Play This Tough 18 To Assess Your Efficiency

Your fees are at the right level; your costs are as low as they’ll go. Now, take the next step with this two-part examination of your practice’s efficiency. This month, part one assesses staffing, patient communications and scheduling.

Judith Lee
Senior Contributing Editor

As managed care and tough competitors squeeze their fees, most doctors have ratcheted down costs about as far as they can go. Until someone invents a sure-fire way to raise gross incomes, the one aspect of the profitability equation that remains ripe for improvement is efficiency.

“In today’s environment, increasing the gross can be very difficult,” according to Marilee Blackwell, M.B.A., C.P.A., senior consultant for the Hayes Center for Practice Excellence. “The cost of operations can be difficult to reduce. This is why we often focus on managing overhead by improving efficiency. This enables the O.D. to make the most of the overhead investment.”

We asked Ms. Blackwell and other consultants to describe efficiency throughout a typical practice. We grouped their responses into an 18-question efficiency test. This month, you can take the first part of the quiz and compare your answers to theirs. Look for part two next month.

Do you employ the right number of staff for your practice?

Sounds like a trick question, and in many ways it is. Consultants don’t agree on what is too few or too many staff. Some like to follow a ratio of staff members to gross revenue, while others feel this is too simplistic.

“The general rule of thumb is one staff person for each $100,000 of gross revenue,” says Denver optometric consultant John Gay. “Some very top-quality, aggressive employees can generate more gross revenue, but these people usually have to be paid more. For the average practice grossing about $300,000, three employees is the right number.”

Ms. Blackwell’s firm did a small survey that generally supports this rule. The Hayes Center looked at high-performing practices (net income greater than 33 percent of gross) and found the following ratio of staff to gross revenue:

• Small practices ($100,000-$300,000 gross), one employee per $118,000.
• Medium practices ($300,000-$560,000), one employee for each $121,000.
• Large practices ($560,000 and up)—one per $129,000.

“Generally we found that the best practices do limit their staff. You shouldn’t go ‘hire crazy,’ because staff is a big expense,” Ms. Blackwell says.
Others caution optometrists not to go too thin on staff. Because the times demand more delegation and better patient service, having extra staff can usually be well worth the extra cost.

“Most practices would benefit from hiring at least one more technician, and many should hire two or three,” according to Neil B. Gailmard, O.D., MBA, a private practitioner and consultant in Munster, Ind. “The error is almost always on the side of too few staff. In 22 years of practice (that has grown from one part-time person to 25), I have never increased my staff and felt a burden from the increased payroll cost. Productivity always increased more than the increased wages cost me.”

What is your staff cost as a ratio of gross revenue?

Several consultants agree that is should be in the range of 18 percent of gross revenue for total staff cost (salaries, benefits, bonuses, taxes). (Our National Panel, Doctors of Optometry last year showed the typical practice spends about 16 percent on staff compensation.) Of course, less is always better as long as the office operates smoothly. More may indicate you have too many bodies around.

Of course, there’s always a differing opinion. Gary Gerber, O.D., a New Jersey practitioner and consultant notes, “I reject the concept that there should even be a benchmark. Doing so often stymies a doctor’s growth since he may focus on the percentage instead of the absolute numbers.”
He offers the following examples:

Dr. Jones has a $500,000 gross and a labor cost of $100,000. His ratio is 20 percent.

Dr. White has a $2 million gross and a labor cost of $500,000. His ratio is 25 percent.

“Does Dr. White have a labor cost that’s out of line with national averages?” asks Dr. Gerber. “Yes, but who cares? Look at the rest of his practice; the bottom line is, How hard does he work and how much net does he produce?”

How quickly does your staff answer the telephone?

Most consultants say your staff should pick up the phone in three or four rings. Alice Botvin, office manager for Wyomissing Optometric Center in Wyomissing, Pa., says they have a rule: The front desk picks up the phone in three rings. If the phone rings a fourth time, it MUST be picked up by someone— optical, a clinical tech, or Ms. Botvin herself. Doctors are the only ones who do not pick up the phone.

