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How Should You Pay Your Doctors? Metric of the Quarter with Dr. Jason Lake
00:56:19
Ever wonder what your associate doctors should really be producing? Or how to fairly structure pay in today’s competitive market? Welcome to the latest installment of the Power Hour’s Quarterly Metrics Roundup, where this quarter’s...
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- [00:00]
Dr. Jason Lake
Foreign.
- [00:07]
Eugene Shotsman
Welcome to the Power Hour, Optometry's biggest and longest running show. We're on our 13th season. I'm your host, Eugene Shotsman. And today's episode features some really rare information. So back in the Power hour studio is Dr. Jason Lake. And if you're trying to figure out how to motivate your doctors, how much they should be producing, or how to fairly structure pay in today's market, you're going to want to take notes with this episode. What makes this episode so special is that Jason doesn't just give you metrics. And by the way, he gives us amazing metrics. He also gives us benchmarks from some of the most successful practices in the country. So this way you can stack yourself and your associates up against these metrics. So whether you're flying solo, whether you're building a team, or you already have multiple ODs, this is the kind of data and insight that that most practices never get access to. So Jason and I break it down into four core metrics like production per doctor hour or percent collections, plus four key drivers that you want to manage to help measure and manage the doctor's production. These are things like capture rate, professional fees per exam. We talk about how to use this data, not just how to measure, but to coach, to incentivize, and to make smarter business decisions. So if you want to grow a high performance doctor team or become one, this episode is a must. Listen. And also one quick ask for you all. This is now part of our quarterly metric series. If you've been finding these episodes helpful. And Jason also, at the end, teases one metric that he thought would be an interesting one for you to hear about. One quick ask, please let me know what you think. Reach out to me@eugene shotsman.com or through the Power Hour website. Let me know what's working, what you want more of, and what we should cover next. Make sure you're subscribed, by the way, on YouTube, Apple, Spotify, or wherever you get your shows. And now let's go to the episode. All right, welcome to the Power Hour with Dr. Jason Lake. Jason, so excited to have you back on the show.
- [02:09]
Dr. Jason Lake
So great to be back, Eugene. Thanks for having me.
- [02:12]
Eugene Shotsman
All right, so this is our core quarterly metrics discussion. I'm not sure that we really nailed the name of the series just yet. I think we're going to take some audience suggestions for that. But this is one where if you go back and you listen to some of our previous episodes, we've talked about things like cost of Goods which are highly relevant in this particular environment. We've talked about productivity and profitability, and we've talked about a variety of topics that, you know, are really important when you're running a practice. And I think this time we're going to zoom in on what I think many practices find to be both their largest expense and also their largest bottleneck, which is how you pay your associate doctors or how you pay doctors in the practice in general. So where do you want to start? Jason? This is a really hot topic, and there's a lot of misinformation about it.
- [03:11]
Dr. Jason Lake
You know, I. I think when we talk to our members, Eugene what I'm seeing is this absolute dichotomy is not the right word, but it's. It's a widespread on what, what doctors want, depending on geographically where they're at. There's no secret that rural locations, my friend Lisa Wade calls them prosperity practices. Those rural locations tend to. Tend to produce more, and they pay a little bit more in larger metropolitan areas. You know, in Missouri, Kansas City and St. Louis, it's usually easier to hire than other places. And I think you can. That translates directly in how you pay a doctor. But I think the reality is, is that sometimes what I see as you monitor social media and boards, I think some of the expectations, perhaps by young doctors maybe are unrealistic. Not all of them. Some of them. And I think it's important that we understand how we back into those numbers. So when I hear somebody say, Yes, I need $240,000 a year, but I'm only going to see 10 exams a day to do that, you're changing a lot of ratios. Is this continual within the practice? So I think what I hope for your listeners is, number one, if they're a doctor by themselves, a solo practitioner, they're trying to figure out what are the metrics I can pace myself on to determine how well I'm doing. Number two, if you've got associate doctors, how do you fairly compensate them and motivate them? And I think that's always the issue is, you know, really to increase revenue, whether you're the owner or the associate, there's only two things you can do. If you boil it down. I can see more people or I can make more money for each patient that comes in the door. I think there's a lot of subtlety and nuance in there, and there's four metrics that I think that you really need to watch on every one of your doctors. And I think underneath those are kind of Indicators, kind of temperature, oil pressure, type of lights on your instrument gauge to determine how well that works. So dive in and you know, we can start off with any question you want, Eugene, but I think that's the premise and the overall thought process we're looking.
- [05:09]
Eugene Shotsman
Yeah. So we're going to talk about the metrics that you, that, that you want to hold your doctors accountable to, which ultimately allows you to pay them what they want to be paid. And I completely agree with you, and I've seen this happen a lot, is that, you know, a client in downtown Chicago may have a really different recruiting cadence and may have a lot of, may have a very different salary expectation from the young doctor who wants to move to that area than a doctor who has a location in the middle of South Dakota or something like that. And then they've got to recruit for that position. And that may be a quarter million dollar gig, but in order to make it a quarter million dollar gig, you still have to meet some basic requirements in order to be able to make sure that the practice is productive. Now, I do have to ask, before we even get into your four metrics, is there ever a world in which you would advocate for a salary to a doctor rather than straight production or some sort of version of production backed into a salary.
