And...Action. Set the scene for greater profitability. Also in This Issue: Visit mba-ce.com for more news, ideas

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1 Visit mba-ce.com for more news, ideas 3Q 2013 Advanced management ideas for MBA graduates And...Action Set the scene for greater profitability TM Also in This Issue: Customized Prescriptions Tracking Growth Staffing Levels Dispensary Metrics MBA Tips

2 Three Technologies Allow Higher Levels of Customization and Satisfaction Many progressive lens wearers have experienced the effect where images seen through the edges of their lenses seem to swim the result of the curvature of the lenses. Patients may complain that it s as if stationary objects are moving or straight lines are curved all of which can make them wary of walking down stairs or frustrated as they try to switch their focus. But Essilor has solved that problem with its Varilux S series of lenses, explains Gabriel Keita, PhD, Essilor s associate director, technical marketing. Instead of considering the lens as a single, continuous curve, Nanoptix technology calculates each lens as if it was made up of thousands of optical elements. The The Varilux S series incorporates new technologies for a more customized prescription. length and position of each element can be controlled in order to meet the precise requirements of the design and the power, which suppresses the distortion. A second factor that has been accounted for in the Varilux S series lenses is through SynchronEyes. In the past, calculations were made on one lens at a time. Now we have introduced the way to calculate true binocular vision in the axis, cylinder and sphere, says Dr. Keita. SynchronEyes technology treats lenses as a pair, with each lens corrected to account for aberrations in the other. The result is balanced images, giving wearers the best possible binocular vision, with improved acuity and contrast sensitivity. The technology looks at Dr. Routhier Joins the Team Janelle Routhier, OD, FAAO, recently became Essilor s director of ECP Education. In that role, she ll be managing the Management & Business Academy (MBA) program, as well as resources such as ECP University, a training tool that Essilor created to provide optometrists, ophthalmologists and opticians with a formal training program for their staff members. Dr. Routhier, who came to Essilor from Global Medical Affairs at Dr. Routhier Johnson & Johnson Vision Care, and who has also worked in a private practice and in academia, says that her background as an optometrist puts her in the role of connector. I ll represent the interest of ODs as we develop educational initiatives, and I can also serve as an advocate internally for ODs. Dr. Routhier says the ECP Education department will continually develop new offerings for office staff and add in valuable education for doctors. Although she just arrived at Essilor, she says she s already intrigued. For such a large entity and an industry leader, it s great to see at how entrepreneurial it is. The culture feels more like that of a smaller startup it s the way that Essilor runs its business, and it s reflected in its innovation and success. It s a very nimble company that way. In the past, calculations were made on one lens at a time. Now we have introduced the way to calculate true binocular vision in the axis, cylinder and sphere. Dr. Gabriel Keita not only the prescription, but also the journey of the eye on the lens. Use the Varilux S fitting guide to help you determine where the distance area is and where the reading area is dependent on the frame size, as well. But Essilor didn t stop there. The Varilux S 4D lens uses 4D Technology to develop an even higher level of personalization, Dr. Keita says. Using the combination of these lenses and the Visioffice fitting system, eye care providers can determine the patient s unique eye-rotation center for the dominant eye the one that the patient will use to track a target in motion. You can t predict it with a PD measurement, he says. But the combination of these three technologies provides a new and higher level of customization in progressive eyewear. Click here for more information. Visit the MBA website often for updates and announcements. Click here. Volume 6 Issue 3 mba-ce.com Cover: Jakub Jirsák Dreamstime.com MBA Insights is a quarterly publication produced by Practice Advancement Associates, a division of Jobson Medical Information, for the Management & Business Academy MBA Director Rod Tahran OD, FAAO, VP Professional Relations and Clinical Affairs, Essilor Janelle Routhier, OD, FAAO, Director of ECP Education, Essilor Publisher: Al Greco Executive Editor: Roger Mummert Director of Custom Publications: Marjolijn Bijlefeld mbijlefeld@jobson.com Associate Editor: Maggie Biunno mbiunno@jobson.com Marketing Manager: Courtney Murphy cmurphy@jobson.com

