managed care is similar. We can’t change it, but we can control how we react to it. Thus, the answer to your question is that good can come from managed care if we change our attitude.

Looking at managed care from a sea-level perspective can make eyecare professionals wince. Plans can be difficult to understand and administrate. In fairness, however, some are much more efficient and user friendly than others.

ALTER BEHAVIOR

With a more global perspective, plus positive thinking, we can alter our own behavior. Practices faced with increasing overhead and decreasing profit margins have two choices. One is to make less money. The other is to delegate more.

The first not only involves making less, but most likely working just as hard, if not harder, to deliver the same care. The second, delegation, involves using brain instead of brawn.

How? By considering delegating procedures other than biomicroscopy and indirect ophthalmoscopy. Yes, refraction can be delegated in an optometric practice. Many non-optometrists are already doing refractions, especially in ophthalmology. In fact, refraction can even be accomplished without lenses with an invention coming out of the combined efforts of Emory University and Georgia Tech.

LOOK AT NUMBERS

Let’s say you are fed up with reduced reimbursements as a result of the growth of managed care, your market’s aggressive eyewear competition, and increasing costs to run an office. If you determine that, as we suggest, you need to increase the number of patients in order to sustain profitability, you can speed up the doctor. This may, however, result in less personalized care and a very worn-out practitioner. Instead, we recommend adding a technically trained, fully utilized ophthalmic technician. Let’s assume that this technician is allowed to refract and is paid $50,000 per year. Here’s the math:

■ If your practice’s average revenue per patient is $300 and your cost of goods is 33.33 percent, then your average profit per patient is $200 ($300 less 33.33 percent = $200)

■ If you are able to generate an average of $200 per patient, it would take roughly 250 extra patients per year (250 patients x $200 = $50,000) or approximately five patients per week to pay the employee’s salary. That is just one patient a day.

ADD MORE PATIENTS

Now let’s assume that the new refractive technician employee allows the doctor to schedule two extra patients in the morning and two in the afternoon. The doctor is now working smarter instead of harder.

Here’s the math:

■ Four extra patients per day results in roughly 1,000 extra patients per year (4 patients x 250 work days = 1,000 patients).

■ At an average revenue of $300 per patient, that translates to $300,000 more in practice revenue (1,000 patients x $300 = $300,000).

■ The gross profit from those patients would be $200,000 based on 33.33 percent cost of goods ($300,000 less 33.33 percent = $200,000).

■ Thus the practice would produce an increased profit of $150,000 ($200,000 less the technician’s $50,000 salary = $150,000). This is an excellent return on investment, so maybe it is time you consider doing what ophthalmology is already doing and let others perform the refraction.

The bottom line is that seeing more patients is not a bad thing if done correctly. Increasing your employee payroll is not a bad thing either, as long as you have demand that warrants the addition; your current staff is already fully utilized; and the new technician/refractionist staff member is dedicated solely to the doctor and not to doing other tasks during patient care time.

No matter what you do, managed care is here to stay. If we utilize delegation properly, we can see more patients, discover and treat more conditions, and maximize time performing more high-level skills that complement our training.

— Allan Barker, OD, and Greg Stockbridge, OD, MBA

SEND US YOUR QUESTIONS

Drs. Barker and Stockbridge will answer your questions about practice growth, business management, as well as other issues. Please email your questions to eyecarebizeditor@pentavisionmedia.com