Benchmarking is an excellent practice-management tool. Its as important to managing your practice as a binocular indirect ophthalmoscope is to performing a comprehensive exam.

  Heres why: An accurate benchmark allows you to measure your practices current performance against both past performance and against other optometric practices that use your same business model. It can help you identify opportunities for growth and develop an action plan to achieve that growth. These comparisons also tell you and your staff what you do well and what needs some improvement.

Fear Factor
Another positive effect of benchmarking: It removes the fear that can sometimes creep in during a troubling economy. By accurately measuring practice performance, you can maintain perspective on a challenge. 

For example, many O.D.s are afraid of losing their patients to places that advertise cheaper prices. Statistics Ive compiled from the practices Ive worked with, however, show that only about one in eight patients dont purchase their eyewear or contacts at the time of their exam. Some facts about these exam-only patients:

Only 17% left for a lower price. These patients were shoppers; they wanted to shop no matter what price, selection or level of service their doctor offered.

Some 7% do not require visual correction, and 29% had only a small change in their prescription.

Some 30% went elsewhere because they waited too long in the patient flow.

The remaining 17% left for other reasons. They found one-hour service elsewhere, did not have money, needed the opinion of their spouse/friend, did not like the selection or they believed that another place offered something different.

The 30% who say they waited too long is especially revealing. Here, benchmarking helps us diagnose a problem. Now, we can look for a solution.

A Marginal Difference
Financial data is the most common benchmark on which many O.D.s rely. Comparing your practices financial benchmark to published benchmarks from other practices can be helpful. For an accurate comparison, you must consider two guidelines:

How was the information collected? Do the published benchmarks represent statistical data or subjective responses? This should be defined as part of the published document.

Is the published benchmark based on the same business model as your practice? For example, the traditional business model for many practices used to be 20-25% of income from exam fees and 75-80% from materials. Many practices now operate on a model of 40-50% of exam fees and 50-60% from materials.

Why is this important to know? Consider the practices of Drs. Smith and Jones.
Each practice has gross revenues of $400,000. Also, the total cost of goods sold in each dispensary is $120,000, or 30% of gross.

However, Dr. Smiths revenue consists of $100,000 from exam fees and $300,000 from the dispensary. When you factor in the cost of goods, his margin on materials is $180,000, or 60%.

Dr. Jones revenue, however, is evenly divided: $200,000 each for exam fees and material sales. So, $120,000 in cost in relationship to $200,000 in sales makes his margin on materials $80,000, or 40%.

Thats a $100,000 difference in margin that these doctors might otherwise overlook if they accepted the traditional published benchmark. Now that we have this benchmark, however, we can look at solutions to improve this part of the practice.

Benchmarking can minimize fear and maximize practice growth when you apply it accurately and wisely. However, the true success comes when we dovetail benchmarks to appropriate strategies to enhance performance. 

Ms. Juneau is president of Juneau Practice Management Institute, an eye care consulting and training firm in Lake Worth, Fla. During the past seven years, her firm has established a statistical database with data from more than 4,000 practices and 93,000 patient charts.