Dr. Jason Lake (3:56)

Yeah, there's nothing unique that we're doing. People have been doing study groups for 50 years and I don't think it's unique contextually. What, what I think that we do that is different is the way that we apply analytics to the groups is we not only have a system, with your help from your organization, Eugene, that can dive into the software to pull out production analytics, we then blend that in with the accounting analytics, either QuickBooks or from their CPA. And that conversation is the power I have seen too many times in my career. So much emphasis on driving top line and no driving in the bottom line. You can't run a business without both. Right. And so I think that is indeed the reason we have been able to pace it, you know, greater than four times the industry. So our. The average perk office that is in attendance is about 2.2 million in top line revenue. And the average Optiport office is just right at $8 million in attendance in total revenue. And so you've got a really wide range, as you said of Offices. These basic business principles work from 1 million to 25 million. You just have to get better at scaling. It's having the conversations and managing to them. And I think that's what's unique. Setting with a group of people who are speaking your language allows you to do that. And, you know, the hard part for us is to spend the time to make sure that the analytics are the same across several hundred offices.

Eugene Shotsman (5:22)

Right.

Dr. Jason Lake (5:22)

Like you, you can't be speaking to a metric when everyone's tracking it different. I think if I had a passion for your audience is you. You can certainly do this yourself. But it's understanding the baselines that we're talking about and managing to them, like, hey, I want to affect a capture rate. What's realistic is 90% real, is 40% real. What should we be looking at? And I think, you know, we can let go of some of those aggregated insights today.

Eugene Shotsman (5:48)

Yeah. And that's kind of what I wanted to dig into is that there are. I know, and for the audience who was in attendance, the meeting is fascinating and unique for me because it is so data focused. It is so data driven. Right. There's conversations from the main stage that are focused on data that I got to be part of. And Jason leads a, leads a lecture every single time. But then there's also. You go into your breakout groups. Right. Your study groups. And then that entire day is spent on metrics, just comparing and having numbers that start with. Or conversations that start with numbers. You know, there's a mutual friend of ours, calls the. Calls the guys who say, oh, yeah, I'm doing that, and I'm doing that. And whatever you call him. All hat, no cowboy or whatever he calls him.

Dr. Jason Lake (6:44)

Big hat, no cattle, buddy.

Eugene Shotsman (6:46)

That's right. Big hat, no cattle. Thank you. I thought mine was. Mine might have been funnier. But the idea is there's a lot of people who say they're doing stuff in their practice, but you let the numbers speak for themselves. And when you start with a numbers driven conversation where everybody's numbers are normalized, Right. Your EHR is pulling this out, your EHR is pulling that out. But you guys have gone through the process of normalizing all of that, both on the production numbers and on the accounting numbers, what that creates is a conversation where everybody can start an even playing field and say, who's the real leader in the room at this particular metric and who's the leader in the room at that particular metric? Which I think is super fascinating. And that's why I. And you know, I had to, again, for the audience, I had to twist Jason's arm a little bit to agree to release some of the things, you know, there's lots of metrics that you guys track, but to release some of those metrics on this podcast and to really dig deep into what's, what you guys are actually seeing across your groups and how that's trending.

Dr. Jason Lake (7:55)

Yeah. And I think it's good for the industry. Right. Like I. There's not a secret that we're going to put out there in this aggregated data. But to your point, Eugene, when you sit in a room with, with equal peers that are facing similar challenges, you know, I'll be honest, a ten million dollar offices faces a very different challenge than a two million dollar office. Right. And that's just how it works. $25 million office offers a different challenge than a ten. When you're facing those, the metrics have to match the volume of business. And so when you're in the room, you know, I always tell everyone when they join, I said, sometimes you're the student, sometimes you're the teacher. And I've never in 20 some years of doing this in a lot of different formats have ever seen anyone walk into a room and be the best at everything. It just doesn't have. There's always a weak link. Could be that that's your business plan to only, you know, to be an emphasis in one area or the other. But there's. So as our good friend Jamie Rosens likes to say, if you're curious, you can learn from anybody. And I've, I never ever walk away from sitting with a group for 20, 30 minutes. As I bounce around, I'm always walking out of the room with something going, huh, I never thought about it like that. So there's always, there's always somebody bigger, there's always somebody better. And if you're smart, you walk into the room. If you think you're the smartest person in the room, you're probably in the wrong room. Yeah. Or you're very delusioned about it. Yeah.

Eugene Shotsman (9:15)

Or maybe you got that big hat. So, Jason, let's jump right into it. I know I asked you to pull a few metrics and how they're trending across your membership. Again, these are some of the top performing offices in the country. So I think it would be interesting for anyone who's listening to kind of say, here's what's happening in those offices and how does that compare to mine or what's happening for me? So why don't you talk a little bit? I mean, where do you want to start? And what. What's most important on your list?

Dr. Jason Lake (9:45)

I did. I did a top five for you. I'm going to put a little asterisk behind the first one because it's. It is. It takes about two years to figure out how to track it. And I have heard a lot of people say there's no need to track it. I vehemently disagree. One of the things that we spend a lot of time with is teaching our offices to understand ebitda, which is a word that had never hit optometric circles until probably five years ago for maybe some nefarious reasons. But ebitda, what's left over after you pay the doctors and you pay everything? You know, I tell everybody it's what's left. And if I could change one thing in optometry, Eugene, it would be that I would make every optometrist understand they get paid two ways. You get paid to see patients, and you get paid to run your business. And almost always what you get paid hourly to run your business is much more lucrative than what you do to see patients. And you have to do both to make it all work. But we don't spend enough time working on our practices instead of working in them. And four hours a week of dedicated time would bring about results that are exponential in growth. But. But we do track that very well. One of the things that we see is EBITDA has finally stabilized. We're seeing an average profitability of probably around 15% across our groups. The interesting thing is, pre Covid, we saw that number probably closer to 18, maybe 19. We've seen definitely an erosion of that. And what that means to your listeners is for those of you who, you know, if we're on a country music theme, apparently today there's too much. Was it too much month at the end of the money type of a deal is. Many practices run it. You know, hey, there's money left in. In the. At the end of the month. And I think people are feeling that squeeze. Certainly tariff conversations are going to have an effect on that. How. How will that have an effect? Because that's a direct impact to cost of goods. So we had seen the past three years, really, for our practices that really know how to track it correctly and understand how to pay themselves a doctorate wage and a CEO wage, it had stabilized. And 15 is nothing to sneeze at. That's a pretty good number. We certainly have practices that are crushing that, but that's kind of the average. And so I would encourage you to spend some time looking at your profitability, not on your tax return, but really what your practice is throwing off as a business. And I would encourage you to try to figure out what that number is. And the key to that, Eugene, is compensating yourself as a doctor like you had hired yourself.