3 Follow the Details Sluggish economy prompted doctors to track metrics It was during the downturn of the economy several years ago that Beth Groninger, OD, realized it was time to take a closer look at the finances of Plainfield Eye Care, the Plainfield, Ind., practice she coowned with Cory Shaffer, OD. The partners had recently renovated their office when they noticed that patients began spending less on their eyewear and more time passed between their visits. We slowed down while having a lot of expenses, so that s when I became concerned and decided to track and measure more, says Dr. Groninger. We needed to be more proactive than reactive. So she started monitoring metrics and end-of-year reviews, improving her knowledge by researching resources that could Dr. Groninger Take the Next Step help improve the business. Dr. Shaffer had attended a session of the Management & Business Academy (MBA) back in 2005, so Dr. Groninger knew there were many articles offering advice on the mba-ce.com website (click here). She s found information on practice sources of expenses and income and staff productivity most valuable. Since the office has had many of its same staff members for 10 years or more, Dr. Groninger wants to make sure that everyone is working efficiently and that she will be aware when it s time to hire a new staff member to help the practice grow. The practice also recently hired The Prima Group for consultative advice, and she receives guidance from two founding MBA faculty members, Sometimes making a small change can make a big difference. Plainfield Eye Care s original patient recall system involved sending patients a postcard. But Dr. Beth Groninger began to think it wasn t enough when the results were not successful. A postcard can get lost in the mail and is easy to misplace, she says. So the office has added a second part to the recall system a personal phone call from a staff member. When we re not busy, the staff is expected to call patients who are overdue for an annual exam. The results have been positive, and the phone calls are securing more appointments. TRACKING Neil Gailmard, OD, FAAO, and Jerry Hayes, OD. These are just a few things that have changed in the long-established practice since she came onboard as an associate doctor following her optometry school graduation and residency. That was 22 years ago, and already the office founded by Tom Maloney, OD, in 1961 was well-known in the community. There wasn t much local competition. After two years, she and Dr. Maloney agreed that she would start buying in for 50 percent ownership through a payment structure and salary differential, and she became a practice partner when Dr. Maloney retired seven years later. Around the same time and still ongoing today more practices moved into the area, saturating the market. Plainfield Eye Care s long-time presence alone just wasn t enough to grow the practice. When Dr. Groninger began paying more attention to the numbers, she realized that kind of monitoring would be a way of doing business going forward. It makes a difference when you stay on top of the business, she says. That s been especially important now as she s become the full owner since Dr. Shaffer retired last year, and as she s brought on an associate doctor, Megan Walton, OD. Dr. Groninger sees great potential in Dr. Walton s ability to take over the business one day. She s wonderful, and I hope she decides to stick around and buy in, Dr. Groninger says. I want to make sure the practice is healthy and holds its value. Putting in the work now will pay off when it s time for her to retire and pass on the practice once again. AOA Encourages Employers and Health Plans torethink Eyecare The American Optometric Association (AOA) has launched a campaign called Rethink Eyecare to help health care decision-makers recognize the improved patient outcomes and cost savings that can be achieved by including optometrists as in-network providers. The target audience of the campaign messaging is broad and includes employers, consultants, benefit managers, health plans, integrated health care delivery systems and accountable care organizations, according to the AOA. Through a new website, rethinkeyecare.com (click here), health plan decisionmakers and administrators will now be able to access information on the benefits of including primary eye care services as a standard covered benefit provided by optometrists who are included in the health plan provider networks. The American Optometric Association is working to position optometry into new payer models. mba-ce.com MBA Insights 3Q

4 Staffing Levels by Practice Size Making the decision of how many staff members should be working for you can be a difficult one. The productivity numbers at right can help, and here are some general guidelines, based on data from the 2013 edition of Key Metrics: Assessing Optometric Practice Performance (click here). In typical independent optometric offices, there are four staff members for every optometrist working. The ratio of staff hours to OD hours increases as practice size increases. This reflects the fact that in many small practices, to save expenses, ODs perform some testing and administrative tasks normally done by staff in larger practices. The savings are often false because the value of an OD s time is four-to-five times greater than that of an nonoptometric employee. Staffing Levels by Practice Size Practice gross revenue Average FTE non-od staff Average FTE OD $492,999 or less $493,000-$641, $642,000-$766, $767,000-$882, $883,000-$1,025, $1,026,000-$1,199, $1,200,000-$1,431, $1,432,000-$1,694, $1,695,000-$2,132, $2,133,000 or more Note: Full-time equivalent (FTE) equals 2,080 hours per year Source: MBA 2013 Staff Management Survey TRACKING In typical independent optometric offices, there are four staff members for every optometrist working. Staff Members per OD (by decile) Low Median High th 15th 25th 35th 45th 50th 55th 65th 75th 85th 95th Percentile ranking Average= 3.9 staff members per OD Note: Includes both part-time and full-time ODs and staff members Source: MBA 2013 Staff Management Survey Assessing Staff Productivity Determine needed staffing levels One of the key metrics that Beth Groninger, OD, uses to make sure the practice stays on track is the gross revenue per staff hour for employees who are not ODs. In the 2013 edition of Key Metrics: Assessing Optometric