“If you think about it, benchmarks are just a way to make you feel bad about your own practice.”
Gary Gerber, OD
Recently, I had a conversation with a Books & Benchmarks client who was concerned that his Cost of Goods Sold had recently climbed above 30% of revenue. As is often the case, there was a story behind the numbers that helped explain the spike and, to some extent, justified it.
Let’s use this conversation as a starting point to explore how benchmarks can help you evaluate and improve your practice. And don’t worry, we’ll circle back to how your numbers fit into the bigger picture of your practice’s unique story.
1. Tracking data is hard. Do it anyway.
The journey of a thousand miles starts with a single step. If you haven’t been a data person before now, start by tracking 2-3 key metrics. I suggest starting with Collected Gross Revenue, Number of Exams (Comprehensive and Total), and Revenue per Comprehensive Exam.
As you track and try to improve these numbers, new questions (and new benchmarks) will come to mind. And from there, even more will follow.
2. Don’t should on your practice.
Benchmarks are a way to show what’s “normal” for any given metric. But there are no laws saying every practice needs to, or even ought to, look the same. A good benchmark should be expressed as a range, not a fixed point, demonstrating that there is natural variation in any population.
Besides, being different doesn’t mean you’re doing something wrong. You might be outperforming other practices. And yes, you might have uncovered an area of improvement. But sometimes, your practice might just be different. As Shimon Peres once quipped, “If a problem has no solution, it may not be a problem, but a fact…”
3. The best benchmark for your practice is your practice.
While it’s helpful to compare yourself to others, the real value lies in tracking your progress over time. Be sure to celebrate success (there will always be something to improve) and even embrace the win of catching issues sooner because you’re tracking your numbers.
4. Keep your numbers in context.
Take the practice owner I recently spoke with. His COGS jumped, but there were clear reasons behind it. He had postponed some payments for frames during a period of financial recovery, was dealing with some known receivables issues, and is currently increasing staff in preparation for upcoming changes in the practice.
Needless to say, his numbers did look a little off. What I told him is 1) it’s great that you know this about your practice, 2) there’s a good explanation for why things look different this year, and 3) don’t over-interpret your numbers during a transition or disruption.
5. Look back and celebrate success.
I’m stating this again because it’s so important to maintaining momentum and morale. As leaders, all of us are chasing perfection, at least at some level. While it’s important to recognize where our practices can improve, it’s just as important to acknowledge how far we’ve come. Make it a habit to pause regularly and reflect on your growth and progress.
In summary
Benchmarks are a great way to create accountability, uncover opportunities to improve, and gain perspective on what makes your practice unique.
Even better is to get your data automatically, with minimal time and input from your team. When you let our team at Books & Benchmarks handle your bookkeeping, you’ll receive automatic optometry practice financial benchmarks, compared (anonymously, of course!) with data from over 175 practices nationwide. If you want expert help turning your numbers into actionable insights, contact us today at Books & Benchmarks.