Eugene Shotsman (12:05)

And so, so the biggest mistake I'm hearing you say people make is when they're looking at their ebitda, they're basically saying, well, you know, I'm not really paying myself to see patients, so I'm more profitable than I, than I really would be if I had a doctor doing that job.

Dr. Jason Lake (12:24)

The number one thing, I'll put this in a nutshell for your listeners. Everyone's EBITDA is great at the bar and they think it looks good because they're usually there. They had take a tax strategy to take a distribution and, and they're paying themselves really nothing to be a doctor, which gives you an artificial sense of being better than you are. If you had to replace yourself tomorrow, how, how healthy is your business? And the reason that's important is that's how you buy new equipment, it's how you have capital in tough times. It's how you know if you can tolerate a tariff is really, it's just what's coming out of your pocket. And I, I think sometimes people don't understand how it's a tough thing to do and I get that. But I would encourage them to start really understanding their cash flow left over what's left over at the end of the month, so to speak, no matter how they choose to track it. But there has been a 3 to 4 point erosion over the last five years is the take home for your listeners and that little squeeze they're feeling is real. And if you're not growing rapidly, you know, you can outgrow poor cash flow to an extent, but if you're not growing rapidly, eventually it catches up to you. So dive into that profitability and really understand your QuickBooks.

Eugene Shotsman (13:32)

Jason, 15% is your kind of benchmark, but that's after saying to yourself, okay, I'm going to take, and I'm going to pick a number, but I'm going to take my own production as an optometrist and I'm going to say if I, if I had to pay 20% or 19% or whatever that number is, 18% on fully loaded on that production, would that 15% still be left over?

Dr. Jason Lake (14:00)

Right? I was at a major meeting early. I think you and I were actually sitting at the same table. We were both presenting at it. And I heard one of the speakers get up and say, well, I mean, we all met about 30%. And I, I literally, I think you heard me cringe vocally when I said that. Because I said that. That is true 20 years ago when there was one doctor in a single door. And you're right, that's what they took home. But that was EBITDA plus doctor compensation. So what you're saying is true. Whatever you produce, about 18 or 19% is what it would cost to find another doctor to do that same production. What's left over after that is really what your, your profitability is. Net is not what we were taught in practice management. It is what should be left over after you pay your doctors. And I think that's an important concept that you can't bring in an associate, you can't sell your practice, you can't grow your practice. It's such a foundational base to understand, and it's probably a hard number to grasp. I mean, it's. We could. That may be our first quarterly metric of the month, Eugene. We could riff on that front.

Eugene Shotsman (15:02)

Well, we can come back to ebitda, but I just have one more question, because you've been at both ends of this stick. What's more profitable, a 2 million dollar practice or a $15 million practice? Or what should be more profitable?

Dr. Jason Lake (15:16)

Yes, yes, it's the correct answer. So that's super helpful. Well, you know, like we talked about cost of goods, if you've got a $3 million practice that is primarily a daily disposable contact lens practice, you're making a lot of money. It's just your margins may be low because the cost of acquisition, the margins on contact lenses aren't good. You still get the money. Can't spend a percent. But I would say, on average, the bigger you get, the more profitable you become because you can spread out those fixed expenses. You can spread out your call center or your CPA bill or your rent. Almost always bigger. Almost always bigger. Practices tend to be more profitable because simply, they can leverage things right? And I will tell you in a general rule of thumb, a single door to an 8 million is almost always more profitable than four doors doing 2 million each because you've gotten rid of fixed expenses. So when you go through a P and L, you look through it and say, hey, what can I leverage on that? I mean, staying flat is just no longer an option. And if your listeners are wanting to know how to get better they wouldn't spend the time every month. 30,000 listens a month or whatever your number is. Those people want to get better. So my advice to you is start figuring that out and figuring out how to leverage and drive down your fixed expenses.

Eugene Shotsman (16:35)

Got it. Okay, so that's one. You said you got five for me, so let's keep going.

Dr. Jason Lake (16:40)

Number two, and this one won't be as much discussion. Collections per refraction is really, really interesting. And during COVID it really took this massive jump because people had money, right? Our patients had dollars in their pockets to spend from COVID relief. And we saw a 15% jump in that. So each patient brought in more because they bought more stuff. Right. We've kind of seen that come back down. The number that we are seeing averaged out is about 480 to 490, depending on it has it kind of went crazy up in 20. Even higher in 21 than 22. It kind of went back down and it's back to its original growth status. So these practices are high performers. Right? You. I think the national average is probably a lot closer to 350, 300. But these 480s, we see it across the board is when we're looking at these folks, we are starting to see growth back in the number at a palpable level like 7, 8% a year. Right. Like it's pacing inflation and pacing things like that.

Eugene Shotsman (17:41)

It.

Dr. Jason Lake (17:41)

The number prior was unfortunately not sustainable. And it had a little bit to do with the jump in the ebitda. Right. Like you just sold more stuff, so it automatically dropped your fixed expenses. But we see that number is kind of where you are today in the last two years is probably where you ought to be working on building out for 26 and 27 as you start to strategize.

Eugene Shotsman (18:03)

So, you know, and I think about the. That number of 480, as you're kind of looking at this whole. Where do you think it's trending? Is it going up or down right now?

Dr. Jason Lake (18:14)

No, it's up. It's strangely up. But I think a lot of that is, you know, and not to dive into tariffs, but I think it'll drive it even higher. So 50% on average of our business is capitated by vision plans, Eugene. So you can't do anything about lenses because that lab bill's paid for you. You're kind of capitated. But you can affect frames and you can't affect contact lenses. Contact lens price adjustments have risen every year. And so you'll really frame prices as you kind of Try to move people up. Those are the two areas you can absolutely affect a. Which is probably frames are going to be the number one area affected by tariffs. So you can actually there's some strategies that we could talk about at a different time but I think that's going to continue to go upward. And I think my prediction is you may even see a little jump this year. And remember, we may see a drop in capture rate but that, but that.

