Power Hour Optometry - Episode Summary: "How Should You Pay Your Doctors? Metric of the Quarter with Dr. Jason Lake"
Introduction
In this insightful episode of Power Hour Optometry, host Eugene Shotsman engages in a deep dive with Dr. Jason Lake from The Power Practice. Released on July 30, 2025, the episode focuses on the critical topic of compensating doctors within optometric practices. Dr. Lake shares valuable metrics and benchmarks that can help practice owners structure fair and motivating compensation plans for their associates.
Understanding Compensation Structures
Dr. Lake emphasizes the importance of simplicity in compensation structures. He advocates for percentage-based salaries, arguing that complexity in compensation can lead to confusion and demotivation among doctors.
"I have a real strict belief that simple is better... every salary really boils down to one thing, is what is your total percentage of collections that you're allocating for that clinician." ([06:18])
Dr. Lake suggests that allocating 16% of total collections to a doctor's salary, plus an additional 4% for benefits, forms a well-rounded compensation package. He notes that in rural areas, this percentage might slightly increase to accommodate higher salaries needed to attract talent.
Core Metrics for Measuring Doctor Productivity
Dr. Lake introduces four primary metrics crucial for evaluating and motivating doctors:
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Production per Doctor Hour
- Definition: Total revenue generated divided by the number of hours a doctor works.
- Benchmark:
- Low End: $400/hour ([16:20])
- High End: $600/hour
- Exceptional Performers: $1,000/hour
- Insight: Achieving $400/hour equates to approximately $120,000 annually, suitable for new graduates, while top performers can generate upwards of $300,000 annually.
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Exams per Hour
- Definition: Number of comprehensive exams a doctor conducts per hour.
- Ideal Range: 1.8 to 2 exams per hour ([19:48])
- Impact: Balancing the number of exams ensures that revenue per patient remains consistent. Overloading can decrease production per patient, negatively affecting overall compensation.
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Revenue per Full Exam
- Definition: Total collections divided by the number of full comprehensive exams performed.
- Industry Average:
- Primary Care Practices: $300 to $450 per exam ([34:54])
- High Performers: $600 to $800 per exam
- Actionable Tips: Increasing professional fees through effective patient recommendations and maximizing the value of each exam can significantly boost this metric.
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Percent Collections
- Definition: The percentage of total revenue allocated to a doctor’s compensation.
- Target Range: 15% to 20%, including benefits ([14:31])
- Consideration: Higher-performing doctors may warrant a higher percentage due to their increased productivity.
Key Drivers to Improve Metrics
Dr. Lake outlines four key drivers that directly influence the core metrics:
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Capture Rate
- Definition: The percentage of patients who purchase recommended products or services.
- Benchmark: Aim for at least a 50% capture rate for lens sales.
- Strategy: Encourage doctors to make consistent recommendations and follow-ups to improve conversion rates.
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Frame Capture Rate
- Definition: Percentage of patients who purchase frames out of those who buy lenses.
- Benchmark: Frame capture should not be more than 10% lower than lens capture rates.
- Insight: Consistent frame recommendations by opticians play a crucial role in maintaining healthy capture rates.
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Contact Lens Fit Rate
- Definition: The percentage of patients fitted with contact lenses.
- Benchmark: 30% to 40%, varying with patient demographics ([42:02])
- Enhancement: Introducing contact lens recommendations and offering free trials can significantly boost this rate.
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Exam Only Rate
- Definition: The percentage of patients who undergo an exam without purchasing glasses, contacts, or additional services.
- Target: Reduce to 15% to 20%.
- Approach: Implement strategies like the "puppy dog sale" to encourage patients to try products, thereby increasing conversion rates.
Behavioral Coaching and Encouraging Change
Addressing the challenge of behavior change among doctors, Dr. Lake underscores the importance of role-playing and consistent recommendations. He advises that doctors should view their role as one of making informed medical recommendations rather than traditional salesmanship.
"Patients have to hear something three times before they'll act on it... you're not selling anything. It's called doing your job." ([52:23])
By incorporating these techniques, doctors can seamlessly integrate recommendations into their consultations, enhancing both patient satisfaction and practice revenue.
Benchmarking and Performance Comparison
Dr. Lake discusses the value of benchmarking doctors against each other within the same practice and against industry averages. This comparative analysis fosters a culture of continuous improvement and healthy competition.
"If it's framed correctly and if it is done in spirit of education, it's wildly useful." ([48:16])
He cautions against using benchmarks to intimidate but highlights their effectiveness in identifying areas of strength and opportunities for growth.
Conclusion
This episode of Power Hour Optometry provides a comprehensive framework for optometric practice owners to fairly and effectively compensate their doctors. By focusing on key metrics such as Production per Doctor Hour, Exams per Hour, Revenue per Full Exam, and Percent Collections, and by driving improvement through Capture Rate, Frame Capture Rate, Contact Lens Fit Rate, and Exam Only Rate, practices can enhance both profitability and physician satisfaction.
Dr. Jason Lake’s insights equip listeners with actionable strategies to foster a high-performance environment, ensuring that both practice owners and associate doctors thrive in today’s competitive optometric landscape.
"The simplest compensation structures are the most effective. Keep it simple for your audience... 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." ([06:18])
Key Takeaways:
- Simplify Compensation: Opt for percentage-based salaries to maintain clarity and motivation.
- Track Core Metrics: Regularly monitor production hours, exams per hour, revenue per exam, and collection percentages.
- Enhance Key Drivers: Focus on improving capture rates, contact lens fittings, and minimizing exam-only cases.
- Foster Continuous Improvement: Use benchmarking constructively to encourage growth and excellence among doctors.
For more insights and innovative ideas in the optometric industry, visit www.PowerPractice.com.