- [06:19]
Dr. Jason Lake
You want to talk about a great call out, something which probably should have hit in the beginning. So I've literally looked at hundreds of compensation contracts throughout my career and, and I've seen people bonus and metric on some crazy things. Eugene. I have a real strict belief that simple is better. And maybe that's my part of my own rule upbringing on farm is keep it simple. As my dad would say, the second S is stupid. But we'll just call it keep it simple for your audience because they're certainly not. But when we look at those metrics, just understand that every salary really boils down to one thing, is what is your total percentage of collections that you're allocating for that. That clinician? Absolutely. Some people value security more than they value productivity. But the reality is, is no matter how you set that up, it's based on a percentage of what you're doing. And I think that's the baseline we probably ought to hit and begin from. From what I see, and it's one of the four metrics I look at, and we'll kind of hit it first, is how much of your overall collections are you allocating to a doctor? And I would tell you that Without a doubt, 20% is probably the high end and 16% is the low end. Now, if you're in rural, a rural part of our country where you can't find a doctor, you might have to allocate 22%. And that's okay because you set that within your budget. You might make that 2% up on cheaper rent or other things in that rural community that don't cost as much. It's just important that you set the budget. But I would tell you in general, whether it's private equity or strategic private practice, it doesn't matter. What I see most often is about 15 to 16% of every dollar they collect is allocated to salary money they take home. And another 3 to 4% is allocated to benefits. So if you take 16 plus 4, that's 20%, a really well running practice. And certainly most of our group members are in that 18 to 19 range. And that really helps. So one of the things that I think you should do is even as the owner, if you have associates, you should put yourself on that schedule as well. Your, your CPA would probably agree with me is you have to know what it would cost to replace yourself as a clinician, which helps you become a CEO. Work on it more than in it. But I would say whether in a salary, some people do not need the motivation of productivity metrics. I am not a huge fan of that. But you can make their base salary higher and their bonus smaller. Some people are much more motivated by that and they see a bigger upside. So we could talk about that kind of in the end when we figure this out. But you kind of, at the end of the day, I would tell you 15 to 16% needs to somehow end up in our hands, whether it's the majority salary or the majority bonus. What I see is a base of about 120 to 140 for a beginning doctor with bonuses stacked on top of it. And we'll kind of talk about what that looks like.
- [09:22]
Eugene Shotsman
All right, so now let me zoom in on that. We'll call it 20% a little bit. Let's say I, Dr. Schottzman, I'm working in your practice, Dr. Lake, and I see a patient today and that patient buys, I don't know, a month of supply of contacts and then so that gets allocated to my 20%. Now let's say I don't know, there's a piece of software that you have in your practice that continuously follows up with that patient. And a month later or a quarter later or even six months later, that patient buys another six months of contacts. That's a big purchase and whatever that is.500 or something like that that patient just spent on contact lenses. Does that go into my 20%? So because it's my patient, it's.
- [10:09]
Dr. Jason Lake
Whoever did the final exam on the patient receives the credit. So in other words, even the patient doesn't come in for two years and you choose to extend their prescription. I'm not advocating for that. It would technically go back to the doctor that did the final full exam, not nice things like that.
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Eugene Shotsman
So now let's.
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Dr. Jason Lake
All revenue associated with that patient is given back to the doctor that did the full.
- [10:33]
Eugene Shotsman
Okay, so now let's. Let's play a game. I've seen in a couple other practices I have a dry eye patient or I identified that this patient is a dry eye candidate. I am unfortunately not the dry eye specialist in our practice. So I set up a call or I set up an exam with you, Dr. Lake, and I finished. You know, I did my job. I pass the referral over to you, and you're the owner. And then you sold them a $5,000 dry eye package or $3,000 dry eye package. Is that, does that production number go to me? Do I get a bonus on that or.
- [11:11]
Dr. Jason Lake
Well, you could. I would have to think about interoffice referrals and how that would work and if it's compensated by insurance and if that's legal. I'm going to take a step over from that one. I would tell you that I. No, I do not see it that way. So if I'll give you an example, two examples of your answer. One, you're the primary care doctor and I, they come into the office on my day and I see them for an emergency, I get credit for that. Okay. The only things that are associated beyond professional fees are the retail sales. So you said there was a dry eye package. If most of that's going to be professional fees, that's going to be affiliated back to me because I'm the doctor that did the work. But like glasses and contacts generally, you know, little knickknack things you buy sons or maybe vitamins or whatever. If the doctor who did the comprehensive 99% of the time gets credit for that. I have seen situations where a doctor might get a referral fee for like a vision therapy case or a big IPL case, something like that. You have to. Most of those are cash procedures, so that's totally legal. I would have to think about that if it was getting billed to insurance, because I think there's some innuendo and subtleties about that.
- [12:22]
Eugene Shotsman
But yeah, well, and I think I've seen situations and I've kind of talked to people. The reason I brought up the maybe not the simplest example is that I've seen situations where people say, well, you're not going to get credit for it, but you need to make a number of referrals X number of times per month. And if you don't make those referrals, then you're not meeting the expectations of your job and maybe some of your other bonus opportunities are taken off the the of top table.
- [12:49]
Dr. Jason Lake
That's, that's to me, I'm not a. I would have to see how it was set up. But I'm not a fan of things like that. I like transparency. If you don't do the work, I'm just going to send you, you know, I'm going to send that patient to you. Eugene, if you're a dry expert, I'm not because it's just the right thing to do. 99% of optometrists are really nice people. I say this all the time. There's 1% Little Sus. But the rest are super nice. And to be honest with you, I've just never had that problem in my own clinics. Like we have 12 doctors. They just, they send them to people because that's the right thing to do. But no, if, if you're doing the work, you get the credit. I don't. But you know, like I said, if I did the comprehensive exam, if they buy an associated retail product, glasses, contact Sons, whatever, I did the primary care exam, I made those recommendations. I should get credit for that. The simpler it is, Eugene, the, the more this is going to make sense to not only the associate, it just makes it cleaner and easier to track throughout your P and L. And truly, at the end of a contract year when you're sitting there evaluating your doctor, you can be very clear, hey, you did all these things so great. Here's three things you can improve on. If you've got to jump through 16 hoops. And I've seen these contracts, I think they're demotivating because they're confusing personally.