Eugene Shotsman (19:05)

Does impact collections per refraction if you have a lower capture rate.

Dr. Jason Lake (19:11)

Right.

Eugene Shotsman (19:12)

That's one of the drivers to collection per fraction.

Dr. Jason Lake (19:14)

Absolutely. So to me that's why I'm saying it. It may level out. I think you'll see a modest jump this year. I think it'll slow down. It'd been clipping six, seven bucks a year going up and up and up and we saw a pretty robust spring. But I think some of that may have been preloaded. I think we may see a little bit of a slowdown and I think, you know, if you're watching Reuters and Bloomberg and people like that, they're predicting a slowdown in retail. I don't think this is a shock but that could change on a dime. But I, I think consumer sentiment right now would tell you to believe there we'll get into capture rate in a second. But I agree with you. I think it'll be modestly up. It's not going to grow at the same pace. It's growing maybe flat to modestly up.

Eugene Shotsman (19:51)

Well, so that's that. That's where I want to kind of caution and say that there are, there are people right now who are saying my consumer is going to be more price sensitive. So I'm either letting the sale walk or I'm, or I have to offer more discount options or cheaper options in my optical. And you know, so there's a two part question and is that 480 the product of selling premium product in the. In the optical or is it a product of being good at multiple pair or being good at multiple at, you know, whatever AR and warranties and whatever.

Dr. Jason Lake (20:31)

Well, I'm going to answer that question in a funny. I am. Yet I could probably count on one hand the number of people I've met who are actually good at multiple pairs. Everyone says to me they are. I'm yet to see it very often.

Eugene Shotsman (20:41)

It's pretty.

Dr. Jason Lake (20:42)

It's the infamous Black Swan. I haven't seen one but I empirically can't say they don't exist. I think it's a product for a lot of things. I will sell you the most successful practices. And particularly with a lot of the scope legislation that's going on, they're driving that with medical as much as they are retail. Historically, I would say if you looked at a practice, it was 70% retail, 30% exam fees. And that's really trended almost opposite. You know, optometrists are taking the lead role in a lot of the medical care. And you know, you look at states like Arkansas recently, West Virginia, Oklahoma, Kentucky. Sorry if I forgot your state, but there's a. You know, we've got several states now that have done a great job advancing the scope profession, which is why it's so important to be engaged in the AOA and do those things. But that absolutely drives it because again, the denominator is a unique patient visit. And that starts. So in other words, if you do end up doing 6, 7, 800 with professional fees to that patient, whether it's dry eye or whether it's laser or whatever, that individual patient revenue rises. That's why I'm bullish. It's going to rise. I don't know if it's going to rise from retail. I think it's going to rise because we are doing a better job. The bigger concern I have is a slowdown and people just extending the retail cycle. Hey, I come in every 14 months. Does it go to 18 months? I. I think this number is pretty safe. I think you're gonna have to get real good at recall to keep them coming back in. I think that's where people will interact. I think once you get them in, you're going to do a really good job of selling them stuff. But again, I actually agree with you. I think you're going to have to learn how to step down a little bit. People want value. I think private label is a big deal right now. You saw that from the Vision Council, is that people are starting to look in areas that maybe they haven't looked before. So that save the sale lens is going to be an important component of your. It's not going to be the bulk. It's going to be that 10% that's going to walk or you keep it. How about that?

Eugene Shotsman (22:37)

Yeah, it's interesting. I reserve the right to come back to collections per refraction, but I think this is a good one for us to, for us to keep an eye on.

Dr. Jason Lake (22:47)

I agree 100%. Are you ready for number three? This is one that has. I find this number to be fascinating and it's not the number that people think it is. So We've tracked this. We have data going back to 2017 with our original groups and staff costs. I can remember, I think we've talked about. Jerry Hayes was the kind of the father, I thought, of all modern metrics. And I can remember an optometry school saying, 18%. That's what I should pay my staff. I got to figure out how to budget to that, brother. It ain't been 18 in decades. Right. And in particularly, you know, as. As we've grown entities, and we. And the worker now requires better benefits, which is maybe a good thing. That's a debate for a different day. But we saw in 20, 21, staff costs on average were in that 28, 29 range. And it is coming back down to earth. And for a couple sessions now, Maybe almost for two years, we're seeing that number, right? About 25, plus or minus 25% staff. Yeah. More medical requires a little more staff as a percentage, but it's obviously more profitable. But I tell people 26 is probably where you ought to draw the line. That's. That's a loaded number, too. That means all your benefits, all your vacations, everything is plowed into that number. That does not include doctors. It's a different category. But what's interesting is when we dug even deeper, the number has stayed the same, but we are under staffed. And so we are paying less people, more money. And we are seeing a burnout in staff. And the problem is you got 10 good staff out of 30. They're doing the work of the 30. Yes, the number has stabilized. I contend we are still understaffed. When you listen to leading economists, they will tell you wage pressure has really vacillated back to normal or close to normal. You know, the I need a 10% raise every year period is gone, thankfully for the employer. But I don't think that we are fully staffed up yet. And I think it's a problem, and it's showing up in other statistics. And so we can talk about that. You know, staff hours per fractions is kind of my next category.

Eugene Shotsman (24:55)

Well, hold on. Before we go there. So I just want to make sure I heard you correctly. Do you think that we are understaffed, but we're trying to make it work by overpaying certain people in our practice? Like paying them more and paying. And we wouldn't have to pay them more if.

Dr. Jason Lake (25:11)

Yes, you have staff listening to this podcast? No, I do not think they're overpaid.

Eugene Shotsman (25:15)

Right.

Dr. Jason Lake (25:15)

Like, I'm not trying to start a negative revolution. I'm Saying that the natural wage pressures that existed drove those staff costs up and as a result it costs what it costs. I don't think think the number's 25. I think the number is 26. And the reason I think that is the number has come back down to 25. But I've seen our staff hours per fraction, which is a measure of productivity drop. I think most offices, if you ask them, are seeing way more people than they were three years ago with the same number of staff. It's an insidious thing that happens. But where it starts to show up are things like capture rate because there's just simply not enough time. So I don't think people are overpaid. I absolutely could guarantee there are people overpaid. But on average I don't think that's generally the case. But what I will tell you is I think the 25 is fool's gold. I think the numbers just, just to Scotch higher, maybe 26. I just think we need to, we need to start looking at productivity measures next to staff payment to figure out what we truly should be staffed up at.

