In this new-for-2023 column, EB takes a unique look at innovative practice management strategies. Here, one successful O.D. reveals how his practice collects key performance indicators (KPIs) and creates trending analytics from that historical data.

There are really two stories. That’s how Mick Kling, O.D., explains tracking KPIs in his two San Diego-based locations, Invision Optometry and Vision Boutique. “There’s what I call ‘rearview mirror KPIs.’ I say that because we’re looking backward. Then there’s real-time data.”

The topic of KPI tracking in optometric practices is such a huge topic that EB is running a three-part series in 2023 with this very focus. The first installment—here in the debut of our new In Practice column—addresses tracking and dashboarding in order to view trends based on historical data. In the next two installments in our series, Dr. Kling will reveal how his practice collects real-time data—and how he makes it all a team effort. 

Successful Strategies

KPI is currently a hot topic, but Dr. Kling has been tracking his practice data for 25 years. He’s also continually improving the dashboards he’s created. One of the reasons for doing it himself is control.

“If a vendor’s software is…not mapped correctly, you may get erroneous data,” he notes.

Here, Dr. Kling discusses the nuances of his own KPI spreadsheets—what he tracks, the buckets in which he places all his numbers, and more.

Step One

Where to start? “The first thing I want is a big-picture view of how the practice is doing from an income and expense standpoint,” he says. “So the first tab on my spreadsheet is ‘Business Overview,’ and it tracks my practice revenue.”

Step Two: Expense Buckets

Next in importance for Dr. Kling are the three main buckets of expenses: cost of goods, people, and things. The point? Tracking how revenue is trending relative to expenses.

PEOPLE. “Looking at trend lines, a big concern is people costs,” he notes. “Looking at historical data, our staff wages have gone up over time, but this year’s data shows staff costs are pretty flat.”

GOODS. “My cost of goods varies because there’s the inventory component of varying frame expenses, for example,” he says.

THINGS. This includes everything that’s not a cost of goods, people, or place. “Some things like occupancy stay pretty flat, while almost everything else fluctuates,” says Dr. Kling.

Net Operating Income

Dr. Kling also emphasizes the importance of seeing income relative to net profit. “The net operating income is before we pay doctors,” he shares, “and the net profit is after we pay them as well as interest on debt.”

He tracks 12 KPIs in all:

1. Collections per exam
2. Exam capture rate (percent of available eye exam slots that are filled)
3. Exams per doctor hour
4. Frame capture rate
5. Optical job capture rate (lens pairs sold)
6. Average optical sale
7. Anti-reflective coating capture rate
8. Contact lens materials per contact lens exam
9. Average collection per doctor hour
10. Fundus capture rate
11. Collections per staff hour
12. Labor efficiency ratio (collections per payroll dollar)

How does it work? “We enter both trend lines and raw data, which is from my practice management or financial software,” says Dr. Kling. “I can look at any metric and tell if it is trending up or down.

“We set targets and show how we met, exceeded, or fell short in colored boxes on the spreadsheet. That makes it easy to tell at a glance how we’re doing currently and historically.”

Average Daily Collection

One of the most important KPIs to track? Dr. Kling points to average collections per day. “It’s more important than looking by month, as many practices do, because some months have more production days than others,” he says.

His practice’s spreadsheet includes number of production days, collection goal for the month, actual collection by day and month, variance up or down, and average collection per day. “These are different ways to look at the same data,” he explains, “and give us a quick snapshot of both historical and current metrics.”

Exam + Product Trends

Another crucial KPI, exam trends are analyzed by number of exams, new patient exams, and established patient exams.

For product, it’s all about cost of goods. That is, the difference between the revenue collected from product sales and what the practice paid for them. Product tracking includes:

• Frames: frame income relative to frame expenses to determine frame profit
• Lenses: again, the revenue versus expenses
• Contact Lenses: revenue, expenses, and profit

Retail Business

In the end, taking purchasing patterns into account is also key. “For example, our profit analysis on frames shows that our numbers swing wildly based on inventory purchases,” he says.

Dr. Kling also does a quarterly optical view, mostly for his opticians. “It shows what our retail business and total sales have done over the last 18 months, along with total lens and frame sales.

“Everything we’ve addressed here are rearview mirror KPIs,” concludes Dr. Kling. “They’re trailing indicators that don’t just tell you where you’ve been, but help predict where you may be going next.”