BUSINESS BRIEF 19

Modern practice
management
B A S I C P R A C T I C E M E T R I C S

By Professor Nizar K. Hirji JP, PhD, MBA, BSc, FAAO, FCMI, FCOptom, FBCLA

“is Count what is countable, measure what

measurable. What is not measurable,
make measurable.
”
Attributed to Galileo Galleli, this quote is fundamental to modern
management. In management terms, it translates as: “You cannot manage
what you cannot measure or do not measure” – often quoted with slight
variations by management gurus.

Whilst regularly speaking on management matters at an international

postgraduate facility in Paris, I am always astonished at the lack of
knowledge of basic practice metrics amongst UK delegates including
independent optical practice owner-managers, employed managers,
opticians, optometrists and support staff.

In my experience, most optical businesses measure at the minimum,

income and expenditure. In many cases, this is done retrospectively by the
practice accountant at the financial year-end for tax purposes. Other
information regarding the growth, decline or stagnation of the practice is
almost information by default – these are lagging indicators because they
Figure 1. The eight key areas of optical practice metrics
are historical and reflect the performance of the practice in the past. There
also are leading indicators , which are measures that tell you how the
practice is doing today and can include weekly optometric hours, NHS sight measurement used to gauge some quantifiable component of the practice’s
tests, private sight tests, dispensings done, till takings etc. Table 1 shows performance. The benchmarking idea is to record metrics from a large
a typical practice-reporting summary that includes some basic metrics. number of practices and then consider how a particular practice differs from
these and if so, what intervention could be taken to improve performance.
Of course, optometric cover in terms of clinic hours (actual patient contact
hours) may also be tracked into the following week and beyond to help plan There are already organisations that have ‘benchmarking’ as a business
staff cover in the future. Such a weekly reporting summary can easily be service and will provide data, relative to a database of subscribing
enhanced to include additional parameters as appropriate. However, the practices using a questionnaire. However, a much broader and detailed set
example below contains probably the basic information regarded as core in of metrics needs to be established to better manage the 21st century
order to better manage an optometric business on a day-to-day basis. independent optical practice in the UK. These metrics can be divided
Tracking this data, and correlating it to the profit and loss statement and broadly into the following key areas, also shown in Figure 1.
budgets, will give valuable insights into the past, current and future
performance of the practice as a business entity. ● Practice characteristics – including gross turnover (ex VAT),
% professional fees, % sales of spectacles, % sales of contact lenses,
Key Performance Indicators % other sales, complete eye exams, active patient base, optometric
hours per year, support staff hours per year, number of consulting
Some businesses call the most significant of these metrics ‘Key rooms, square feet of practice space etc
Performance Indicators’ (KPIs) and will select these to suit their particular ● Sales – including professional services sales, spectacle sales, contact
practice or business goals. A practice metric, thus, is any type of lens sales, other sales etc

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Table 1. A typical practice-reporting summary that includes some basic metrics

 BUSINESS BRIEF 21

● Profits margins – including % gross profits etc What is important is to measure what you want to understand and manage;
● Fees and charges – including eye exam fees, contact lens professional and a good way of doing this is to collect the data to generate the metrics
fees, other professional fees etc as you go along on a day-to-day basis, as well as looking at historical data
on a monthly, quarterly and annual basis. As profit margins for many
● Stock – frame stock level, frame stock turnover, contact lens stock and
practices are being squeezed, either by increased competition, or changing
contact lens stock turnover etc
patient and customer demands and higher costs, it becomes increasingly
● Expenses – including costs of sales, e.g. salaries, marketing and important to plan the future of the practice in detail to effectively ride the
promotion costs, rent, rates etc economic ups and downs.
● Patient and customer relations – including complaints, refunds, recall
statistics etc Understanding and harnessing the information from practice metrics may
● Productivity – including revenue per optometrist hour, eye exams per not make you the most successful optical business in the UK overnight, but
optometrist hour, sales per patient etc it will help you judge how you could maximise the potential of your practice
and give you a competitive advantage over businesses that do not.
Tailoring your KPIs
There are many adages used in our industry, including ‘retail is detail’ and
Just because something is measured, or measureable, does not make it ‘location, location, location’, but I am afraid that in my book, Galileo has it:
key to the success of a practice. Selecting KPIs is about having an “Count what is countable, measure what is measurable. What is not
understanding of as full a set as is possible of practice metrics, and then measurable, make measurable’”.
deciding which ones in particular are crucial to delivering agreed practice
goals. For example, a practice interested in maximising profitability will About the author
prefer to have financial KPIs gauging gross profits and costs, whilst a
practice interested in improving patient retention will look at KPIs dealing Professor Nizar K. Hirji has a portfolio of engagements as a consultant
with complaints, compliments, recommendations and patient recall. optometrist, a contact lens practitioner, a clinical scientist, a business and
management consultant and advisor, and is Principal Consultant with Hirji
Some businesses will have say seven to 10 overall (generic) KPIs and then Associates, mentoring, consulting and coaching in optometry, based in
will add/alter two or three in response to market forces or other needs of Birmingham. He has held a variety of senior optometric posts over the past
the business. Some parts of the practice may even have specific KPIs in 30 years, embracing clinical, scientific and management remits in industry,
addition to the generic ones for a practice (e.g. % digital fundal photograph hospital, academia and community practice. Professor Hirji is involved
sales may be a specific one for receptionists involved in pre-screening). personally in every project and initiative at Hirji Associates.

MAXIMISE YOUR OUR BUSINESS

PRACTICE POTENTIAL IS YOUR SUCCESS

HIRJI ASSOCIATES
MAKING INDEPENDENT OPTICAL PRACTICES MORE SUCCESSFUL

‘ As a practising optometrist Professor Hirji

was able to talk to my employed optometrists
on a peer basis, delivered training both in clinical
and business aspects. He has experience of
PRACTICE AUDIT:
A DETAILED REVIEW BY PROFESSOR NIZAR HIRJI
OF HOW YOUR PRACTICE IS CURRENTLY RUN, TO
IDENTIFY WAYS IN WHICH YOUR PRACTICE COULD
working in a variety of practices and therefore BE IMPROVED.
has a better understanding of the broader It is an assessment process that challenges you to
optical marketplace. Unlike other consulting set and pursue goals for the future success of your
firms I have used, he carries out practice practice. The audit will help to evaluate your
analysis visits “in the flesh” to identify issues practice capacity and processes, identify strengths,
which the practitioner would be unaware of. weaknesses, opportunities and threats, work out
MR ANDY CHAPMAN FBDO,
MANAGING DIRECTOR CHAPMAN'S OPTICIANS,
KIDDERMINSTER, WEST MIDLANDS
’ ways to deliver better optometric outcomes for your
patients, look at how to increase profitability and
make the practice a more rewarding place to work.

Hirji Associates
Mentoring, consulting and coaching in Optometry
T 0121 682 7041 E [email protected] W www.hirji.co.uk