Benchmarking for Ophthalmology Practices
Benchmarking is an effective way of identifying and prioritizing areas in which you can improve your practice.
By: Maureen Waddle and Derek Preece
Most practices are diligent in gathering and measuring financial data and important statistical information. Some practices then compare their results with published benchmarks so that they understand how they measure up to similar offices. The truly successful practices take an additional step and use that information to develop strategic plans and make better business decisions, propelling them into greater success. The benchmarks presented here are derived from formal and informal tracking of ophthalmology practice trends that BSM Consulting and its consultants have conducted for more than 20 years. We have also used industry sources to corroborate and validate these measures. The table shown on page 3 generally includes the 25th and 75th percentiles for the various benchmarks, a range we consider to be "healthy" for most comprehensive ophthalmology practices. Of course, for some benchmarks, a practice may be very pleased to be higher than this healthy range; in other cases, an office that finds itself below the 25th percentile may be delighted in its good fortune. Benchmark Cautions and Caveats Before exploring specific benchmarks, it is important to understand some caveats so that these benchmarks are used appropriately in your practice:
Use Benchmarks to Improve Performance
Many practices have discovered the value benchmarking brings to improving performance. A successful quality improvement initiative normally entails four essential elements:
First, management and ownership must agree on realistic goals for the practice.
Second, accurate and timely information must be gathered. Reliance on faulty data inevitably will result in faulty decisions.
Third, the information assembled must be analyzed and a diagnosis of the practice's most critical needs for improvement developed. This diagnosis should include a plan for actions the practice will implement to advance towards its goals.
Fourth, the action steps identified in the practice's plan must be pursued vigorously and tenaciously. The main objective of benchmarking is to identify and prioritize potential areas of improvement. For longterm success, practice improvement must be a continuous process. Benchmarking is an effective way of identifying and prioritizing areas in which you can improve your practice.
These four steps, when carefully applied and repeated in a cycle of continuous improvement, will help the practice make significant, positive changes.
Conclusion
It is important to understand that, due to the varied nature of ophthalmology practices, any comparison to benchmarks must be viewed in the context of individual practice circumstances. Service mix, patient demographics, local market competition, and other factors will greatly Benchmarking for Ophthalmology Practices influence how a practice compares to established benchmarks. Negative variation from the healthy ranges does not necessarily mean the practice must immediately change, and a positive variation should not be seen as a license for complacency. The main objective of benchmarking is to identify and prioritize potential areas of improvement. For long-term success, practice improvement must be a continuous process.
Please see a list of ophthalmology-specific benchmarks below.
By: Maureen Waddle and Derek Preece
Most practices are diligent in gathering and measuring financial data and important statistical information. Some practices then compare their results with published benchmarks so that they understand how they measure up to similar offices. The truly successful practices take an additional step and use that information to develop strategic plans and make better business decisions, propelling them into greater success. The benchmarks presented here are derived from formal and informal tracking of ophthalmology practice trends that BSM Consulting and its consultants have conducted for more than 20 years. We have also used industry sources to corroborate and validate these measures. The table shown on page 3 generally includes the 25th and 75th percentiles for the various benchmarks, a range we consider to be "healthy" for most comprehensive ophthalmology practices. Of course, for some benchmarks, a practice may be very pleased to be higher than this healthy range; in other cases, an office that finds itself below the 25th percentile may be delighted in its good fortune. Benchmark Cautions and Caveats Before exploring specific benchmarks, it is important to understand some caveats so that these benchmarks are used appropriately in your practice:
- Avoid overreacting to monthly fluctuations. There are many reasons numbers will spike or dip in a month. Rather than panicking over a temporary blip, it is important to look at trends over time before making any rash decisions.
- Avoid the belief that your practice must find a way to get into the "healthy ranges" shown. Each practice has unique circumstances that must be taken into account when comparing its results to the benchmarks.
- Compare apples to apples. Take time to understand clearly the definitions and formulas for calculating the benchmarks and to make sure your calculations are equivalent to those shown in the table.
- Use more than one benchmark to diagnose the health of your practice. Most benchmarks give only a limited view of one facet of an office, and using several related measures can enhance your understanding of your practice's true situation.
- Remember that each ratio is the result of dividing two numbers. Therefore, changing the ratio can be achieved by impacting either the numerator or the denominator. Often, practice managers focus on only one way to improve the ratios - for example by decreasing employee expenses to reduce staff payroll ratio. However, increasing revenues is probably a less painful way to bring that measure into the healthy range.
- When preparing your practice's data, adjust for one-time occurrences or unusual financial arrangements. For example, if your practice pays above-market rent because the doctor also owns the building, use fair market values to adjust your rent expenses.
Use Benchmarks to Improve Performance
Many practices have discovered the value benchmarking brings to improving performance. A successful quality improvement initiative normally entails four essential elements:
First, management and ownership must agree on realistic goals for the practice.
Second, accurate and timely information must be gathered. Reliance on faulty data inevitably will result in faulty decisions.
Third, the information assembled must be analyzed and a diagnosis of the practice's most critical needs for improvement developed. This diagnosis should include a plan for actions the practice will implement to advance towards its goals.
Fourth, the action steps identified in the practice's plan must be pursued vigorously and tenaciously. The main objective of benchmarking is to identify and prioritize potential areas of improvement. For longterm success, practice improvement must be a continuous process. Benchmarking is an effective way of identifying and prioritizing areas in which you can improve your practice.
These four steps, when carefully applied and repeated in a cycle of continuous improvement, will help the practice make significant, positive changes.
Conclusion
It is important to understand that, due to the varied nature of ophthalmology practices, any comparison to benchmarks must be viewed in the context of individual practice circumstances. Service mix, patient demographics, local market competition, and other factors will greatly Benchmarking for Ophthalmology Practices influence how a practice compares to established benchmarks. Negative variation from the healthy ranges does not necessarily mean the practice must immediately change, and a positive variation should not be seen as a license for complacency. The main objective of benchmarking is to identify and prioritize potential areas of improvement. For long-term success, practice improvement must be a continuous process.
Please see a list of ophthalmology-specific benchmarks below.