Eugene Shotsman (26:23)

Well and it's interesting because I looked at something around how you know the, anything about alternative employment options. Right. For staff and I remember reading something recently that something like a nationwide. Now just again be clear, this is nationwide at some point median base pay for, for full service restaurant workers increased so much that it was like reaching something like $24 per hour.

Dr. Jason Lake (26:56)

Is that including tips?

Eugene Shotsman (26:58)

That includes tips. And that also includes that, that includes some of your salaried, you know, managers and whatever. And then what's happened I've, I've read is that in 20. So that, that number, that number hit high and then it started coming down in terms of, you know, what, what is the starting pay for a restaurant worker who's hired in 2025. That number is lower than the restaurant worker who was hired in 2024. And simply just because, you know, supply and demand. Right. And then there's different markets. So some, some cities have seen much more significant pay increases for. And the reason I use restaurant is because it's an easy, it's an easy alternative that everybody's staff always cites. I could go to Burger King and go make $17 an hour. Why are you paying me 15? Right? Like that's that kind of thing.

Dr. Jason Lake (27:50)

Well, I also think it's a great comp because I think one thing that's helping us is we're seeing a significant drop in at home jobs like it, you know, three years ago you saw the big requests from a lot of people where I want to stay home, I want to work from home. Those jobs are drying up. And what we found was, yes, there are ways to be productive at home. You still have to have that people to people interaction. The problem for things like restaurants and medical offices is you can't work from home. I gotta have, you know, I have to have you in the facility. And so you're kind of competing in that space for really friendly customer service people. I'm not comparing the work, but the attitude. You know, we've, listen, we've through the years, hired a heck of a lot of great baristas in our clinics to be wonderful, wonderful staff people. And it is, it's a truly competitive environment in that space. Like, you're not working from home. I gotta have you here to serve people. So I actually think it's a really good comparison. We, we see that wage pressure lessening. The problem is, is that we just stopped. We never stopped growing the practice and we kind of forgot to look. Oh, yeah, that you perfectly led me into. The next one is staff hours per fraction.

Eugene Shotsman (29:07)

Let's go there.

Dr. Jason Lake (29:09)

So the first question you'll get from somebody next week is, well, how do you, how do you figure that out? So you take the total staff hours worked, not vacation, not personal leave, not sick leave, but the hours worked in the clinic, and you divide that by the refractions that you did. So the full exams, your complete exams that were done. I've tracked this for the better part of 20 years, and I've seen a lot of variations on it. But one thing that I would tell you that I feel is pretty certain the sweet spot is between 4 and 5.

Eugene Shotsman (29:38)

Okay, so hold on. So this is everybody in your practice. Your front desk, your scribe, your optician, your everybody except for the doctor, everybody.

Dr. Jason Lake (29:47)

Including virtual employees that are working for you, you add up the hours they work to say it's a thousand, and say you saw 300 patients or 300 patients, right? Well, it's 1000 divided by 300, so it would be 3.33 staff hours per refraction. So it's the total hours divided by the total exams you did. If you're a medical clinic, because you're doing a lot of testing, you may have to be on the higher end of that band. If you are strictly a one man or woman show with 900 square feet, one optician, one front desk, you might be way low on that. Those are kind of the exceptions. But I would tell you for the vast Majority of your listeners, I always tell people at the end of every month, at the end of every quarter, I do an analysis, and I'd say, how close am I to 4.5? And if I had to hedge as cheap as I am, Eugene, I even hedged higher, I would make sure. Because if I don't have staff to serve people, what happens is the doctor's cranking out exams, and you walk in, you do the handoff, and the optician goes, huh, huh, huh. Yeah. Did you need anything? No. Yeah, you're good. Okay, let's go. Instead of sitting down. And it's not their fault because they're stacked up six deep in the dispensary, right? It's. You can't stack them in like cordwood and expect people to service them. It just doesn't. And the patient doesn't want to wait an hour and a half. It just doesn't work like that. So I will tell you that staff hour per fraction metric is. It's so hard to do metric of the quarter. You know, wisdom of the court. We got to come up with a new name the end of this hour. But it's so hard to do it because each number is so interrelated to everything else. I think there's a dozen core metrics that you have to track. And we probably look at 25, and we. I think we gave this analogy before. When you're driving your car, you look at the gas gauge and primarily the speedometer. But the problem is, if something goes wrong, you got to have the six other gauges. And I think that's how we should be looking at our metrics. We should be saying, if my capture rate is dropping, why? Well, do I have enough staff to service them? Whether you have to pay 28% or 25%, your staff costs will keep going up. If you're not selling anything because you're not making any money, you're just a bad retailer. So one problem begats the other. It can. You can absolutely work through it. But you. You have to have a certain amount of critical mass. And if you're below a 4, you could have unique circumstances. And I see it work. They're just the outliers and not the norm.

Eugene Shotsman (32:13)

So, you know, and explain, if you're below, like, where are your bands? So, like, you're. You're absolutely in the red zone. If you do this number and you. And you're in the red zone. If you are too high or too low, what do you consider too high? Too low.

Dr. Jason Lake (32:29)

I will occasionally walk into an office that I have seen in the high fives, like a 5.8. And I'm like, you're going to have to give me a very, very good explanation of why you're overstaffed. Because everything on this piece of paper, your 30% staff cost, tell me that you are overstaffed. And nine times out of 10 I'm right one time out of 10, it's a very unique medical model that they aren't billing a lot of refractions. You know, they don't keep, they're not tracking the data right. They don't know what the denominator is. For sake of argument, most of the time they're just overstaffed. And like, because what's the if. No offense to your office managers listening, but the most frequent thing doctors hear is when there's a problem, it's hire more staff. Are we working to our efficient best sells? And the answer is, is that office manager should be walking in with this number. And the other side of that spectrum that you asked for is if you're below a four. I mean you're, you, you're just watching money walk out the door because there's no way you're going to transact well on a retail level if you don't have time to spend with your patient. You just can't, you can't sell the second pair. You, hell, you can't sell the first pair because they just don't have time to do it. And you know what? The doctor doesn't know? When we are back in our exam rooms working, you've got Bob from the call center and Sally from accounting out front trying to work up a patient just because they're stacked up. So admittedly Bob and Sally probably don't work at a super low staffed office, but it is what happens. It's all hands on deck and it's not a prescription for long term. Occasionally, yes, it should happen, but it can't happen all the time because the other impact that happens with really low staffing volume productivity wise is you're just, you're burning out the people you got. They're not going to stay. You're taking the four or five high producers and you're just beating them half to death and they won't stay in the long run.

