Trend Report n Mid-Year 2019Independent Optometry Key Performance Metrics

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Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 2

METHODOLOGY

Data was generated from over 500 independent practices participating with The Glimpse dashboard service. Rather than self-reported estimates, data was gathered directly from billing codes within practice management information systems to offer true comparative benchmarks. All revenue categories represent gross billing figures per practice, prior to MVC deductions.

PRACTICE DEMOGRAPHICS

500 locations geographically distributed by region:

NE, 23%, SE 20% MW 24%, SW 15% W 18% 

Urban/suburban: 50/50

+/- 1 million dollar net revenue: 60/40

72% single location, 28% multi-location

90% independent, 10% retail franchise

It should be noted that practices represented in this report are larger than the typical solo practice — seeing approximately 50% more patients and grossing 165% more revenue*. So while insights into seasonal trends, year-over-year comparisons and revenue mix may be applicable to practices of varying size, specific numerical benchmarks may need to be adjusted accordingly.

There is significant big data and small data available to help businesses guide their marketing and sales strategies. Big data is larger data sets that may be analyzed computationally to reveal associations, especially relating to human behavior and interactions. Small data is data in volume and format that makes it accessible, informative and actionable by humans. Small data is typically generated from information found within a business, such as sales reports, customer lifetime value, Google Analytics, marketing response rates and customer surveys. Big data can be generated by a variety of sources including government agencies, large data companies, research companies, and large businesses.

This “big data” report can help you understand industry benchmarks, so you can compare your “small data” key performance indicators with a larger group and identify areas of opportunity and areas that may need improvement.

What an organization chooses to measure shapes its attitudes and behavior as it focuses attention on specific goals. To adequately control a complex business such as an eyecare practice, a number of performance metrics are required to assess the spectrum of business activity. Each practice should develop a simple hierarchy of metrics and track it consistently.

*Improving Capture Rate, EPCUniversity, MBA Volume 1, Issue 1 and Issue 2

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 3

Key Performance Indicator: GROSS PRACTICE REVENUE The total gross revenue per practice in the first half of 2019 averaged just over $1 million. Year to date, 2019 has seen higher gross revenues per practice than the first halves of 2017 and 2018. In fact, Q1 2019 grossed 15% more than Q1 2018. An increase in both the number of patients seen and the amount of revenue generated per patient have contributed to growth.

NUMBER OF PATIENTS SERVED In the first half of 2019 each practice served an average of 2,163 patients. Comparing patient volume with 2017 and 2018 figures, the total number of patients seen year to date increased 8% over first half of 2018 and returned to numbers seen in 2017.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 4

REVENUE MIX In 2019, the revenue mix is still dominated by eyewear, accounting for 38% of gross revenue. Eye exams and contact lenses came in second and third in terms of revenue production.

Key Performance Indicator: AVERAGE REVENUE PER PATIENT The average revenue per patient in Q1 and Q2 of 2019 was $486. Comparing trends from the previous years, revenue per patient in Q1 2019 was up 9% from Q1 2018 and up 6% from Q1 2017.

With an increase in both number of patients seen and revenue generated per patient, Q1/Q2 of 2019 saw higher gross revenues per practice than the first halves of 2017 and 2018. In fact, Q1 2019 grossed 15% more than Q1 2018.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 6

Revenue Mix: COMPREHENSIVE EYE EXAMS Contributing to the increase of overall gross revenue, earnings from eye exams in the first half of 2019 were 20% higher than that in 2018, returning to 2017 figures. Consistent with previous years, eye exams account for just over 20% of gross income.

n Number of exams given in the first half of 2019 were 24% higher than 2018 and up 16% from 2017.

Exam revenue includes routine medical tests/screenings but does not include refractions or contact lens fittings.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 7

n As the number of eye exams increased slightly more than the incremental revenue generated, exam revenue per patient dropped. Eye exam revenue in early 2019 was 3% less than the same period in 2018 and 11% less than 2017.