- [14:03]
Eugene Shotsman
Okay, fine. So we talk about the first metric, which is essentially the percent of total revenue that the percent of total production that touches that doctor. And you believe that compensation should be somewhere between 15 and 20% or 16 and 20%. And that's what we call fully loaded because that includes your benefits, not just your salary slash earnings.
- [14:32]
Dr. Jason Lake
One thing to point out is I see, I hear owners say this and it Makes me cringe a little bit when a doctor, to me a million dollars in annual production is what a full time associate should bring. That's a good baseline in today's world economy. One of the things that I think that if you're wearing your owner hat, understand that the percentage cost of benefits decreases the busier a doctor gets. So if you have Dr. A and he is making 600,000 a year in production and Dr. B, she is making 1.4 million in production and the benefits are $10,000 for both doctors. Which doctor do the benefits cost less on? Right. So you can even put in modifiers that once you get to a million I'm going to pay you 15%. Once you hit a million, I'm going to pay you 16%. So you can also put jumpers in there like that reach that total production because inherently if you're decreasing their cost significantly as you go, you get into trouble when you're in the lower amounts. And part time doctors are wonderful and, but you can't, you know, if they're working two days a week, you can't pay them benefits because you get upside down real fast. Does that make sense? There's always exceptions, but as a general rule of thumb, a million should be your goal. I would say.
- [15:52]
Eugene Shotsman
Yeah, that's. That was exactly. My next question is that you know, in today's environment with high performing practices, what revenue per doctor are you typically seeing? And we're talking about newer associates and then we'll call them associates that have been in the practice for five, 10 years. And we can talk about your practice, we can talk about your members practices. What are you seeing out there? That's that should, that we should benchmark total revenue production per doctor.
- [16:21]
Dr. Jason Lake
Anyway. Well, I think that's what we'll hop into. So I think the first one that I want to talk about on that. I'm sitting here looking at my list thinking how I want to do it. But I think let's do production productor and then we'll back our way into that conversation. So what production product or revenue productor ourselves is, is Eugene Schatzman did a million dollars in production. And for the sake of our argument today we're going to say that the average doctor works 48 hours a week. Excuse me, 48 weeks a year. Times. Times 40, 40 hours a week. It's about 19, 20. We're going to say that a full time doctor works 2000 hours a year. Okay. In general, so if it just makes the math easier, you can adjust it as Needed. But if that doctor's working 2000 hours a year and they're making a million dollars a year in production. So let me do the math here real quick. Divided by 2000, we're looking at $500 per hour in production. So what I would tell you is that most Doctors don't work 48 hours and they don't see 2000. They, they don't do 2000 hours a year. They do maybe 1850, something like that, because you can't count the time off as part of this equation. So to figure this out, it's the total number of dollars that they bring in, you divide it by the total hours that the doctor worked. Not you can't really look. Well, the doctor works five days a week times eight. You actually need to track it because what you're going to find is obviously when the doctor's on vacation, their production is going to be zero, right? Like unless, you know, I'm walking in the door. One thing I could advocate for is making sure that you accurately track the doctor hours work, because that's going to tell you the story of what you can do to motivate that doctor. So when we look at production product per hour, there's a couple things I look at. It's number one, what is your end result? So if I would say, if I looked at the average, what I would call the middle standard deviation, Eugene, I would say on the low end of that is about 400 an hour production, and on the high end of that is about 600 an hour. Now we have a lot of doctors in our practice that are a thousand dollars an hour. Those are kind of on the, you know, their standard deviation over. They're, they're doing a little bit better than a lot of people. I would caution anyone, if they're below 400 an hour in production, you really need to look at your systems and decide it's okay. But how are you staffing them? Could they delegate more than 400? To be clear, $400 an hour in production is equal to $120,000 a year for a full time OD, which is the probably on the low end of which you're going to pay a full time OD coming out of school. And granted they're not busy yet, but if they're somewhat busy, $400 an hour, and what they bring in to the clinic is about the lowest you're going to get. Now, after they've been there 4, 5, 6, 10 years, they ought to be getting up in the 5 and 600 range if they're seeing a full book of schedule. But it's important to monitor that because you want to explain to that doctor if you're making a bonus, the difference between you doing 400 an hour and 600 an hour is about $50,000 in how you get paid. So it's, how do we measure day to day, what we're doing in looking at the effects of that over time.
- [19:48]
Eugene Shotsman
So how often are you looking at this metric with your doctors or how often do you recommend that people look at this metric? Monthly. Okay, monthly. Now, the other part that clearly impacts this, that the doctor probably has no control over, is actually there's two things that I can think of that impact this. Number one is patient demand. Do I. You know, there are practices out there where their doctors are sitting there twiddling their thumbs because, you know, they have four open exam slots every day. And the second part is, are you providing them with efficiency? We'll call them tools and people. Right, because you think about a scribe, and I'm thinking of one particular client, in my mind, their doctors are super, super efficient. But the reason they're super efficient is because they've got a scribe for every single doctor. They are testing virtual. Essentially, everything is done virtually for the doctor. The doctor barely ever touches the computer and at all. The older doing is seeing patients getting up, going to the next one. They're prepped for the next patient, they're doing their handoff. The optician walks into the room before the doctor even leaves. I never even have to walk down the hall to the next. So the practice is set up to be super efficient. So of course I, the doctor can see more patients. I can do more revenue per hour, and I can do more total revenue. And in that practice, I can make a lot more money. But also the practice has now invested a lot more what I would call fixed cost. Because that scribe gets paid regardless of how many patients they see that and that marketing bill gets paid regardless of how many patients they see or not get paid regardless of how many patients they see.