Eugene Shotsman (34:17)

Is there ever a case where you're within that previous band because you were talking about, you know, it's called 2526 as your percentage of revenue that gets applied to staffing costs, but you're on the wrong side of that band. So either you're in, my guess is, you know, let's just say you're within that. And then your office looks overstaffed. Is that possible?

Dr. Jason Lake (34:43)

Yeah. Yeah. Because, I mean, I can be in rural Virginia and I can hire staff cheaper than I can in downtown Los Angeles. So it's, it's why I always. It's another metric you put an asterisk on is, listen, you're in real danger of not having any EBITDA if you're above a 28, 29, to be truthful. You got to figure out how to get more efficient. But if I am in a state that requires a licensed optician, I'm not hiring an optician for 20 bucks an hour. They're 40 bucks an hour. It's naturally going to drive. Now, I expect better sales and production out of them, you know, off that. And they usually drive some of that down. But you absolutely can be on the wrong side of that number. That's why you have to look at both numbers to make sure. The other common misnomer is usually there is a significant other, a husband or a wife that works in the office. Well, that guy doesn't know what he's talking about. My staff costs are 21%. Well, do you pay your significant other, your husband who's managing the office or your wife who's running the books? Quite frequently. Those are free employees. And I say free because they're taking it out as ebitda. Right? They're taking it out of the bottom. But you really have to think about the other one I see missed a lot is, are we tracking the virtual staffing hours? I mean, that's become such a big thing with our biggest clinics of knowing how to outsource things that you don't need high quality people for. And I don't mean high quality people as in the person. I mean high quality people that are in, that are physically there. Because I can tell you some of these virtual staff are some of the brightest, sharpest, hardest working people in your clinics. You're just able to outsource maybe two. A region of the world that $10 or $15 an hour is a very high wage and everyone is winning and doing better. So we certainly partner with a company that does that, and we've had great success in implementing that many of our clinics.

Eugene Shotsman (36:31)

Well, what's interesting is that, you know, the way these two metrics play off of each other is so fascinating because you want to kind of keep. Keep one in context of the other. So staff hours Per refraction. You know, you look at that and you look that and you contrast that with the percentage of, percentage of costs, that of staff. Right. Their staff costs of as a percentage of revenue. And then you can kind of figure out are you in the right ballpark, are you in the right zone? Just because we can't talk for two hours on the show and expect anyone to really listen. Let's take a break. And then when we come back from the break, I want to go to your hardest hitting number. All right. We're back on the power hour with Dr. Jason Lake and. And we're still going to try to name this segment, but right now during the break, I think we decided more cattle, less hat. Or alternatively the vision metrics, the quarterly roundup.

Dr. Jason Lake (37:28)

Quarterly roundup. Yeah. We'll have to work on a theme song. Definitely something. Johnny Cash. We'll work this out. I'm sure ChatGPT will have many suggestions.

Eugene Shotsman (37:37)

Yeah, we got plenty, plenty, Plenty of time before the next time we do it as well. But we've been talking metrics and I think this is super, super impactful conversation. The one that I'm super interested in is I think your biggest, your biggest trend is also, in my opinion, one that I'm super passionate about. So I won't give it away. Just like talk about what you think some of the most impactful numbers are within a practice and what's changing right now.

Dr. Jason Lake (38:09)

But I think the one that your industry partners listen to, and I think it affects, bottom line, is capturing. We're seeing a real drop. We on average, as an industry, you know, and capture for your listeners is defined as, you know, the total, you know, every patient that purchased a pair of glasses that received a full eye exam, obviously these are not your glaucoma, macular degeneration, follow ups, but they come in, they get a full eye exam. Did they purchase a pair of glasses? And it's been the number one driver in the industry for 50 years. Right. We are seeing an average in our groups of about 60 to 61, which is good. I would tell you that has dropped from about 64, 65 down. And it's interesting to me, you know, we kind of knew there would be a drop. And we discussed how there was excess patient funds probably in 20, 20, 21. It's dropped down gradually and I am predictive it might see another slide this year. But what's interesting is I don't. There are three or four underlying factors to me that I see. Number one is I think there is a consumer Sentiment issue. I don't, you know, University of Michigan does their story and certainly the consumers and you know, you and I have called a vibe session before. I don't think we made up the term, but people are in a maybe a wait and see approach. And I think you saw this morning retail reports came out and said there was a big slowdown in April versus March, although I think our industry looked a little better on the whole. But I haven't seen the data yet. People, that's empirical from just me, people talking to people. I think that's part of it. I think part of it is maybe people got a little less money in their pocket. But I think an underlooked portion of this is the staffing we had talked about. You know, I, I think with less staff we don't have time and you have to work a little harder in a tougher economy. I don't think there's any reason for capture rate to drop. I think you have to work harder to get it. And I think if you don't have well trained staff and great products that fit what you're trying to do, it's tough. I, there's an old term you, you market to the masses and you sell to the classes. And there are. I said that to a marketing guy that he's never heard that. You cocked your head on that. I mean, you market to the people, but when they, when that patient's in your doorstep, you need to know, do I need to go to like a precision seven versus a daily total one, for example, like I've got a premium daily to maybe go to a modality that's more of a frequent replacement as an example because quite frankly, the patient, you know, is wearing the daily disposable for two days. You know, I always, they're not dailies anymore. They're dailies with an S on the end. I think that you see people when you, you really look and like, hey, you bought six months worth of lenses last year. Yeah.

Eugene Shotsman (40:55)

You.