Revenue Mix:

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 8

Revenue Mix: MEDICAL EYE CARE Patients receiving medical screenings/exams along with clinical treatments/procedures represented 12% of gross practice revenue. Medical revenue appears quite stable throughout recent quarters, with the exception of Q1 2018.

n The percentage of patients being treated for medical services has increased from a previous average of 15% to 18%; however, revenue per patient has dropped 14%.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 9

Revenue Mix: OPTICAL DISPENSARY EYEWEAR SALES Eyewear sales are showing improvement from 2018 but still falling short of early 2017. Total contribution to gross revenue has declined slightly from previous averages of 42% to 38%.

n Revenue per eyewear sale continues to climb to an impressive average of $577, 21% higher than Q1/Q2 figures from recent years.

Revenue per eyewear sale continues to climb to an impressive average of $577, 21% higher than Q1/Q2 figures from recent years.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 11

Revenue Mix: OPTICAL DISPENSARY CONTACT LENS SALES Contact lens revenue is strong in early 2019, showing an increase that is 17% higher than Q1/Q2 2018 and 9% higher than Q1/Q2 2017. It has also risen slightly in its contribution to gross revenue from 15% to 18%.

n Revenue per contact lens sale is steady with data from 2018.

Gross revenue from contact lens fitting fees and product sales divided by the number contact lens fittings.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 12

Revenue Mix: REFRACTIONS This metric includes refraction test fees plus all associated product sales. In terms of total revenue, this continues to be the largest contributor. Refraction revenue has risen from figures seen in early 2018 and 2017 with the most significant change occurring in Q2 of 2019, which was 18% higher than Q2 2018 and 14% higher than Q2 2017.

Independent Optometry Key Performance Metrics | Trend Report n Mid-Year 2019 13

Summary and Recommendations:

BRIDGING THE GAP

VIsionWatch estimates that independent ECPs command a 70% share of eye exams yet only 54% of eyewear revenue^. Share of revenue is lower than their share of patients because their capture rate of patients purchasing corrective vision wear is much less than 100%. As patients take their prescriptions to be fulfilled in conventional chains, mass merchants and online retailers, the importance for ECPs to present quality, value and an exceptional patient experience is more important than ever in today’s market.

^Vision Council: Consumer Barometer, December 2018

(Also VC: US Optical Industry Report Card Dec 2018, VC: Vision Care Market Quarterly Overview, Dec 2018)

BEST PRACTICES TO INCREASE VALUE & CAPTURE RATE ALONG THE PATIENT’S JOURNEY

n ODs that introduce how eye care and eyewear can enhance a patient’s lifestyle help preset patients to explore options within the practice dispensary. After the exam, ODs should transition patients directly to an optician/sales associate at which time the benefits of specific eyewear can be reiterated in front of the patient.

n Merchandise your optical dispensary with a balanced and enticing product mix. The space should be inviting, up-to-date, well-organized and well-lit. In essence, it should feel like a center of excellence not an ancillary service.

n Demonstrate the benefits of premium ophthalmic lens options (blue light, anti-glare, photochromatic, polarized, etc.) rather than just telling about them.

n Introduce a convenient way to pay over time with deferred interest. From patients on a fixed budget to those who appreciate smart financial resources, it provides immediate value to a broad spectrum of consumers.

n Only 1 in 4 contact lens patients purchase glasses after an exam*, yet most of them need a pair of glasses as well. Be sure to offer these patients eyewear after every CL exam.

n Patients with no or little change in their prescription may very well welcome a new look, new lens enhancements/protective coatings or a second pair for specialized use (such as the computer).

*Indentify New Opportunities to Improve Capture Rate, EPCUniversity®, MBA Volume 1, Issue 2

This content is subject to change without notice and offered for informational use only. You are urged to consult with your individual business, financial, legal, tax and/or other advisers with respect to any information presented. Synchrony and any of its affiliates, including CareCredit, (collectively, “Synchrony”) makes no representations or warranties regarding this content and accept no liability for any loss or harm arising from the use of the information provided. Your receipt of this material constitutes your acceptance of these terms and conditions.

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