Practice Performance, the 70th percentile ranking is $97 per hour or more. (Click here for the 2013 edition.) The actions indicated for practices with that ranking follow. If gross revenue is less than $1 million and ratio of staff-to-od hours is less than 3, or if gross revenue is $1 million or more and staff-to-od hour ratio is below 3.5, evaluate increasing staff to improve patient service. Symptoms of understaffing include low staff morale, administrative tasks frequently unattended, frequent patient waits of 5 minutes or more during office visits and doctor assumes some of staff s testing and/or administrative duties to keep process flowing. The average range for gross revenue per staff hour is $72-$96, which represent the 30th-69th percentiles. For these practices, consider the following. If gross revenue per exam is $286 or below, compare usage of PAL, AR, high-index and photochromic lenses to industry norms. Select one or two lens types, and train staff to present these to appropriate patients. If gross revenue per exam is $287 or higher, staffing level is likely adequate, unless the practice is above $1.5 million gross revenue. For practices that fall into the 29th percentile or lower, with an average $71 or lower average gross revenue per nonoptometric staff member, consider these actions. If staff-to-od-hour ratio is 5 or above, evaluate staff reduction or reduce number of hours staff works weekly. If active patient base is less than 3,500, increase marketing activity to attract new patients. If gross revenue per exam is $286 or below, compare usage of PAL, AR, high-index and photochromic lenses to industry norms. Select one or two lens types, and train staff to present these to appropriate patients. mba-ce.com MBA Insights 3Q

5 Is Your Service Unexpectedly Superior? Service levels can be placed in three key categories: core, expanded and unexpected, says Mark Wright, OD, FCOVD, who authored the latest MBA monograph, Monograph 17: Designing an Eyecare Service Experience (click here). Core features and benefits are the basics that every customer expects. These define the commodity of- Dr. Wright fering in any service business. They do not differentiate one business from another and command only a low price. The economy segment of the consumer market selects providers offering only the core package. An expanded set of features and benefits adds value and increases customer satisfaction. But this package is often widely available, because it appeals to the mass-market segment. Customers who value the expanded features and benefits will pay a modest premium for them. The unexpected features and benefits exceed customer expectations, delight customers and build loyalty and referrals. Some STELLAR SERVICE customers are willing to pay a substantial premium to receive these unexpected benefits and consider themselves underserved by companies that do not offer them. Use this list as a guideline to help you evaluate and upgrade your practice s current service experience. In the expanded and unexpected categories, place a checkmark next to those services you currently offer. Count the boxes checked in the expanded category and those in the unexpected category and see the key on the next page for an assessment. Core Features and Benefits in an Optometric Practice Diagnostic testing Refraction Frames display/dispensing area Eyewear and contact lens selection advice Eyewear and contact lens ordering/dispensing Medical record retention Insurance claim processing Mailed recall notice Expanded Features and Benefits in an Optometric Practice Same-day contact lens inventory Same-day eyewear dispensing Medical eye care therapy (glaucoma, allergy, dry eye, diabetic, etc.) Specialized eyecare services (sports vision, low vision, pediatric, etc.) Digital imaging display Well-displayed selection of 650 or more frames styles Display of 75 or more plano sunglasses Free eyeglasses repair and adjustments Scribing Doctor-paging Highly experienced optician Children s waiting area Preappointment Online medical history Online appointment-making Appointment availability within five working days Insurance verification before service Online contact lens reorder Online eyewear ordering Patient satisfaction surveys Timely emergency access Service Assessment Checklist Electronic medical records Convenient parking access Weekday evening hours Home delivery of contact lens orders One-hour delivery of eyeglasses See next page for key Unexpected Features and Benefits in an Optometric Practice Luxury office furniture and decor Staff highly trained in service skills Digital fitting station Virtual try-on technology High-end frames boutique Video education on eye disease, ocular physiology and advanced products ipad check-in E-prescription service Personalized written exam report Gift with purchase (luxury eyeglasses case, lens cleaning supplies, candy, etc.) Follow-up call to monitor product satisfaction Personal escort through complete office visit Gift card for referral Wi-fi connection No-wait office process Weekend office hours Mobile device contact lens reorder app Mobile device website E-newsletter Personalized communication about new products and new therapies 100-percent-satisfaction guarantee Transportation assistance Holiday gift basket as loyalty reward mba-ce.com MBA Insights 3Q