- [21:35]
Dr. Jason Lake
So I'm going to take a detour here because all these are intertwined together. And some of your listeners may have heard us talk about some of these numbers prior, and they need to understand that every number interacts with another number. That's why you look at, that's why you have a dozen or 15 KPI as you watch, because that same number, depending on the eyes that you're looking at it in, can have a different effect. Right? The number is the Number. But one of the things that I think is so important here that you kind of hit on was the marketing and support. What, what are the doctors exams per OD hour? And we talked about this a little bit the last time we were talking about templated scheduling, total exams, the total number of refractions or comprehensive good, you know, or good well health exams that you do. Not all the, not all the 99,000 codes for your medical billing. I'm talking just the comprehensive exams. And the best way to look at that I've always thought is major fiber fraction or S code because you know, if you're doing that, you've done a comprehensive exam. So when we look at that, people always say, well Jason, what's the ideal number? What do you feel like is the perfect number to look at? And, and this does incite some interesting conversations. We've touched a little bit. I think the sweet spot is about 1.8 to 2 exams per hour. And we talked about this last time. Every doctor is, oh my God, I see more people. Well, maybe. So let's say that you work eight hours a day, Eugene, and that we book you on the books or two full exams per hour plus another recheck or glaucoma check. Something Is that contact lens? Check if, if you set that up. And let's see, I did the example here before we got on. If you set that up and you said okay, if I want to do 1.6, that's. I'm sorry, I did the exam. Okay, I work at 8 hour day and I see 16 fulls which would be 2 exams per hour plus another 8 to 10 follow up visits. That's 24 to 26 visits in a day. That's a busy doctor. Right. If you book 16, you're probably going to see 14. I know that you run wonderful systems. Let's just say a couple no shows. We don't always fill the books perfectly. But when you average that out. So you book 16 folds and 8 to 10 follow ups and rechecks a day, which is a busy day, 24 to 26, you probably got one to one and a half technicians working them up, maybe a scribe helping you, you're moving along. If you look at it like that, 14 exams a day times 48 weeks a year times four and a half days a week. Who's checking off early on as a Thursday golf day? I don't play golf, but I assume Thursday is golf day and you take off some early to watch your kids. That's about 3,000 exams a year. So people are like, oh, my gosh, you know, we see way more than that. I'm like, well, maybe, but If I took 3,000 exams a year, and I took it by the industry average of 4, $400 per exam, that's $1.2 million in production. And now all of a sudden, the hands in the audience go down. Well, I do that and I do that and I do that. I'm like, really? Do you do that? Do you. Do you produce $1.2 million a year? Because you're only seeing 14 polls a day, taking four weeks of vacation and a half a day off a week to hit that number at an average number. So the reason I point that out is if you look at 3000 exams a year per full time doctor is the baseline. You can easily achieve that in about one point exams per hour. People think, well, that just seems low. It's not low when you count in all the other things that you're doing throughout the day. So really, what becomes the binding factor with that? So we talked a little bit last time about every doctor has a sweet spot. And I personally think that Sweet spot's about 1.8 plus or minus. But when. And you have to have your schedule built to schedule that. We talked about all those things prior. What happens when a doctor is seeing too many exams, Eugene? What happens to that doctor's production per patient? Does it go up or down?
- [25:34]
Eugene Shotsman
We can't keep up.
- [25:36]
Dr. Jason Lake
So if we say that Dr. Saw 3, let's just say 3,000 is the baseline. We've covered that. If 400 is the industry average for a good practice per patient, $400 in revenue, the difference in production between $300 per patient and $400 per patient is about $300,000 a year, or $45,000 roughly to the doctor. So if I'm doing only 300 an exam, I'm going to produce about 900,000 in revenue. If I do 400 exam, I'm going to do about 1.2 million in revenue. That determines how fast the doctor can go. About 3,000 exams is really pretty good for a doctor a year. But you know what, Eugene? Dr. Bill over here may only be able to see 2,800 or 2700 exams because that's the speed that they go at. So you either have to give them more staff, ascribe and help them, or simply make them understand that if I make you busier and your production per patient goes down, you're making less money, you're taking home, you're working a lot harder to get less. And so I think that's the key thing is if you don't measure these things, how would you know what that sweet spot is? So it goes back to your point. We're measuring exams per hour. And when we look at that exam per hour. Hour and we know it gets perhaps a little high, what are the things that we, we know it's going to affect, it's going to affect capture rates and exam only, some contact lens fits and professional fees. All those things come underneath that. So it's a little bit of a loaded question that you gave me, but in essence, when you fill it up, you should be measuring how many full exams per hour that doctor's doing. And then what are all the other things that happen after they see that number? And if it, if they can maintain 400 an hour, maybe you could have 2.3 exams and they could. That's what high performers do. They figure out how to do the same thing per patient and they just see more of them and they know they're going to hit limit and they come back down to their sweet spot.
- [27:35]
Eugene Shotsman
Right. So, and then we're, we're back at your original point, which is revenue per doctor hour is a core metric that you've got to really zoom in on. Because if you understand revenue per doctor hour, it's probably even less important than. Because optimizing for revenue per doctor hour versus how many exams per hour they do is probably ultimately more productive. Because if you, if you optimize for revenue per doctor hour, everyone wins.
- [28:04]
Dr. Jason Lake
Right. It's a lead versus lag. Right. Isn't the productivity product or a lag measure that we said, well, this is a function of how busy you were, how good the marketing did, how well I supported you on your staff. You know, every time that I've had a meeting with a doctor in darn near 30 years of doing this, 80% of the time when I offer constructive feedback, it is always met with, well, yeah, but you need to do this for me. And honestly, most of the time, it's been really good feedback. I need another optician. My capture rate, you know, if you teach them to do it, they'll diagnose their own problem and get better. I hope that makes sense.