Dr. Jason Lake (40:56)

How many days you wearing these? Eh, two to three. I go, well, if you're going to wear them like that, maybe let's put you in a lens that you can do that in. And those conversations are happening right now in exam rooms across America. And if you're not having that conversation, I would implore that you're probably, your patient's just overwhelming what you're putting them in. And I'm painting with a real broad brush. But it's an example of did I, as the clinician, spend the time to explain to you why you need to change out the lens regularly. And if you don't change it out regularly, let me put you in a product that you would change out weekly or monthly, because that's a modality that better fits your wear experience and your budget. Budget's not a dirty word. And I think that those conversations don't happen if the doctor's too busy. And they certainly don't happen when the patient walks out front and they say, yes, you know, Dr. Lake said he wants you in a Verilux with a crazy transition. Yeah, I don't think I want that. You know, insert product. What do you have that's cheaper? I can go to Costco or wherever and save a lot of money not putting down one option versus the other. But as a private practitioner, if you don't have a way to have your team step that down, you're in trouble. You need to have two or three options to sell. Two is if you don't have the staff time to spend an extra three minutes with that patient. Again, that 10% just walks. So of that 5% that we've seen a decline. My guess is the vast majority of is at the bottom of the scale. Not the top, I think. But that's staffing. It's staffing and having the right products to sell. So you're marketing to the masses to get them in the door with all the search engine optimization. All the great things are your people do, Eugene. But if we don't have the products to sell them and sell to the classes, and I mean classes of expenditure in income, you're just. You're doing all the work and bringing them in. But, you know, would you always tell me your most hated number is. You do all the work to get the phone call. Nobody picks it up. It works the same inside the office. It's, I want to spend money. I just don't want to spend money like you're presenting it to me. It takes time to do that.

Eugene Shotsman (42:56)

So this is a really interesting twist on capture, which is why I really wanted you to talk about this because we've. This is a metric that is just so important, you know, whether it's capture rate or exam only, as Jamie Rosen calls it, or what. Whatever the. Whichever way we want to go. The reality is that, you know, patients need to understand why it is valuable to buy product in our offices and not just use the office for. For an exam. And you're saying that this is a product of time. So now I'm going to push back a little bit. Now this may be your other metric, but you know, so how much time do we actually need to spend with the patient and both in the optical and in the, and in the exam room. Like are you pushing for efficiency or are you pushing for what the optimal.

Dr. Jason Lake (43:50)

Time is 47 minutes and 32 seconds. Now I made that up. I, I just know it's not over an hour. There is a minimum amount of time that has to be spent clinically to, you know, if I have a complicated 90 year old with macular degeneration in glaucoma, I'm going to have to spend more time. Not have to. I want to a three doctor spherical myop, who's 24. I don't know, 10 minutes, man. I mean, what are we going to talk about? It doesn't take long, you know, to do a healthy eye exam if you've got the right technology. So it leads us into our find. It's just such a great setup there. Because I think the most important thing that is affecting probably a lot of this is the way that we book our patients. I, this is like if I were to have a PhD in data and this is something I've been passionate about for 25 years, I've been doing this for darn near 28 is how we put our patients in, how we recall them. So we look at, it's basically refractions per OD hours. So if you took all your exams and you divide it by the number of hours that the optometrist works and I will tell you, do not sit down at your computer and say, Well, I work 40 hours a week times 52. Yeah, it doesn't work. You actually have to track it month to month. Because you took off early to go to your daughter's game, you got sick, you went to your son's. But this, but whatever it was, that number will determine capture rate even more than staff does. And what I mean by that is each doctor speaks at a certain speed and processes in a certain way and takes care of their patients in a certain way. One of the things I think you have to advocate for right now, Eugene, is I would say if you were to look at a range, the correct range of refractions per ODR, somewhere between 1.5 and 2. It is not as granular, I think as staff hours. So if you have a doctor who has a virtual scribe, I have seen those doctors very easily go to 2.5 exams per hour. If you have a doctor who has all 90 year olds who is not technology savvy, and takes a long time putting data into the HR I've saw. Maybe their success spot might be 1.2. The average doctor, 1.5 to 2.

Eugene Shotsman (46:10)

Okay, hold on. I, I gotta stop you for a second.

Dr. Jason Lake (46:13)

I know. I, I was about to say the.

Eugene Shotsman (46:14)

Number sounds crazy to me because 1.5 means I'm seeing three patients every two hours. I know I can't be right.

Dr. Jason Lake (46:23)

I'm about to prove you wrong. Everybody says this to me and I was about to point this out is it's about living off of a template. And I have done this for many, many, many, many years. So it is full exams. So doctors talk about the patients they see very differently. So to me, a great day. If I'm seeing 18 to 20 fools in a day, that in a, you know, an eight hour day, assuming two people don't show up, that's two stack two refractions per ODR. Now in addition to that 18.

Eugene Shotsman (46:58)

I don't get it. 18 to 24 is what you said.

Dr. Jason Lake (47:01)

So let's say they see a busy schedule. When I was really rocking and rolling back in my youth, I booked 20 full exams and another 12 to 14 follow up exams. And so for your listeners, the way that we are tracking exams per hour is just the full exams. That doesn't count the fact that you saw two follow ups and three PEs and the glaucoma follow up and all those things. And again, I've seen a lot of doctors do great at 2.2, 2.4, but they're probably not working in a lot of medical visits around that. Here's the key, Eugene. It's two things. Number one, say it so they can hear in the back of the congregation. You must run a templated schedule. That is the passion our young doctors come in. We usually start them at 12 to 14 full exams and another six to eight rechecks. They're seeing about 18 to 20 visits per day. And when you are starting out, you generally aren't seeing a lot of pathology. Your patient base is pretty healthy. Those are contact lens checks. And you're just learning. You know, our externs that work alongside of us, they come in, they, they probably stay there. You know, we kind of go faster than them and they work them up and we come in, spend time and go over it with them. But I'd say out of school for most kids, 12 to 14 fools, another six checks, which calculates out at the full day, 1.2 to 1.3. Within a year you should be seeing 14 to 16 foals. And somewhere between that and about 18 to 20 is a band with a doctor with one, maybe one and a half texts for support. That's a, if you're seeing 24, you're probably seeing 30 patients because there's 10 follow ups have to be worked in. So let's, let's go even deeper so your listeners can understand better on that templated schedule. One of the things, and you know you, and we will not dive deep into recall because that's a whole nother bucket of information. But when you build that template into your schedule and almost every ehr you can do this, you have to build in slots that are held exclusively for full exams. Now I've seen doctors that like, well I want slots for visual fields, I want slots for octs. I, I think that's overkill personally. I think there are full exams and there are follow up exams. So I personally run on a 15. Most of our doctors run on 15 minute schedules. I might see two full exams and a PE every hour. It just depends on the day and how I want to do it. But if the reason you run into a lot of problems in optical aging, which is why I'm bringing this back full circle, is if you don't template your schedule, your staff is trained to fill that schedule up with people. If you do not reserve those spaces for what I call revenue producing patients which are full exams, it will fill with literally patients that don't produce revenue. To be blunt, and quite frankly, when you look at it that way from a business perspective, what ends up happening is you end up with nine full exams in a row. And that morning you did nine medical visits. And so the optician's kind of killing time in the morning and in the afternoon they can't keep up. The point of the template isn't just for the doctor to hold their pace because usually one of those flex or PE visits is quicker than a full exam. It's also to space out for your staff. You can't rattle off six full exams in a row and then do six visual fields in a row because it's not, it's not going to keep your staff at a consistent level of busy.

