Part 1: Strategies for Large Practices

Learn the secret retail techniques that propel some large practices into the profit stratosphere

By Allan Barker, OD, and Greg Stockbridge, OD, MBA

Why do some practices collect revenues of $4,000,000 per year and others only $400,000? Why do some practices take 20 years to collect $1,000,000 a year and others see that much in their second full year of operation? These are actual, not fictional, examples. To answer these questions, this two-part series will address both "retail" and "professional" business strategies that the most successful practices live by.

DEMONSTRATE CONTINUITY

Large practices demonstrate continuity in their marketing, both internal and external. They have graphic standards (and often graphic standards manuals). For example, the look of the exterior sign is tied into the look of the Yellow Page display ad, which in turn is tied into the website, internal office signage, etc. These practices also coordinate their marketing pieces to have a similar look and feel and to state a consistent message or slogan. They realize how important it is that people recognize the advertisement immediately. Continuity extends to many areas. For example, if a practice is open Saturdays, it needs to open every Saturday. Even staff dress needs to express continuity.

INVEST IN OFFICE APPEAL

How many times have we gone into a medical practice or optometrist's office and judged the quality of care on the appearance of the office? We have all experienced a medical or dental office where the appearance was run down. Before you even saw the doctor, you had already formed the impression in your mind that you would not be getting good quality care at this office.

Large practices know the importance of appearance. And, they know that investing in attractive display boards, modern equipment, new flooring, and freshly painted walls are vital to credibility and profitability. The return on investment is well worth the cost.

There are many things done by large practices that translate into a better bottom line without compromising patient care. Hopefully, the retail business concepts presented here—and the professional practice ones to follow next month—will encourage smaller operations to embrace the fundamentals of large practice concepts.

Why? So that like their more successful counterparts, they, too, can be rewarded financially and professionally for all their hard work.

INCENTIVIZE SALES

Large practices incentivize sales by rewarding staff involved directly in sales. Whether it's based on frames, lenses, or annual supplies of contact lenses, the selling staff needs to be incentivized.

Some smaller practices say that it's not fair to leave out technicians or appointment desk personnel. That reasoning has been used too many times by doctors to not incentivize dispensing staff. Our response: Get over it. If you want to include the entire staff, set up a parallel bonus program based on total production for a given period.

The same philosophy applies to doctors. They should be paid for their hard work on a production basis. We have heard many excuses as to why doctors should not be paid with incentives, but we have not yet heard a good one.

Large practices recognize that sales revenue alone should not be the determining factor. Both staff and doctors also have to be made aware of other issues, like net profitability and accounts receivable, as well as patient satisfaction, wait time, and referrals.

The last thing you want is a staff member to push patients into buying multiple eyeglasses that they don't want, or can't afford, or that were sold at such a discount that the practice loses money. What you may also lose is that patient's future business. Patient satisfaction should never be jeopardized at the expense of making a sale.

SET BENCHMARKS

Large practices set benchmarks and use them religiously. They also constantly work to improve upon them. Large practices don't settle for average, but rather continually strive to improve and set the bar higher. By communicating these benchmarks, they serve as a guide to help staff know what is expected of them.

FOLLOW BUDGETS

Large practices have budgets that they monitor closely. They construct these budgets at the end of each year and utilize them as a road map for the new business cycle. They also know the relationship between the various segments of their profit and loss statements and use these percentiles as a projection for the coming year.

Budgetary goals need to be monitored monthly. When not met, proper adjustments to one's practice need to be made immediately. Simply put, a practice without a budget is like a ship without a compass.

PURSUE SALES OPPORTUNITIES

Large practices don't miss sales opportunities. They dispense annual supplies of contact lenses and multiple pairs of eyeglasses; they conduct trunk shows and sell miscellaneous products such as quality readers, contact lens solutions, and eyeglass cleaners. It's about fulfilling ALL their patients' eyecare needs in a onestop shop and being able to execute a sale when the patient is physically in the office.

They also understand the importance of patient control. For example, if a patient purchases an annual supply of contact lenses, the chances of compliance and return far exceed those of the patient who does not.

PARTNER WITH VENDORS

While many small practices "buy" from vendors, large practices "partner" with their suppliers. Large practices consistently utilize vendors to augment their staff training programs, provide office décor and displays, and promote sales through periodic trunk shows. Smaller practices can do the same thing—if they buy smart and limit the number of vendors they use.

Why is it that a $4 million-a-year practice deals with eight frame vendors while a $400,000-practice may use 20 suppliers? It makes no sense, but it happens all the time.

What it means is that the smaller practice owner is not paying attention and doesn't understand that the more one limits the number of vendors, the more benefits can be obtained from those fewer suppliers who now recognize account loyalty.

STRESS VISIBILITY/ACCESSIBILITY

Large practices realize that optometry is a service profession and, therefore, invest in highly visible locations that offer convenient hours that include nights and Saturdays. Working people seek time slots when they are off to schedule appointments with doctors. Also, these are people who often have the spendable income to purchase products with benefits. They also have the better insurance coverage.

Large practices do not hide from their patients. Their rents and/or building payments may be higher, but so are the rewards of increased visibility and accessibility.

PROVIDE BRANDED PRODUCTS

The most successful, larger practices generally don't provide patients with off-brand products. That's because they recognize the power of piggyback marketing with a limited number of recognized products and vendors. When products are available that are marketed nationally, why tell patients who ask for them: "We have products just like it." Why not have the actual brands?

Large practices capitalize on the value that patients place in branded products. They also capitalize on the benefits vendors of those products can bring to a practice via training, product inventory backup, or replacement parts, as well as guarantees and warranties.

PRICE STRATEGICALLY

Large practices strategize and coordinate their pricing. Several years ago, it was in vogue for consultants to tell doctors to increase their prices. Many did this without any regard for the basic fundamentals of pricing policy.

The problem? Pricing policy must complement and coordinate with a company's overall marketing strategy. This means that both the staff and doctors must be brought into the process of policy establishment.

Doctors who took their consultants' advice, but merely increased prices without a global approach, saw shortterm increases in profits, but then often experienced long-term failure.

The simple part is increasing prices. The hard part—and large practices know this—is to assimilate and communicate these efforts to their team and coordinate the new prices into an overall strategic policy and direction. Practices that forgot to do the second part of the process see their numbers fall. EB

TRAIN AND RETRAIN

Train, train some more, and then retrain. In the first month of 2010, we held seven training sessions for our staff. They ranged from medical coding and billing to OPTOS and retinal grand rounds to Transitions lenses. Too often we witness optometrists training staff via osmosis. Rather than investing in a professional, they often rely on current staff. The risk? Embedding bad habits. Smaller practices should instead take advantage of the numerous training programs available to them. Large practices certainly do. In any business, both training and office policy should focus on achieving patient loyalty and retention. Take one major hotel chain's strategy, for example. This top-drawer vendor trains staff to never say no to a guest without offering an option. Concepts like this don't appear by chance; they are fostered through training and retraining.

HARNESS COMPLAINTS

Large practices harness patient complaints to their benefit—by accepting complaints with a smile and using them to improve how they conduct business. While the small, less successful practice grouses over refunds, the large practice maintains a liberal return policy and solicits constructive criticism. This can be done via patient surveys, a president's hotline, and secret shoppers, to name just a few. All are meant to identify patients with issues, to deal with these issues, and then to take corrective steps within the practice in order to avoid the same problems in the future. As a practice, you can't, on the one hand, try to develop a personal, close relationship with the patient and, on the other, treat him or her like an unknown customer when a problem arises.