Rethinking Optometry KPIs
After writing one post about Optometry Practice Expenses and one post about Optometry Practice Revenue, I thought it would make a good post to write about few key performance indicators (KPIs) in Optometry that we might look at on daily basis and get insights about the success of the business.
KPIs deliver quick reports to Optometrists and practice owners that they can use to make data-driven decision instead of purely relying on instinct and coincidence. Even though we sometimes get driven to producing complex KPIs based on complex data and delivering complex interpretations, however, the purpose of KPI is make it simple to the decision-maker to understand, measure, be able to compare to other KPIs, and easily interpret it and its implications to the business.
The most common KPIs we find in every small business include: Gross Profit, Return on Investment ROI, Net Income. Those are KPIs that provide indications about the business itself and how it’s doing.
Other KPIs provide information about employees and they include: Revenue per hour paid, labor cost per employee, ROI on total labor cost, etc.
Depending on whether we look at the top or bottom line we can think of those KPIs in terms of revenue (revenue per hour paid, gross revenue), profit (labor cost per employee, gross profit), and net income (ROI on total labor cost, net income).
More complex KPIs provide insights on price (how well am I charging for my services), employees rewarding (optimizing rewards to improve hiring), cash flow compared to receivables (shows how well is my collection), new patients, fee-for-sevice and other forms, recalls, referrals, etc.
My most preferred KPIs are related to the Optometrist and employees performance and practice strategy for growth. I may not find revenue per employee, profit per employee, and average task completion rate as the ultimate KPIs in this category. However, the KPIs that I find very attractive include:
Overtime hours per employee, provides insights on both the need to increase workforce or to reduce or sometimes completely eliminate activities or services.
Sales per labour hour and Income per labour hour along with Overtime hours per employee, they provide us with a lot of valuable insights about growth strategy. If we want to build a disruptive, sustainable, and efficient practice at the same time we should constantly think of a system that constantly creates jobs, constantly creates products, and constantly does more with less. Those three KPIs provides all it takes to make this system.
They provide information about who is the optometrist or the staff bringing the highest sales per labour hour. Moreover what jobs is he performing? Discovering those jobs, helps us organize the practice around providing more of those jobs thus specializing to sustain consistent delivery, hiring new recruits accordingly, and eliminating old and obsolete services.