Cost of Goods

Cost of goods is the biggest expense in your practice. Let's look at some ways that we can control and effect those costs to help maximize our net profitability. Better inventory and frame board management. Just really paying attention to your frame inventory there's no need to have all this excessive inventory of frames that we see in practices, you're just tying up your money there and your cost of goods increases. So just, you know, really pay attention to those numbers and if your frame costs are high then you'll look at is our markup high enough, do we buy too many, those are just probably two examples that come to mind. Minimize remakes and commit to staff training. Oh, my goodness, remakes will add to your overall costs on your lenses. If it were me, in my new practice, I would ask my laboratory, my ophthalmic lens lab to provide a remake report monthly or quarterly. They can all do that and they’ll actually be pleased that you're asking because those remakes cost them money as well. You can see patterns when you get those remake reports. So, whether it's just a pattern of a prescription, seg heights, particular types of progressive lenses, you'll be able to see those patterns and you’ll say is it a training issue and if so, let’s bring in an expert to help train our or re-train our staff. Minimize bookkeeping errors and you know that's everything from just incorrectly charging for a product, failing to charge, oftentimes that would be an enhancement, an anti-reflective coating, something like that. It also might mean some missed copays. Whatever it is, I would just really pay attention to my charts and so doing an internal audit and that just simply means looking at the patient record, what did you prescribe doctor, what did the patient buy, kind of going through that whole cycle, then how much did we charge, waiting until the invoice comes in, what did we charge for our costs versus what we charged or are able to collect from the patient. I guarantee you by doing those internal chart audits that you will find some error and again, just might be a training issue. And then be aware of vendor price increases. Typically your vendors will have some type of a price increase on a yearly basis. Most of them notify you, but oftentimes that just kind of slips by and so you should be evaluating your pricing on a yearly basis as well.

But it all begins with receipts, right? So, top-line definitely helps. We’re focused on that in your new practice. So, let's take a look at those receipts and how we can maximize those as well. This isn't about selling, just about paying attention which will typically increase those receipts per patient. So, there are missed opportunities in some of what we see. As missed opportunities, the first is just setting your fees appropriately and we can help you with that. We can’t tell you what to charge, but we can provide you with information that will help you set your professional fees appropriately. And then we’ve talked about markups for your product and again, evaluate those on a yearly basis so that those increases from your representatives, from your labs just don't sneak up on you. Bill accurately for all professional services and materials, I touched a little bit on that with some of the errors that we see. Same thing there, collecting the patient share of costs are just things that get missed and you know $20 and $30 here and there as you see more patients can really add up. Sometimes you know with those insurance plans that’s your profitability. Submit insurance claims in a timely manner, like right away. Don't let those just pile up. That's your accounts receivable or your money that's owed to you, which segues into the last bullet point. You have to manage your accounts receivable. Again, that's money that's owed to you. So, it’s collected receipts that haven’t yet been collected. So, we’re waiting for insurance payments perhaps. We're waiting for patients to pick up their product if they hadn't paid in full. Just run those receipts. You can run those right out of your practice management software. We have a nice downloadable document that helps you manage your accounts receivables. I find with new practices that you do that frequently, which is really great, right? You want to see, cause you need to get paid. But as the practice gets busier and you delegate that and everybody just gets busy, it is one area that you just stop paying attention to and doctor you work so hard, we want you to pay attention, we want you to get paid. So, managing those accounts receivable are really important.