6 STELLAR SERVICE Assessment Key Count the expanded services checked. Five or fewer expanded services? It s likely that the practice operates in the lower half of the independent OD service spectrum. This may signal vulnerability to patient defection. Practices at this service level should consider adding additional expanded services. Five-to-10 expanded services? The practice likely operates in the middle of the independent OD service spectrum and has an opportunity to upgrade. Take action. With staff input, consider adding expanded services. Use the list as a starting point, but also consider other services. It s best to add expanded services before considering additional unexpected services. Count the unexpected services checked. Five or fewer unexpected services (and 10 or more expanded services)? This practice likely operates in the lower-upper-middle of the service spectrum, with room to enhance its offering. Ten or more unexpected services? This practice likely operates at the high end of the service spectrum, yet it still has opportunity for further improvement. Take action. With staff input, brainstorm additional unexpected services that might be offered and add to the list above. Decide on which unexpected services to make part of the routine service experience. Offer an Unexpected Atmosphere When patients walk into your practice and see luxury furniture and décor and a high-end optical boutique, it may be a pleasant surprise compared to what they ve come to expect from a doctor s office. That s a great first impression to make on new patients. But that kind of first impression requires dedication and must be followed throughout the entire experience. The Management & Business Academy (MBA) Monograph 17: Designing an Eye Care Service Experience (click here) guides you through the steps to deliver a consistently great experience to patients. If you want an office that exudes an atmosphere of luxury, focus on the details. Beyond your service culture and the way staff and doctors treat patients, the practice also needs to look the part. Among a patient s core expectations walking into an eye care practice will be to see a reception area, an optical and exam rooms with equipment. Simple ways to enhance these are to incorporate rich colors and the kinds of items that patients would expect if they were visiting high-end hotel chains. These could include a beautiful coffee bar well-stocked with options or the pieces of furniture that might be seen in a lobby. Take a critical look at your frame displays, and consider table displays that highlight new arrivals or hot items. Maybe you ll choose to incorporate other pieces from the luxury brands, such as a handbag or other product from the same designer. Patients appreciate that connection as they see their favorite designers carry over that same quality to eyewear. MBA faculty member Mark Wright, OD, FCOVD, says that a common mistake practices make is trying to cater to every single patient. Most communities are comprised of people of widely different economic means and service expectations. Practices that adopt this ineffective strategy usually end up being mediocre at everything and exceptional at nothing, he says. Yet on the other hand, delivering a consistently exceptional service experience is an effective strategy to build patient loyalty and referrals and to achieve strong profitability. If your goal is luxury, put Acomfortable and familiar experience for patients can engender loyalty. One way to provide more personalized, comfortable services and exceed patient expectations at the same time is to identify one staff person who will escort a patient throughout his or her entire exam experience. This staff member will be the one to greet all of his or her assigned patients that day, walk them to pretesting and explain what the tests are for before bringing them to the exam room. The staff member stays in the exam room to act as a scribe, documenting exam findings and notes from the doctor on an individualized vision solution for the patient. With the patient and staff member educated on the recommendations, the two can move to the dispensary, where that staff Final presentation of new eyewear reinforces perception of value. forth the effort so that your patients know, and don t have to guess, about the experience they can expect from your office. Guide Patients Through the Exam Experience member can continue by helping with frame and lens selection or pass on the specific plan to an optician. Not only does this system keep the office flowing smoothly, but it also can benefit the practice in other ways. The staff member has a chance for small talk with each patient, and by learning about his or her family, there may be an opportunity to remind the individual that family members are also eligible for eye exams. When the patient isn t the only one to hear the doctor s specialized visual plan, it s easier to bring those recommendations to life in the optical with demonstration products. Patients may forget the options the doctor recommended if they are not familiar with the specifics, but that s easily prevented by keeping a staff member at their side. mba-ce.com MBA Insights 3Q