- [28:41]
Eugene Shotsman
Yeah, I think that's great. And I think we'll, we'll come back to behavior change for doctors, because I think this is an area I really want to zoom in on. I want to get through your other metrics that you, that, that you wanted to make sure. That we covered. Because ultimately it's going to come down to here's what I need to know, and then here's how I use those metrics to impact behavior change.
- [29:05]
Dr. Jason Lake
Right. So we've kind of hit on really three of the four, Eugene. We've hit on exams per hour. Okay. And that's a byproduct capacity rate. We've hit on your production productor. We kind of talked about that a little bit, and I think we should dive in there a little bit at kind of what should our expected ranges be? Yeah. What that translates out to. So production product hour was what we said earlier. It's the total amount of dollars they bring in divided by the doctor hours that they to work. And I get the question a lot. What's a good number? What should I expect? And I will tell you, on average, you're going to see between 400 and 1,000 an hour. And that is a big range, right?
- [29:48]
Eugene Shotsman
Big range. Yeah. That's huge.
- [29:50]
Dr. Jason Lake
And you kind of hit on the fact that that is the difference between how you scale that doctor up. So let's think about that from a new OD perspective and what they might be interested in. If you're. Let's just assume we're paying them the 15%. We've got the benefits on the end, but we're just. We're paying a straight 15%. $400 an hour equates to about $120,000 a year. I would expect that out of a new grad, their ability to hit that. Okay. On the other side of that, we have two or three doctors that are hitting $1,000 an hour right at it. That is almost $300,000 a year production. So one of the things that I think that when you were looking at your doctor and talking with them is at the end of the month, you would say, you know, you were at $500 an hour for the prior month. What would it take to get you to 550 an hour? And then you can start playing with math. Like, what if you increased your capture rate 1 or 2%? Or what if you increased your contact lens fits 3 or 4%? You know, more fits in the door equal more contacts. Or tell me about your dry eye clinic or your specialties, or have you went and done any work on surgical or premium IOL with your patients? All of those things are additive. And I had a doctor one time ask me, yeah, my, my professional fees and my, my revenue per hour is down. I said, why? He goes, why? And I go, I looked at his numbers. And I said, well, you didn't. You were doing four or five cases a month of Lasik last year and you're doing one this year. And Lasik just slowed down. Right? That's just the market we're in. I said that's a big driver for you. So you can either figure out why that's happening or you need to figure out something to, to fit the bill on that. Is it dried eye? Is it another subspecialty? Is it maybe raising those capture rates? But the why is the answer that drives you in the right direction. I hope that makes sense. Out. That wasn't great.
- [31:56]
Eugene Shotsman
No, that's great. And I think that's a, you know, having that conversation is. It sounds like it's a two way street because it's a. What can I do for you? Right. What can I, the practice owner, do for you, the associate, to help you get from 500 to 550? And then also let's look at the metrics underneath the metric. Right. What are the things that are driving that? And like you said, that's contact lens fits. That's your examine.
- [32:25]
Dr. Jason Lake
Do you want to hit those? Because you've hit the big four. And then there's the four metrics underneath that help drive that are drivers to this.
- [32:32]
Eugene Shotsman
Okay, wait, hold on. So just make sure that the audience got it.
- [32:35]
Dr. Jason Lake
The big four, number one. Well, we, I don't know that we've hit this one yet. Have we talked about revenue for full examination? We've kind of touched it ancillary.
- [32:45]
Eugene Shotsman
But yeah, I think we need to zoom in on that one because I, I've got three that I'm tracking.
- [32:51]
Dr. Jason Lake
Yeah. So we already hit production product per hour. Yep. We hit exams per hour. Get your doctor cost. It's more of a, more of an owner probably perspective. But I think it's important for the, for an associate to understand that like it's, it makes it really hard for us to be a profitable business if this goes above 20. And the fourth is, is really the second major driver is your revenue per full exam or dollars per full exam or collections per full exam. People call it different things and it's probably. Eugene, one of the single most quoted metrics in our industry because it's easy to figure out. It's your total dollars divided by the total number of full exams that you and your listeners, you know, we've, we've gone over how to track what a full exam is. It is important that you don't track all the office visits because it gives you an artificially low number? Yep. When you look at that, I think the industry average, depending on who you look at. Oh, I mean in our groups we like to see closer to 400, 450. And I think if you look at across the industry, it's probably in the low three hundreds. It just, it depends on what group you're asking and when and why. And I often question Eugene, sometimes when I see that, I'd say abnormally low. Are they tracking, are they using the right denominator? Did they use full exams or are they using all the office visits? Because if you count every follow up visit, your denominator is artificially high and it makes that number look low. But I would say on average in today's world, at primary care practice, I'd like to see the low end be at maybe 300, 350 in that range. That's someone who's converting at an okay level. On the higher end, I've got doctors that get 6, 7, 800. I'd say on average 450 to 500 ought to be kind of your goal. And that's a really just a well producing doctor. They're doing a good job. Yeah.
- [34:43]
Eugene Shotsman
So if you had to coach three things, if you got a doctor with a low revenue or collections per full exam, what are the top three things you would coach?
- [34:55]
Dr. Jason Lake
Well, it's so ironic that you led me into the four metrics that we were going to talk about, Eugene. So those are the four things.
- [35:01]
Eugene Shotsman
Okay, so we're going to take a break right now and then we're going to go into that answer right after, right after this break. And we're back in the Power Hour with Dr. Jason Lake. And before the break I asked you a question which is that, you know, if you're looking at collections per full exam and you're saying, man, I got one guy who's at 300 and I got another guy who's at 600. What do I need to do, what do I need to look at with the guy who's at 300 and how do I coach him to go from 300 to 350, 400, 500. And then you said, well there's four, four more things we got to talk about because we've already talked about the big four. Let's talk about the, I guess smaller four.
