10 Ways to Increase Profitability Mark R Wright

10 Ways to Increase Profitability Mark R. Wright, OD, FCOVD mwright@pathways-o. com

This power point presentation was created by Mark R. Wright, OD, FCOVD Copyright 2014

Mark Wright, OD, FCOVD • President: Pathways to Success • Editor: Review of Optometric Business www. reviewofoptometricbusiness. com • Author: Coding, Reimbursement and Contracting for Optometry • Faculty coordinator of the OSU College of Optometry Business Management Program • 2006 Benedict Professor: University of Houston • 1980 – 2007 founder: Professional Vision. Care, Westerville, Ohio

• The attendee will be able to. . . 1) Define and calculate profitability 2) Identify the 10 ways to increase profitability 3) Create a system for managing the trends 4) Utilize staff to help in management 5) Create a reporting plan 6) Create a system to maximize profitability

Define and calculate profitability

Definition of 'Profit‘ Investopedia • “A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners, who may or may not decide to spend it on the business. ”

Money IN Money OUT Money LEFT OVER

CATEGORIES DEFINITION MONEY IN Revenue Money actually collected CLINICAL SERVICES MATERIALS OTHER MONEY OUT COGS MATERIALS Lab bills + In-house lab OTHER Staff Payroll All costs for having staff Occupancy Occupying your space Equipment Clinical equipment Marketing Internal and external marketing Overhead Everything not covered above MONEY LEFT Dr Payroll Costs for doctors Net What is left over RANGE YOUR BUDGET $640 - $1. 4 M $800 K/FTE OD 23. 9% - 34. 2% 26% 15. 5% - 24. 2% 4. 4% - 8. 9% 0. 2% - 3. 4% 0. 6% - 2. 3% 3. 3% - 10. 3% 20% 6% 1% 1% 6% 20%

Identify the 10 ways to increase profitability

10 ways to increase profitability 1. Stop sorting sand – increase your personal productivity 2. Increase income 3. Increase your ROI on marketing 4. Decrease COG expenses 5. Decrease Payroll expenses 6. Decrease Overhead expenses 7. Create Profit Centers 8. Actively manage by the numbers 9. Manage risk 10. Understand manage money

#1

Stop sorting sand Make a master list ROCKS SAND

Educator Husband CEO Editor Parent Investor

CEO Future planning Fiscal health Practice administration Risk management

CEO – Practice Administration • Human relations • Finance • Procurement • Quality Control – Hiring and Training – HR Reporting and Management – Firing – Equipment – Clinic Supplies – Inventory • Information Technology – Computer System – Telephone System – E-Mail and Website Management • Operations – Scheduling – Examination – Treatment and Dispensing – Revenue – Expenses – Tax Reporting – Staff Proficiency Testing, Education and Discipline – Patient Quality Control – Laboratory Quality Control • Public Relations – Internal Marketing – External Marketing – Success Stories

1. Once a week for 30 minutes – Schedule your big rocks – Prioritize your master list (sand) 2. Daily, spend 10 minutes to plan your day

#2 Increase income 1. Increase fees 2. Increase income/pat 3. Increase new pats 4. Increase visit freq

Increase your ROI on marketing 1. Create projects 2. Tips for Tracking 3. Measure #3 4. Most effective

#4 Decrease COG expenses 1. Buy in bulk 2. Buy stock lenses 3. Merchandise 4. Manage inventory 5. Manage shrinkage

#5 Decrease Payroll expenses • Have the correct number of staff • Each staff member is productive • Manage the schedule

#6

#7 Create Profit Centers Clinic Money IN - Money OUT Money REMAINING Optical Money IN - Money OUT Money REMAINING

Actively manage by the numbers 1. Yearly goals 2. Weekly review #8 3. Daily tracking

#9 Manage risk • Disability Insurance • Exit Strategy – Vertical – Horizontal • 25 documents everyone MUST have

Marriage and Divorce • • Marriage license Divorce papers • • • Life insurance policies Individual retirement accounts 401(k) accounts Pension documents Annuity contracts • • • Personal and family medical history Durable healthcare power of attorney Authorization to release healthcare information Living will Do not resuscitate order Life Insurance and Retirement Healthcare • • Bank Accounts • • • List of bank accounts List of all user names and passwords List of safe deposit boxes • • • Housing, land cemetery deeds Escrow mortgage accounts Proof of loans made and debts owed Vehicle titles Stock certificates, saving bonds and brokerage accounts Partnership and corporate operating agreements Tax returns Proof of Ownership • • Essential Documents • • • Will Letter of instruction Trust documents

Understand manage money Rich Dad, Poor Dad … E-Myth • Passive Income vs Active Income 1. Active Income 2. Passive Income 3. Financial Freedom • 4 Different Type of Money 1. Income (Active) • Most or Least important? 2. Profit (Passive) • Intentional or Accidental? 3. Flow • #10 How $ moves through practice 4. Equity (Passive) • 2 nd most important asset

Create a system for managing the trends #11

Utilize staff to help in management #12

Create a reporting plan #13

Create a system to maximize profitability #14

Mark Wright, OD, FCOVD Pathways to Success mwright@pathways-o. com Thank you !