7 COVER STORY OpticalTransformation Focus on upgrading service and product offerings helps practice increase optical profitability Mark A. Lipton, OD, and David J. Tang, OD, had a vision to make the optical dispensaries the go-to places for eyewear in Virginia Beach, Va. However, the opticals at all three locations of the MD/ODowned Beach Eye Care weren t running as efficiently as possible. So they looked for someone who could turn the ideas into reality and found him in Stephen M. Coiner, ABOC. Coiner became Beach Eye Care s optical director in October 2011, coming to the practice with more than 11 years of experience working for a national corporate optical. My role was to go into the labs, retrain (l-r): Vivek K. (Vic) Jain, MD; David J. Tang, OD; Stephen M. Coiner; Mark A. Lipton, OD; and G. Peyton Neatrour, MD staff and find replacements for employees who didn t meet the company s expectations. I was the troubleshooter. Coiner knows that even optical dispensaries that are seemingly doing alright have opportunities for improvement. Sometimes it s a matter of moving employees into positions where their strengths can shine, or it could be that the staff needs a focus on what the expectations are and motivation to achieve these goals. And sometimes, it means making staff changes. Typically, Coiner says he likes to move Continued on page 8 Practice photography by Stephen M. Coiner The Visioffice System as Educator e are an Essilor shop, says Stephen Coiner. Essilor co- money helped the practice expand one location Wop and relocate another. Each of the three locations has a standing Visioffice System, located right at the front of the optical department. It creates the statement right from the moment that patients walk in that we use state-of-the-art technology. It s an attention-grabber, not just for the patient going through the measurements. When patients are getting their Varilux Ipseo measurements, the instrument beeps, so others will stop and watch, he says. The staff tries to lead all patients regardless of lens choice to the Visioffice for final measurements. We explain that the system allows us to customize the prescription, and we can show patients what that looks like. As a result, nearly every patient who goes through the Visioffice experience does purchase at least the Varilux Physio Enhanced lenses. If we re busy, we don t make the patients who need the Visioffice system for their fitting wait. But we ll explain why we have it and what it does to the patient who says, Why don t I get to use that? The Visioffice experience is detailed in the practice s brochures, detailing why Beach Eye Care is the best place to purchase eyewear. Coiner believes that as a result of this process, the practice s capture rate in eyewear has increased, too. When patients are determined to shop elsewhere, Coiner wants them to have all the information. We educate them on what they can expect there. I ll say that the treatment Beach Eye Care recommends is Essilor Crizal Sapphire and Crizal Avancé, but if they say they want to go to a national chain, I can tell them that the best lens offered in the one-hour turnaround, for example, is old technology, he says. Those locations are going to charge my patients more to get an older lens because their overhead is higher. So I explain that and also that the corporate location can t provide the Varilux Physio Enhanced Eyecode lens that we showed them in the Visioffice machine. One of the features that resonates with patients is the idea that their left-handedness or right-handedness actually impacts their near and intermediate vision or hand-held device. The Varilux S 4D accounts for that. The Physio Enhanced Eyecode is the recommended lens because of being the widest channeled lens on the market and because it is priced the same as older and less advanced technology. I m not forcing patients to stay here. In fact, I m almost pushing them out the door, saying, When you go somewhere else, I just want you to get the best lenses. I want you to avoid the distortion that you see at the edge of the paper, for example. About four-of-five people want me to continue talking, and about three-of-five people decide that they want to buy their lenses here. Those who ask for their prescription are given it cheerfully. If you change your mind, you don t need an appointment. Just come on back, he says. mba-ce.com MBA Insights 3Q

8 COVER STORY Optical Transformation Continued from page 7 slowly by spending a few days watching and then implementing changes in steps. But when he was approached by an optician who told him he had paid his dues and just wanted to collect his paycheck, that kind of We want the optical staff to take the time to explain the features and benefits of second pairs of eyewear and premium lenses. Stephen Coiner attitude required an immediate response. As a veteran of labs and dispensaries, Coiner knows that there are ways that employees can disguise what s happening. A lab manager or office manager must be Don t Prejudge Patients diligent and smart to keep tabs on the daily operations of a lab. Now that he s been with Beach Eye Care for nearly two years, Coiner says the employees at the three-location practice are a more efficient and cohesive team. He moved some employees to different positions such as taking a senior optician with 20 years of experience and putting her in charge of one of the locations. He also brought on a sales supervisor he had worked with previously, and she s manager in another location. Once he had a management team in place and had replaced employees who were resistant to new initiatives and goals, then he could begin the work of turning the profitability around. First, you have to stop the slide and sometimes that requires a firm resolve to focus on doing what s best for the patients and the practice. Stephen Coiner says that he veers a little from the conventional wisdom of optical directors who encourage practitioners to focus on the higherend sales. I focus on everyone. I have enough board space to do that. Purchasers fall into one of five different categories but here s the important part. Don t try to determine beforehand what that might be. 1. Low-end purchasers: This group includes Medicaid patients and those who just can t or won t spend more money. I look for lower-cost but decent frame lines that we can sell inexpensively and still make a profit. 