- [35:45]
Dr. Jason Lake
Yeah, you know, are they lead measures? Probably that drives the. I think there are four lead measures that drive the lag. I think productivity per hour, revenue per full exam are lag measure. At the end of the month. It's by its nature, it's a lag. That's how you do the math, right? This is how much I collected, this is how many people I saw. What are the four things that I would tell every doctor to concentrate on to drive those measures? So in no particular order, let's start with capturing. And I, I really spent a lot of time with lenses that it. There's also a subcategory for frames. So when you look at that, you know we've established that the doctor saw X number of exams. It's the total pairs of lenses divided. So we, we want to figure out what's the percentage of people that bought a set of lenses from you. Okay. So when you do lenses, listen, one of the big things that your members need to understand is that a new doctor isn't going to be as good as converting. That's probably an established doctor. But what do new doctors have a lot of new patients and new patients need things. So one of the things that I tell people is, you know, there are really, really good people at this. I would consider the Mendoza line for normal is about 50% conversion. We have seen conversion rate drop a little bit over since co we talked about this last time that I think we had shared that we 61, 62% is kind of the average. So in our groups are probably high performers. I'd say in the industry it's probably closer to 50 if I had to guess. But there's depending on what source you're at. But I would say as a good rule of thumb, if you're averaging 25 to 30% new patients, I'd like to see it 50, 55% lens capture minimum. Now somebody is out balling. It might be 70 or 80% that could go even higher. But if you're below 50 with a decent number of new patients. Think about that, Eugene. You get 100 patients, 25 of them are new. So they need stuff, right? So let's do those officehold. That means we need to convert on 25 of the next 75 patients to get to 50%. That's one out of three. You ought to be able to hit one out of three. They're not just coming in to see it because you're a nice guy or gal. They're coming in because generally it's I hope. But they also need things. So 50, 55, 60, 65 is kind of the better number. But again some variables. So number one, I'd coach them on lens capturing. Number two, we've talked this about this before your frame capture rate should not be more than 10% worse than your lens capture rate. Now why would we show a Dr. Frame capture rate? Well, number one, let's talk about what frame capture rate is. A frame capture rate. Yeah. Is of all these people that bought glasses. Okay, so we had 100 exams and 60% of those bought glasses. Any worse than 50% frame capture rate is not good. And what that difference between those numbers, that 60 and that 50, 60 lens 50 frame, that's the number of people who use their own frame. That's really an optician stat. It has nothing to do with a doctor except one occasion. And the only time you will talk about this is if you have an office with three doctors in it and you have one doctor that has a frame capture rate that's 20% worse than your lens capture rate. Everybody else in the office does the same thing. Same opticians, same everything. I had an optician come into my office one time and she said to me, Dr. Lake, if Dr. So and so doesn't stop looking at the frame, holding it up to the light and say, yes, yeah, it looks good to me. Use it again. She goes, I just laughed. And I said that's probably not an accurate way to judge the lifespan of a frame. And I said, it's. You're not judging wind speed here. I track it. Only if you have an outlier. Like if you have one doctor that's just crazy different. Most of the time that's an optician. It's too much patient on frame. So I don't even count that. But I, I put it in because it's punch story number two, contact lens fit rate. That is so demographically driven, Eugene, that it is tough to put an average on it. If you have older patients, it goes lower. But 30 to 40% is kind of a good range. Now I, I've got a friend of mine who has a practice and she's probably at 80, 85%. It's a contact lens practice. But if you're doing high end medical care in a rural area with a blit, a mix of young and old, 30 to 40, if you're primarily younger, maybe higher. One thing that I always tell our doctors is you can build an entire practice around the foundation of a contact lens patient. And it's been that way for, since they've invented soft contact lenses in the 70s or I guess mainstream them. And the reason is, is because those patients come back like clockwork because their prescription on their contact lenses run out. And those patients on Average always produce more revenue per patient because they usually buy glasses and contacts. Those are incredibly valuable patients. Incredibly valuable. And so really I would look at that doctor's fit rate and if they're below 30%, I would really want to dive into their demographic. Like, you know, if you're doing perhaps all 80 year olds or older patients, kind of like my patient base at this point in my career, you're probably going to have a lower fit rate. But if you're seeing a good blend of new and old and that number's low, I'd look at that doctor and go, well, you've got the time in your day when you're recommending the glasses and you're going through that recommendation unless it's just a crazy script. Have you went, okay, you know, Mr. Schatzman, I see you did this. I'm going to recommend a Verilux Crazole and a Transition and your sunglasses. You know, have you ever thought about a contact? She'd be a great patient for it. Add that question to your recommendation list and say, you know what, we could try a free trial today and see if you like the feel of them. It is a surefire way to build your practice because you're going to hit on 25, 30% of those when you just ask the question. But if you have a low number of fits, you may be seeing too many patients, you may be too rushed, you may not have staff support. It's a pretty good indicator. Primary care practices just see that many. So definitely worth mentioning.
- [42:02]
Eugene Shotsman
What about the argument that first time contact lens patients really slow the practice down?
