Power Hour Optometry
Episode: The Surprising Story Your Numbers Tell: Metrics That Drive Practice Growth with Dr. Chris Wolfe
Host: Eugene Schatzman
Guest: Dr. Chris Wolfe, Founder of iCode Education
Release Date: December 18, 2024
Introduction
In this insightful episode of Power Hour Optometry, host Eugene Schatzman welcomes Dr. Chris Wolfe, a seasoned expert in optometric education and practice management. Dr. Wolfe shares his profound understanding of practice metrics that transcend traditional revenue-focused approaches, offering optometrists innovative strategies to enhance practice growth and patient care.
Dr. Chris Wolfe’s Background and Expertise
Dr. Chris Wolfe brings a wealth of experience from his eight-year tenure helping doctors and students prepare for board examinations. His dual role as a practitioner—seeing patients three days a week—and as the founder of companies dedicated to optometric education and board preparation, uniquely positions him to bridge the gap between academic knowledge and practical application in optometric practices.
Chris Wolf [02:48]: "When you have the knowledge to manage a disease, but you don't have the way to integrate it into a practice, you're left wavering and waffling."
Key Metrics Beyond Revenue per Patient
1. Revenue per Patient vs. Revenue per OD Hour
Dr. Wolfe emphasizes the limitations of the commonly used metric, Revenue per Patient (or Revenue per Refraction). While it provides a snapshot of revenue linked to refractions and related sales (e.g., glasses or contact lenses), it fails to account for time investment and the comprehensive management of ocular diseases.
Chris Wolf [05:04]: "Revenue per patient is incomplete when we think about disease state management."
Instead, Revenue per OD Hour emerges as a more holistic metric, allowing practices to assess productivity by comparing the revenue generated against the time spent per hour. This enables a more nuanced understanding of practice efficiency and potential growth areas.
Chris Wolf [07:29]: "Revenue per OD hour allows me to say, okay, well I might be seeing seven patients in an eight-hour day, but I'm still generating less than a thousand dollars an hour."
2. Comparing Different Service Types
Dr. Wolfe illustrates how Revenue per OD Hour helps practices evaluate the balance between high-revenue services (like refractions) and comprehensive care (such as managing glaucoma or dry eye). By analyzing how different services contribute to overall revenue relative to time spent, practices can make informed decisions to optimize their service offerings without compromising patient care.
Patient Lifetime Value and Allowable Acquisition Cost
1. Understanding Lifetime Value
Dr. Wolfe and Eugene discuss the concept of Patient Lifetime Value (LTV), especially contrasting high-revenue one-time sales (e.g., glasses) with ongoing care for chronic conditions (e.g., glaucoma). LTV considers the total revenue a patient generates over their entire relationship with the practice.
Eugene Schatzman [14:30]: "Now that patient has spent $3,000 in my office... that's your lifetime value of that patient."
2. Allowable Acquisition Cost (AAC)
AAC is derived from the LTV, representing the maximum amount a practice can spend to acquire a new patient while remaining profitable. By calculating AAC, practices can strategically allocate marketing and acquisition budgets to attract patients who will provide long-term value.
Eugene Schatzman [15:35]: "So, that patient spent $3,000 in my office... I have $1500 of profit. Now I have to take a discount factor..."
Managing Different Patient Types
1. Dry Eye Patients vs. Managed Care Patients
Dr. Wolfe differentiates between patients presenting acute issues (e.g., dry eye) and those with managed vision care plans seeking products like glasses. While the former may offer immediate opportunities for comprehensive care and treatment, the latter represent steady, recurring revenue streams.
Chris Wolf [21:37]: "A dry eye patient is more desirable to a practice because they're problem-aware and ready for the solution."
2. Transitioning Managed Care Patients
With effective discovery and relationship-building, practices can transform managed care patients into those requiring comprehensive care, thereby increasing their LTV.
Eugene Schatzman [23:10]: "The same VSP patient will develop... if you treat them in the right way."
Building Effective Processes and Protocols
1. Standardized Symptom Questionnaires
Implementing standardized tools like SPEED or OSDI questionnaires ensures consistent identification of conditions like dry eye, facilitating timely interventions.
Chris Wolf [35:55]: "I use SPEED, but you could use OSDI, there's some DEQ, whatever you like."
2. Tracking and Billing
Incorporating billable codes for specific tests (e.g., MMP9, osmolality) not only aids in tracking clinical interventions but also ensures that these services contribute to practice revenue.
Chris Wolf [38:45]: "There’s nothing better than knowing who’s going to benefit from IPL or RF because you have a patient coming back showing improvement or needing further treatment."
3. Technology Utilization
Dr. Wolfe advises against purchasing advanced technologies without established processes for their integration, highlighting that unused equipment often fails to deliver ROI and can erode a practice’s authority.
Chris Wolf [48:22]: "75% of them aren’t being used... what do you think it does to your identity?"
Importance of Prevalence Data
Dr. Wolfe underscores the significance of leveraging prevalence data to set realistic benchmarks and drive clinical protocols. Understanding the prevalence of conditions like glaucoma or dry eye within the patient population enables practices to tailor their services and marketing efforts effectively.
Chris Wolf [26:40]: "If you think about it, a 43-year-old Caucasian male has a significant likelihood of being a glaucoma suspect based on prevalence data."
Practical Steps for Practices
- Adopt Revenue per OD Hour: Shift focus from solely revenue per patient to include revenue per OD hour for a comprehensive productivity assessment.
- Calculate Patient LTV and AAC: Determine the lifetime value of different patient types and set allowable acquisition costs accordingly.
- Implement Standardized Protocols: Use symptom questionnaires and standardized tests to ensure consistent patient care and accurate tracking.
- Utilize Technology Strategically: Invest in technologies that have clear, integrated processes to ensure they enhance patient care and contribute to revenue.
- Monitor Key Metrics Regularly: Establish a dashboard to track refractions, disease state interventions, and other critical KPIs to inform decision-making.
Eugene Schatzman [42:40]: "If you had a magical dashboard, what would be on that dashboard? Refractions are your wide net."
Notable Quotes
- Chris Wolf [05:04]: "Revenue per patient is incomplete when we think about disease state management."
- Eugene Schatzman [14:30]: "Now that patient has spent $3,000 in my office... that's your lifetime value of that patient."
- Chris Wolf [21:37]: "A dry eye patient is more desirable to a practice because they're problem-aware and ready for the solution."
- Chris Wolf [35:55]: "I use SPEED, but you could use OSDI, there's some DEQ, whatever you like."
- Chris Wolf [48:22]: "75% of them aren’t being used... what do you think it does to your identity?"
Conclusion
Dr. Chris Wolfe provides a compelling argument for optometric practices to reevaluate and expand their metric evaluations beyond traditional revenue per patient. By incorporating Revenue per OD Hour, understanding Patient Lifetime Value, and strategically managing different patient types, practices can unlock untapped potential, enhance patient care, and drive substantial growth. Implementing standardized processes and effectively utilizing technology further ensures that practices remain both clinically proficient and financially robust.
Connect with Dr. Chris Wolfe
For more insights and resources, you can connect with Dr. Chris Wolfe and explore iCode Education through the following channels:
- Website: icodeeducation.com
- Podcast: Search for iCodeMedia on your preferred podcast platform.
- Email: info@icodeeducation.com
This summary encapsulates the key discussions and insights from the episode, providing a comprehensive overview for those who haven't had the chance to listen.