2. Price shoppers: He wants to have some frames on hand that compete with the prices at major optical retail places. These are the shoppers who will pay something, but not much. 3. Recognizable-brand shoppers: These shoppers want a familiar name brand but it doesn t have to be the higher-end brand. 4. Higher-end brand shoppers: These customers are looking for the contemporary and well-known brands. 5. Money-is-no-object shoppers: These are the patients who can afford to spend an above-average amount to get the look they want. Elegant frame displays and an upgraded offering of options encourage browsing. Upgrade Your Product Selection The practice s cost of goods has gone up during this time, an expected result from moving away from nonbranded frames and lenses to a wider selection of brand-name frames. I brought in 20 new lines, he says, generally topping out at Fendi and Gucci frames that retail for about $399. And I brought in Emilio Pucci, since no one in the area sold it. That was from a tip I learned from an Essilor rep. If the highest-priced frames we have are $399, we ll sell primarily $200 frames. But when you add in some $699 frames, then you ll sell the $300 and $400 frames, he says. The opticians show the Emilio Pucci frames first, then show the Gucci, Fendi and Valentino frames. Now they sell the low-margin frames much less frequently as per patient revenue rises. And those Emilio Pucci frames don t just sit on display; the practice typically sells three or four of these frames each month. Next year, he plans on adding a few $1,500 frames to the collection. Similarly, Coiner has trained the staff to present Varilux Physio Enhanced Eyecode for progressive lenses and Crizal Avancé for single vision lenses. We can offer a better discount, allowing us to bring in more revenue, he says. Create a Bonus System One of our bonus systems focuses on multiple-pair sales, he says. Opticians make a good base percentage, but if they really want to make money, the multiple-pair spiffs are a good incentive. Using the Essilor Pair50 program, the practice passes some of these savings along to patients, offering them the opportunity to buy two pairs of premium eyewear with AR treatment with a 50 percent savings on the second pair. Continued on page 9 mba-ce.com MBA Insights 3Q

9 COVER STORY Optical Transformation Continued from page 8 He provides a smaller bonus for partial multiple sales, such as purchasing eyeglasses in addition to contact lenses. He added spiffs for premium materials, too, such as Varilux Physio Enhanced or higher-level ophthalmic lenses. We spiff very well because we want the optical staff to take the time to explain the features and benefits of second pairs of eyewear and premium lenses. Realize that if employees are earning that much in bonuses, sales are going up, too. Now, when new staff members are hired, Coiner looks for people with a team-oriented, outgoing personality. One of the best optical employees we ve ever hired had no optical experience, but she had a great personality and that s something I can t teach. I can teach optics, he says. Results The system was a quick success, and Beach Eye Care Metrics Tracked Between its new practice management software and his own spreadsheet, Stephen M. Coiner tracks several key metrics on an ongoing basis. Average dollar sales Units sold Gross profit margin: We re still increasing the net, Coiner says. Productivity formulas for associates how many hours employees work, what they are paid, how many patients they re helping each hour: This helps me see whether we re overstaffed or understaffed, as well as who s shining, he says. Closeout frames: In the fourth quarter, instead of purchasing a lot of newer frames, we closely monitor our past sales and purchase closeouts that we find have been popular. This maximizes cost-of-goods sold in the fourth quarter while offering some of these frames at reduced prices to patients, Coiner says. even more importantly, it has maintained its momentum nearly two years later. When I arrived, multiple pair sales were in the singledigit percentages. I want to get to 20 percent, and we re getting close, Coiner says. Increased sales have translated into increased profits. In the first two months that Coiner was with the practice, the decline in profit stopped and by the following quarter, the practice was seeing higher profit margins. Optical Management Resources Abound on MBA Website In addition to using the Management & Business Academy (MBA) practice metrics data to help you gauge your practice performance, there are also many resources on mba-ce.com that provide practical ideas and strategies to improve your optical s performance. Here are some. Best Practices of Spectacle Lens Management (click here): This detailed booklet includes practical techniques to increase eyewear capture rate, maximize average eyewear sales, increase gross profit margin, lower transaction costs and increase sales of multiple pairs. It can be found under the Business Management, Marketing and Finance tab. Under that same tab, readers can find the entire monograph series produced by MBA. A number of these focus on specific aspects of dispensary management, such as Monograph 1: Increasing AR Revenue (click here) and Monograph 6: Spectacle Lens Bundling (click here), both by MBA faculty member Dave Ziegler, OD; and Monograph 14: Optimizing Retail Pricing (click here) by MBA faculty member Mark Wright, OD, FCOVD. For a truly coordinated effort at overall improvement, download the Practice Growth Implementation Track on optical merchandising (click here), one of four implementation