- [42:09]
Dr. Jason Lake
Yeah, I, I think that's poppycock, as my grandfather would say. No, I mean, they take an extra five minutes but the doctor isn't training them. I mean, yes, it takes an optician or a technician depending on how your office set up, but I mean, it's a high value patient. And here's your worst case, say that one out of 20 days, you're running super behind schedule. I mean, hey, you know, this is great. I would never recommend this, but if you were really that bad that day, pop the lenses in and say, hey, why don't you try them out for a few hours and come back this afternoon. We've got a little break at 1:30. Why don't you wear them for a few hours and see if you like. Because they look good on your eyes. Come back or hey, you know what, I really think these are going to be great on you. They look good. We're backed up today. Let me Take these back off. Do you have time to come in later in the week to put these in? Because once they get them on their eyes and they see how good they see, they'll come back. You, you cannot get them to come back unless they try them on. You know the, you know what the puppy dog sale is, right, Eugene? When in the car, car, car world, when you're selling cars, the puppy dog sale, that's when you walk into a dealership and they say, oh, Mr. Schatzman, we're so glad you're here. I see that you're eyeing out this, this beautiful SUV here, this hundred thousand dollar suv. I tell you what, it's getting close to closing time. Why don't you go ahead and take this home for the night. Just bring it back tomorrow afternoon. Just drive it around and see how it fits. Make sure, make sure it feels good. They know you're going to park it in that garage and they know your wife's or your husband is going to come out and look at. It's the puppy dog stuff. Nobody goes and shops for puppies. They buy a puppy, play with the puppy, it's the puppy dog. So it works the exact same way in contact lenses. You, you put them on, you see good. Today's lens technology is awesome. Awesome. It's easy to fit. I mean, you, you gotta, you gotta put it on to give them the puppy dog. If you just tell them it's gonna work, they're never gonna come back. So always have them come back after you put it on. But every doctor's got three minutes in their day to make an extra 500 bucks. That's just the reality of it. Number three, and this one's interesting. Professional fees per exam. So I just add up all the professional fees and whatever that denominator you've been using for capture it or whatever you divide by that. I was going through data before we got on and I said, you know, what is a good range to be in now? You're going to get doctors that are really good at subspecialties like myelopathy management. And you may see this number climb through the roof. But let's just say that you've got a stereotypical practice doing a decent amount of glaucoma and AMD and diabetes. So you're getting a lot of medical out of it. You're getting some, some specialty care. Anywhere between 150 to 300 is kind of that standard deviation range that we would consider. The older your patient base is generally the more pathology there is. There's the more testing that goes with it. But if you're seeing a lot of 70, 80 year olds, that number should be probably closer to $300. And you, if you are younger, you're probably just going to get the primary care exam and a contact lens fit out of them and it's going to be lower. But if you're doing a good job and those patients are coming back to see you, guess what else you're collecting people that are aging and have pathology and that need subspecialty care. I don't get real excited about where the number is the first year they start. I get real excited about where the number trends to. So if you're doing a lot of lasik and premium IOLs and subspecialty care and you're doing those things, that number is going to rise and you're going to do a good job with it. So I was pointed out, it's it to me, the easiest way to grow a pathology practice is dry eye care. Because today's world in front of computer is just everyone's got it right. And it, you can, I mean, I can train a monkey to pull out a sharmer strip and put it on there. So don't tell me it takes too long. It takes 35 seconds then. Now, of course, you have to use your professional judgment to look at it. But a simple tear flow, a shirmer, whatever your favorite dye is to look at the point quality of the tear film. There's so much that can go on with that and it's, you're making patients so happy. You will be amazed at the number of people with SPK from exposure and dry eye. And there's just a plethora of things that go along with that, from amniotic membranes to specialty treatments. So those are the big three. And the fourth and arguably the most important one, but the hardest one to capture is exam only. So what is the number of people that come in and get an exam only? They don't buy contacts, they don't buy glasses, they don't need surgical treatment. A brag from my friend Eugene Schatzman is that his program up is the only program that can actually track that. And I think it's incredibly valuable. But if you can get that number down to 15 to 20%, where one out of every five patients come in, all they gets is a healthy eye exam, you will make your practice explode. The vast majority of people have an exam only, probably closer to 50%. And closing that gap down, that's the GA. It's just impossible if you don't have your software or you want to manually track it, because that's really what you have to do. It's really hard to track. You can use the first three and get a directionally correct answer. That fourth one, if you've got the exam only number boy, I would say that would be the. I would put that in a big yellow highlighter on your doctor's review and go from there. Absolutely.
- [47:35]
Eugene Shotsman
So this is, you know, in. You just went through these metrics, and my impression from what you said earlier is that you review these metrics monthly with each of your doctors, or you recommend that people review these metrics monthly with each of your doctors. Now, when you do that, do you show, you know, do you stack them and do you show like, you know, here you are Dr. Jones, and here's, you know, Dr. Smith, and here's Dr. Lake, and here's, you know, you know, somebody else. And let's see how you stack up.
- [48:03]
Dr. Jason Lake
What is. What's the old CEO of ge Good to great. What's that guy's name?
- [48:09]
Eugene Shotsman
Oh, Jack Welsh.
- [48:11]
Dr. Jason Lake
Yeah. You remember his motto. You rank him and yank them top 10%.
- [48:16]
Eugene Shotsman
Top, bottom, bottom 10%.
- [48:18]
Dr. Jason Lake
Always fire the bottom 10%. And you're like, yeah, it doesn't work like that with doctors. Not at all. Too hard to get. And that's just not how you judge a doctor. You know, you are you nice. Do people love you? There's. There's certainly all those subjective things, too. So it's not just metrics, but absolutely. We stack them up and we put them with the other doctors in the practice, and then I'll show them what the office averages and what I think the end, you know, they start to understand what the industry averages. But sometimes, to me, industry averages are tough because it doesn't fit your demographic. Right, right. We're all kind of seeing the same people. So if you've got two or three doctors in your practice, you know, I. I get this complaint from people, then they'll know how much money I make. I'm like, they already know. I mean, they know they can take what you. They can run a report, see what you produce, and take it times 15%. They know what you make it. There's just. That's not how doctors work. And so I think stacking them up next to other doctors, if it is framed correctly and if it is done in spirit of education, is wildly useful. If it's used. I've seen this. If you use it as a tool to intimidate and degrade. You're probably not hanging on to them anyway. You're just, you know, it's not going to work for you in the long term. But very rarely does that happen like 90% of the time when you stack them up. What you hope to say is, I would review with all the Doctors say, oh, Dr. Shatzman, what I'm looking at your contact lens fitment. What did you do different? Like, you're really winning. Like, tell us what you're doing. And if you highlight the good, people tend to see the bad and want to get better. And that's.