Eugene Shotsman (50:40)

So describe the right template again.

Dr. Jason Lake (50:42)

Oh, I don't think there's a, that's, that's another fun topic is we run four basic templates in our office and I've seen offices run as few as two and as many as six. I, I think as long as you can have someone who makes sure that they are correct in the Scheduler, I will tell you that I work really well at 2 to 2.2. We have doctors that I know that if they get above 1.6, I can watch their capture rate drop 5 to 10 points. So not only is it a function of staff, it is a function of how fast the doctor can work and still do their job. Are you reviewing the findings of the refraction? Are you reappointing for medical visits? That's the other thing we see fall off, is that for some reason we, we miss those reappointments. For visual fields and octs. You can watch a doctor's production dip that. Remember we talked earlier about the revenue per patient or dollars per patient? What happens? They'll see a lot more patients, but they're making the same amount of money because they're not spending the time to do their job and explain the optical needs, the contact lens needs, the dry treatments, and the other things that go with it. So it is based, that template's based on a lot of things, Eugene. It's based on the demographic you live in. In other words, you see in young people or old people or a blend. Are you doing a subspecialty like myopia management that takes more time and making sure those things are built into your template so you can't effectively answer the question, what's the perfect template? I will tell you. A busy doctor should see a range of 14 to 20 full exams a day, plus follow ups. And there's certainly room for variation on that depending on how that doctor is supported with virtual staff. I know, I know a practice in Arkansas visit with just the other day that I think is doing a Visit. They see 40 to 45 patients a day and do it very, very well. But they don't, you know, their refractions are delegated. Everything, you know, it's how much you delegates, how much you can see. What matters to the patient is the time that you're looking at it. That's what decides capture rate. It's what decides medical treatments. It's what it will drive. Two things. It'll drive capture rate and it'll drive revenue per patient because if they don't have the time, the optician can't make the sale without the doctor recommendation.

Eugene Shotsman (52:55)

So I want to tell you a story and I want you to kind of break it down for me on the, on the numbers. So I spoke at an event not so long ago and I got off stage and this really pleasant gentleman is on the. Is. Is in the line of people waiting to talk to Me and, you know, he lets everybody else go ahead of him. And then, you know, when. When he knows that he. He's got me for a little while, he starts, he says, you know, everything you said is so fascinating, all the stuff about marketing. And I just. I wish I needed marketing. I just don't need marketing. I said, oh, okay, well, tell me about your practice. And he said, well, you know, it's a. We're in a nice suburban area. You know, I do about $850,000 of revenue or whatever. And we got a wait list. You know, we're pretty wait listed. We're wait listed, you know, three, four weeks out. I said, oh, okay. And then I said, you're the only od. He said, yeah. I said, okay, and how many patients an hour are you seeing? I said, two. I said, okay, and do you have a scribe or is something like that? And he goes, nah, that's too expensive. You know, I just. I said, oh, okay. Well, have you. How much of the time that you're seeing, you know, you got two patients an hour, you're seeing, you're spending 30 minutes with a patient. How much of that time are you spending facing the patient, talking to the patient? Said, well, I pride myself on that. About 20 minutes. And then the other 10 minutes I'm typing into the EHR. And I said, okay, well, that, that's great that you know that. But what happened if you weren't typing into the EHR and somebody else was typing into the EHR for you while you were. While you were seeing the patient? And you said, yeah, okay, that. I don't know. Like, maybe that's. So then we started going down the path of like, what could he afford to pay that person? And we figured out that he could afford to pay that person an insane amount of money so that he could see an extra patient per hour. And we could go from two to three. Right? We could go from two. Two exams to three exams, potentially. If he could see three patients an hour. Because he. If he's spending a third of his time, you know, basically doing bs.

Dr. Jason Lake (55:03)

Let's riff on that for a minute. Let's. He told us so much information in two sentences that we could spend 20 minutes breaking it down. So the first thing he said was, I see two. Two patients an hour. Okay, you work an eight hour day. Sure. That's 16 patients. So I know that on average he's probably seeing 10 full exams and he's seeing about six checks. So if we take $850,000 divided by let's see here. He's got 10 patients per hour times 4.5 days a week, times, oh, let's give him 46 weeks a year, that's 2070 patients. So he's averaging probably 300, 325 a patient. What if he just spent more time with the patients he's got? Could he, Are there sales he's left on the table? So in that templated version we just talked about, in an eight hour day, he's worked, he's worked 10 hours and he saw eight full exams. His number will be 1.3. So I'm backing up what you said at 1.3. If he put a scribe in and could bump that number up to 1.5, what would that do to his revenue? So if he saw like, you know, you said, if he saw two extra full exams a day times $400 a patient, times 50 weeks a year, that's $40,000. Right. And then.

Eugene Shotsman (56:24)

And he's got the demand. I was saying, can't you. I mean, maybe I'm crazy, but I'm saying if this Guy's got a three or four week wait list, why can't he just see 30%, 50% more patients if he just had a scribe working in his exam for them or.