guides developed by MBA. These step-by-step resources guide practitioners through more difficult cultural and procedural shifts in their practice by breaking the goals down into smaller steps. These guides can be customized easily complete the steps in order or use selected goals. Access resources on mba-ce.com. MBA tools can even help with the calculations you ll need to make your analyses easier. Under the Practice Performance Metrics and Market Research section (click here), for example, look under Practice Performance Calculators to find downloadable Excel spreadsheets to calculate revenue per eyewear prescription, a spectacle lens sales mix assessment tool and the rate of eyewear prescriptions per 100 exams. Or look for the Practice Performance Tracking Tools (click here) to download more complex spreadsheets, such as the Eyewear Gross Margin Calculator and an Eyewear Pricing Review. mba-ce.com MBA Insights 3Q

10 COVER STORY Key Metrics: Eyewear Sales as a Percentage of Gross Revenue Eyewear sales produce an average of 43 percent of gross revenue in independent optometric practices, according to the new 2013 Key Metrics: Assessing Optometric Practice Performance. This ratio has not changed significantly over the past six years. The range in eyewear s share of revenue across practices is fairly narrow. In few practices does eyewear Click here to find the 2013 edition. generate less than one-third or more than 55 percent of revenue. If eyewear sales are less than 35 percent of your revenue, it s likely that either your practice specializes in medical eye care and/or contact lenses or that you are paying insufficient attention to your optical dispensary. Eyewear Percentage of Gross Revenue Performance Highest 90th-99th percentile 62% 80th-89th percentile 54% 70th-79th percentile 50% 60th-69th percentile 48% 50th-59th percentile 45% Average 43% 40th-49th percentile 42% 30th-39th percentile 40% 20th-29th percentile 37% 10th-19th percentile 33% Lowest 1st-9th percentile 21% Source: 2013 Key Metrics: Assessing Optometric Practice Performance Key Metrics: Amedian of 10 percent of patients who purchase eyewear in independent optometric offices buy more than a single pair during an exam visit. Only one-third Improvement of eyeglasses wearers report using more than a single pair of eyeglasses. Most second pairs sold today are prescription sunwear. Achieving a second-pair-sales ratio of 15 percent or more is within the reach of most practices. Practice management consultants state that offering discounts on second pairs increases the sales ratio. Most ECPs currently offer secondpair discounts, but the discounts average just 20 percent, which Eyewear Multiple Pair Sales Ratio Median, Low and High Usage of Lens Categories Lens Low range Median High range Progressive lenses* 35%-53% 65% 75%-89% No-glare lenses 10%-35% 50% 70%-90% High-index lenses 2%-5% 10% 20%-50% Photochromic lenses 5%-15% 20% 30%-50% Prescription sunwear 2%-5% 10% 20%-30% Computer lenses 1%-2% 5% 12%-20% *Percentage of presbyopic prescriptions Source: 2013 Key Metrics: Assessing Optometric Practice Performance Eyewear Multiple-Pair Sales Ratio High Opportunity Median Performance 1% 4% 5% 5% 8% 10% 10% 10% 15% 20% 33% 5th 15th 25th 35th 45th 50th 55th 65th 75th 85th 95th Percentile ranking Source: 2013 Key Metrics: Assessing Optometric Practice Performance consultants claim is too low to create an immediate call to action. The effect of increasing the multiple-pair-sales ratio from 10 percent to 15 percent is likely to be a 1 percent to 2 percent increase in practice revenue, depending on the discount offered. Spectacle Lens Usage Single vision lenses account for an average of 54 percent of spectacle lens prescriptions, while lenses for presbyopic patients account for 46 percent. At left are the benchmarks of high-performance-lens usage among independent ODs from the 2013 Key Metrics report. Click here for the full report. mba-ce.com MBA Insights 3Q

11 COVER STORY Key Metrics Practices Report Nearly $50K in Frames Inventory The frames component of sales of eyeglasses accounts for 20 percent of total practice revenue. Upgrading patients from lower-cost frames to branded, designer frames results in large increases in practice revenue. The median Management & Business Academy (MBA) practice had 850 frames in inventory, valued at $49,240, and reported dispensing 1,634 complete pairs of eyewear (new frames and lenses) during the previous calendar year. This translates to a median frames turnover of 1.8 annually. Find your practice size in the chart at right to see how your frames inventory and turnover compares to the results from the 2013 Key Metrics: Assessing Optometric Practice Performance. Frame Inventory by Practice Size Annual complete Annual Value of Frames in spectacle frames frames in Price size decile inventory prescriptions turnover inventory $2,133,000 or more 1,250 3, $70,550 $1,695,000-$2,132,999 1,125 2, $66,035 $1,432,000-$1,694,999 1,025 2, $54,450 $1,200,000-$1,431, ,893 2 $55,020 $1,026,000-$1,199, , $58,630 $883,000-$1,025, , $50,095 $767,000-$882, , $43,500 $642,000-$766, , $38,000 $493,000-$641, $35,090 $492,999 or less $32,175 Total MBA practices 850 1, $49,240 Source: 2013 Key Metrics: Assessing Optometric Practice Performance The MBA database provides a quantitative basis to estimate the ideal number of frames that practices of different sizes should carry in inventory to achieve the right balance between achieving a high annual frames turnover and a high ratio of complete eyeglasses sales to complete exams performed. Inventory turn is higher when the inventory amount is kept