How long does the greeting take?

Your receptionist should get it done in a few seconds, with a greeting such as the one that Ms. Botvin devised: “Thank you for calling Wyomissing Optometric Center. This is Sandra. How may I direct your call?”

Certainly, always have the person identify the practice and herself or himself, and then ask a question that implies the receptionist will help the caller.

How long is a patient kept on hold for any reason?
One minute, tops. If it’s necessary to place someone on hold for longer, get back on the line and ask permission.

Mr. Gay feels patients should never be put on hold: “Train your staff to handle each call,” he says. “This means he or she has information right at the front desk, such as whose eyeglasses or contact lenses are ready for pickup, and of course, what appointments are available. If it’s a question for a doctor or technician, take a message and they’ll call back when it’s more convenient. If it’s an emergency, have the patient come in.”

How long do your patients have to wait to get an appointment?

The consultants say that anything over a week and a half to two weeks is too long. If it’s a daytime appointment, you should be able to fit it in the same week.
Dr. Gerber says consider the location. “Around here, near New York City, if patients have to wait longer than a week, we’re in trouble,” he says. “However, my clients in the South and Midwest generally have no problems when patients have to wait three to four weeks for non-emergency care.”

Dr. Gailmard offers this rule of thumb: “If the appointment book is consistently scheduled more than two weeks solid, I would recommend hiring an associate O.D.”

How do you schedule emergencies?

Schedule for them each day, 15 minutes in mid-morning, and 15 minutes in mid-afternoon. If you have no emergencies, you can use the time to return phone calls or simply catch up in the schedule.

How tight is your daily schedule?

The consultants don’t have a simple rule about appointment scheduling, but they do advise this: Schedule patients closely enough so that you are busy all through your appointment hours, without falling behind. If you are falling behind consistently, then you are scheduling too tightly.

“We like to ‘stack’ patients so the practice looks busy,” Mr. Gay says. “If your volume isn’t large enough to stack patients four or five days a week, then stack them for three days a week, and use the other days to do marketing, give vision screenings, work in another practice, or even just relax.”
He believes that each day the doctor sees patients should account for $100,000 of gross a year. In other words, if you see patients three days a week, you should gross $300,000. For each additional day, you should earn $100,000 of gross. If you’re not, something is wrong.

Ms. Botvin says she had to make a number of changes in scheduling at Wyomissing Optometric Center to make things run smoothly. One problem was that one of the optometrists is a real talker.

“Our one O.D. loves to talk. We did build some extra time into his schedule for this, and we also adopted a rule,” she says. “If any staff member sees we’re falling behind, she can come to me. Then I go in and give the doctor the signal that he has to move on.”

How does your practice prepare for the day’s caseload?

The preparation should come in two phases, the day before and the day of. On the day before, assign one person to pull charts and review them for insurance paperwork or other information (if a high percentage of your patients need physician referrals, have the assistant begin the process two or three days before the appointment). This same person should call the patients to remind them about their appointments.

On the day of the appointment, review the chart again in your “morning huddle.”

“A morning huddle is a great way to start the day, and to improve your efficiency during  the whole day,” says Lori Zimniewicz, consultant for Cleinman Performance Partners in Oneonta, N.Y. “At that time, the whole staff looks at the charts and discusses anything pertinent to those charts or patients. Then everyone is prepared and knows what to expect.”

She cautions practices to schedule 15 or 20 minutes for the huddle, and then start the patient schedule. Don’t schedule patients to start coming in at the same time you’re having the huddle. You’ll be scheduling yourself to run late.

You’re halfway there. To complete the round, and finish the assessment of your practice’s ability to compete, check back next month for more questions and advice dealing with patient flow, the exam, the dispensary and billing.

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