Dr. Jason Lake (56:40)

You led us into our favorite topic, Eugene, is it probably did not break our metrics to take home. But this is a prime example of why you have to look at what your book rate is. And so let's talk about that and how you could make a business decision based on your case that you just gave me. So what's, what's book rate? Everyone tracks it differently. I think that one of the mistakes the industry makes is we look at it as a lag measure versus a lead measure. As you know, Eugene, a lag measure is what just happened. You're just keeping score. The baseball game is 9 to 8. We know the score at the end. It ended up. I would turn that book rate into a lead measure because that's what's going to determine how we make a strategic decision. Book rate to me is if I saw 100 exams in July of 2024, and I want to grow my practice 10%. I know that I would need to see roughly 110 exams in July of 2025. Right. 10% increase in patients. I know that to see that 110 patients, I probably on average one hundred and ten if I want to be about 85% booked, I need one hundred and twenty nine exam slots to do that. And the reason Is, is because people don't show up all the time, do they? So to see 110 patients, if I'm 85% booked, I need 129 full exam slots available during July 2025 to hit my goal. If I look at my slots and because my schedule is templated and I take two weeks off in July because I want to go to Myrtle beach and play golf, which is great, and I only have 72 slots available in July, will I be able to get my goal?

Eugene Shotsman (58:22)

Eugene, you will not.

Dr. Jason Lake (58:23)

You will not be able to get your goal. So there are two ways to look at his equation. He's like, Eugene, I'm very happy seeing patients at this pace. Fantastic. You're booked out four weeks. We looked at your schedule. You have no room to grow the practice. So it's not going to grow other than by price increases, which is a de minimis effect with vision plan. That is probably a time that he should maybe look to hire an associate. Or if he's working out of one exam lane, he might want to get a virtual scribe or more staff. The most powerful thing you can do to project the future of your business is that booking rate, Eugene, is if you sat down and said, because I am now a templated schedule and I know that I make $450 per patient, you can start to do the math on a simple spreadsheet that if I could Increase my capacity 2 exams per day or per week or per month or whatever, what would that do to my top line income? This is that every member we talked about the lake rule of 5050. Each of those patients probably produce a net revenue of about 50% because they don't cost you anything to see them. You know, you've got cost of goods wrapped up in it. Maybe a little stabbing, but it's, it's why multiple payers are so lucrative, right? There's a different profit margin on things you see above and beyond. So for your listeners, and I know we've come a long way with this, number one, I think you need to template your schedule so that you can track staff hours per fraction to regulate your book of business. Number two, that using that as a lead measure to go, you know what, I can't grow 10% this year unless I adapt my schedule to see more people or I need to bring in technology or I mean to expand the building or I need to bring in a doctor. The most common rate for partnership failures is what in optometry, Eugene, do you know, it's easy. It is lack of demand. I can fix any practice if demand is there. This gentleman has a wonderful problem the majority of the time, and I can.

Eugene Shotsman (60:24)

Fix the demand problem. So.

Dr. Jason Lake (60:26)

Yeah, you can fix that. So between the two of us, we can fix anything.

Eugene Shotsman (60:28)

Yeah, Right.

Dr. Jason Lake (60:29)

But if you have that gentleman and he doesn't want to expand, and he knows he's got this, this booking that's waiting, this is a perfect time to have an exit strategy. I bring in a partner. There's so many things. But the reality is most partnerships fail. And I mean, the vast majority fail because we bring in a partner because we think we should, and then we're shocked that that partner in year one doesn't produce a million dollars worth of revenue. Because we looked at our booking rate, and in the opposite of your friend that you met, they're only 50% booked. And even if you add 200 slots, you're not suddenly going to fill them up. There isn't demand to fill that. So that booking rate works both ways. It tells us if we're ready to expand either our real estate or bring in a partner or technology, or it tells us, you know, you're big hat, no cattle, because you don't have enough demand to fill what you got. You could add a hundred more slots, you put a thousand more slots, and it doesn't matter. You don't have the demand to fill what you got. You don't need a partner to share in the loss that your company is.

Eugene Shotsman (61:31)

Going to be experiencing this year.

Dr. Jason Lake (61:34)

I know that that was complex. I feel like we didn't dive deep enough into that.

Eugene Shotsman (61:38)

No, here's what we're going to do. This is where I'm going to open it up to the audience, because I'm going to bring Jason back in in 90 days, and I want to know which of these metrics we should dive deeper into, or if you want to. If you want us to talk about another one. So whatever we call this thing and, you know, whatever it is, the quarterly roundup metrics, Quarterly roundup or something like.

Dr. Jason Lake (62:00)

That, Johnny Cash, I Walk the Line playing in the background. I mean, I think the theme is there. It's just presenting.

Eugene Shotsman (62:07)

Well, we'll. We'll. We'll come up with something like that. My hope is that we've given the audience enough to think about, and we've even set some benchmarks. Like, I think it's, it's rare that I have a guest who's willing to say, to open the kimono a little bit and say, hey, these are the numbers that I'M seeing from some of the top performing practices in the nation. And so you talking about that is super helpful now.

Dr. Jason Lake (62:32)

I think it sounds like a lot of fun. And what I would tell you that there are. No, there's. I haven't really seen anything that innovative and analytic in a long time. What I would tell you is consistency of not only tracking them. Like, sometimes people say, well, in my accounting, does this go under general overhead or blah, blah, blah, or does it go under this category? And I tell them the same thing every time. Here's where I think it should go. But it doesn't matter. Just track it the exact same way every time.

Eugene Shotsman (62:58)

Right.

Dr. Jason Lake (62:58)

And you can't delegate that out. You have to build your classes in your QuickBooks. And when you do that, it helped drive profitability. And when you dive into that business, if you committed four hours a week to running your business, to cleaning up your QuickBooks, to, I would tell you whether it's, it's our groups or any groups learning those metrics with people around you to learn what's normal. And you know, you guys may say, well, that, that guy, Dr. Lake, he's full of beans. I find this number, I, I don't care if you disagree. I just care that you're looking at it. And that's the key to success, is that what we look at, we affect. And that's what I challenge your listeners to do. What do you want to affect first? Yeah, those roll into ebitda. So that makes everybody right?

Eugene Shotsman (63:44)

Exactly. It always, always comes back to you. But I thank you so much for being on the show, Jason. You're always a wealth of knowledge. Such a pleasure to have you here. And thanks for committing to the future ones, even though I guess I may have volunteered you for a minute.

Dr. Jason Lake (63:58)

I'm small and told it's fine.

Eugene Shotsman (64:01)

Jason, thank you.

Dr. Jason Lake (64:02)

Thanks, Eugene. Appreciate it.