low but if it s too low, sales drop because the frame selection seems insufficient to patients. The above table provides guidelines for frames inventory by practice size. The ideal Annual Gross Revenue $500,000 $800,000 $1.1 million $1.4 million $2 million Median annual frames inventory turnover Ideal frames inventory , ,050 1,250-1,400 Excessive inventory 1,000+ 1,100+ 1,400+ 1,600+ 2,000+ Insufficient inventory <600 <675 <800 <900 <1,100 Source: 2013 Key Metrics: Assessing Optometric Practice Performance Frame Inventory Guide frames inventory guideline assumes average frames turnover for each practice size but brackets the inventory range for practices achieving above-average eyewear prescriptions per exam. An MBA Tip If you want to sell high-end frames, you have to display higher-end frames. If your goal is to have 15 percent of your unit sales in frames of $300 or more retail price, then your inventory will need to be 18 percent to 20 percent of these high-end frames. Even though the turnover of high-end frames will likely be lower than your overall average, if you do not display an array of high-end frames, it s unlikely you will sell as many. Similarly you may want to stock a somewhat higher ratio of frames in the $200- $299 retail price category, if your goal is to upsell people from frames in the $150-$199 range. Please Note The metrics on these pages come from the 2013 edition of Key Metrics: Assessing Optometric Practice Performance. Look for your copy in the mail and on mba-ce.com (click here). mba-ce.com MBA Insights 3Q

12 Essilor Cup Golf on iphone and ipad Essilor and Gameloft, a leading publisher of digital and social games, have partnered to present a new, free version of the digital game Let s Golf! 3 for the iphone, ipad and ipod touch. Let s Golf! 3, available at the App Store (Click here), aims to raise players awareness on the importance of good vision and the need to check, correct and protect their eyes. Let s Golf! 3 Essilor Cup unlocks the most difficult golf course of the game, Tuscany, which has been renamed Essilor Cup. Players need to answer a fun quiz about vision and the means to preserve it. Two mini-games are also available, for a limited time, where the players have to choose the right eyeglasses depending on lighting conditions to optimize performance on the course. It s a way to educate players The Let s Golf! 3 app is free at the App Store. about the importance of good vision and how adapted eyeglasses can provide correction, eye protection and visual comfort. Peshkova Dreamstime.com MBA Meeting at SUNY Results in Best Practice Ideas The June Management & Business Academy meeting at State University of New York State College of Optometry resulted in these best practice ideas contributed by attendees. Hire for personality. Hire people-people, not skills-people. Then teach skills, not the other way around. Stay in touch via an EHR system. Following every patient visit, generate a letter and report for each patient using your practice management office software. Use an eyeglasses pickup message as a reminder. When patients eyeglasses are ready, send them an or text and state the date of their next visit. Stay in touch. Call a patient two weeks following each visit to inquire how things are going. Do your marketing homework. Before signing a contract with an outside marketing firm, do your homework on the firm s work and reputation. Consult feedback-driven sites like Yelp! Use outside help. Hire a third-party company to answer phones (remotely) and to schedule appointments. That company s employees already are trained in customer service, saving you the trouble and freeing your front-office staff to focus on the patients in the practice. Think jewelry. Treat your eyewear as jewelry. Study how jewelry is merchandised, advertised, sold and delivered. There are obvious lessons there to increase eyewear sales. Poor Face Larger Gap in Accessing Eye Care AJuly study that appeared in JAMA Ophthalmology (click here) found that the disparity in the use of eye care services persists based on socioeconomic status. Over the years, treatment of certain conditions such as macular degeneration, cataract, diabetic retinopathy, and glaucoma has improved markedly. However, one of the authors, Xinzhi Zhang, MD, PhD, of the National Institutes of Health, writes in the study background, To benefit from these interventions, however, individuals must have access to eye care. The study, titled Socioeconomic Disparity Persists in Use of Eye Care Services Among U.S. Adults with Age-Related Eye Diseases, found that poorer patients with age-related Likelihood of Patients With Age-related Eye Disease to Visit an Eye Care Provider Poor 62.7% Wealthy 80.1% Source: Socioeconomic Disparity Persists in Use of Eye Care Services Among U.S. Adults with Age-Related Eye Diseases eye disease were less likely than wealthier ones to visit an eye care provider (62.7 percent versus 80.1 percent) or undergo a dilated eye exam in the previous 12 months (64.3 percent versus 80.4 percent). The study also found that persons with less than a high school education were less likely than those with at least a college education to report a visit to an eye care clinician (62.9 percent versus 80.8 percent) or dilated eye examination (64.8 percent versus 81.4 percent). The authors concluded, There is a need for increased awareness about the relationship between social circumstances and agerelated eye disease and for more research to determine how income and educational inequalities affect health-seeking behavior at the community and individual level over time. mba-ce.com MBA Insights 3Q