- [49:58]
Eugene Shotsman
So I have a real world question for you that came to me from one of my clients and it was, I'm curious what you would say to respond, but it's a, it's a 2oD practice, owner and associate. Right. And the, and the associates making, let's call it 140, 150 grand. As a, you know, they're, they're, they're a good producer.
- [50:22]
Dr. Jason Lake
Good. Right.
- [50:23]
Eugene Shotsman
Like they're doing well. And in this particular case, and they, you know, they're, they're in an area where cost of living isn't so high. So they're doing well. Right. In this particular case, the owner doc called me in frustration one day and said, how can I get this guy to see that he could just make a lot more money if he just brought up myopia management to kids. I don't understand. You know, he sees the same number of kids that I do. I got this many kids in my opiate program. He doesn't. And I, and you know, so I remember thinking about that. But globally, the question is behavior change all around. Right? What's the, what's the. If I have, if I'm struggling with my exam, only if I'm struggling in. And, and I just tell you, like, listen, Jason, I don't really like to sell. This whole handoff thing you got going, it just seems too salesy for me. I'm not a, you know, I don't like puppies. I don't like puppy dogs. I don't really like to sell that way. I'm just here to see patients. So you got this whole concept of, as you were saying, you know, doctors are not car salesmen. And so you end up in a place where you get people who are just not really that motivated by the additional 50 grand it.
- [51:37]
Dr. Jason Lake
That is more common than not number one. So I'm going to take a detour then come back to your question. Myopia management's just standard of care now. And I applaud a lot of companies like CooperVision and my site and the things that they've done to push this to the forefront. And other companies are doing it as well. But what I would explain to that, doctors, that's kind of the standard of care. And that's okay. If you don't want to treat them, you need to send to me, because I will, and I'm okay with that. Like, if you don't believe in it, just understand it's the standard of care. Now. I actually see this in things other than myopia management that legitimately have the standard care. And I think it, it does recall a conversation. Now, that being said, even if it is a standard care, the most common thing I hear is, well, I'm not a salesman. I don't want to sell this stuff.
- [52:23]
Eugene Shotsman
Exactly.
- [52:24]
Dr. Jason Lake
Totally, totally get you in here yet. But you are a doctor and you do make recommendations. And what we do to a mixed level of success is we role play. And a lot of times I'll have them come in with me and, and I go through the three basic things that have to happen to be a high achiever. And I always say, listen, at any point, if you think I'm a salesman, write it down and we'll talk about it. But let's walk through that. Patients have to hear something three times before they'll act on. So as long as you're recommending and saying what you medically believe to be true, you're not selling anything. It's called doing your job. But they're not going to hear you if you don't do it three times. So number one, I finished the refraction. Mr. Jones, this is great. I'm going to recommend Verilux, Grisol Transition. Tell me about your sunglasses. And then I tell them to shut up and let them speak. And the patient will usually go, well, I would really like the person like, what are you having? No. Well, then we should probably get you some sunglasses. Tell me about your work environment. Are you working on multiple monitors? Well, yeah. Well, then, then you probably need a computer. Lindsay, you spend a lot of your day with your chin up, going back and forth. Yeah. Then you need a lens that works well on a computer. And so I think those are three things that you're just meeting lifestyle needs. That isn't salesmanship. You get to the end of the exam, the optician walks in, Bob or Sally or whoever, and you look at them and say, you know, Bob, I met with Mr. Jones here. And he needs his primary glasses. He wears a verilogs for SOL transition. He also is out in the sun a lot, loves to golf and fish. We talked about some polarized sunglasses. Definitely want to progressive in those two. And he's, he's also working on three different monitors here. So we need to look at those computer lenses. I've created graded all three prescriptions in here. I want to see Bob back in a year for whatever reason. Any other questions, Bob, anything else to do? So great to see you. Then the optician takes them out, they set them down and they say, okay, I just talked to Dr. Lake and he said XYZ. They've heard it three times. Did I do anything there that sounds like a salesman? Now at this point my career, I can joke around with people and tease them.
- [54:39]
Eugene Shotsman
And I counted. I have 19 different levers that you can pull from this episode in order to either help make your doctors more productive, help them more be more accountable, identify kind of the leaky bucket. And I think you said it well, even if you don't have employee doctors, or maybe your employee doctors are associates, are maybe part time, you can think of yourself and think about what would it take in my practice to replicate myself. How can I think about myself as, you know, what kind of production should I be thinking of for myself to see how I stack and rank across the, you know, across the averages. And I think one of the most valuable things you always do on these shows, Jason, is that you give people the numbers to shoot for, right? The industry average or the average across your membership. Because that ultimately allows people to say, well, my numbers are my numbers in isolation, I compete with myself, I compete with my own practice. But when you start giving these industry averages which are not easily available across the industry, no matter what you say, you know, like somebody mentioned something on social media every once in a while, it's okay. But I think that the way that you go about it, by looking at the average performance of your very large membership, I think provides massive, massive value. So for that I thank you, Jason. I think we're out of time for today. We probably could continue the conversation, which we will a quarter from now when we pick another group of metrics to talk about. But thank you so much for your knowledge, your wisdom and your insights.