Why Reviewing Your 2024 Financial Reports Is Critical for Optometry and Ophthalmology Practices
As an optometry or ophthalmology practice owner, you know numbers matter—just like precision in an eye exam. But when was the last time you gave your financial reports the same level of attention? Reviewing your 2024 financials is more than a box to check—it’s your roadmap to making smarter decisions, maximizing profitability, and ensuring your practice thrives in 2025.
Let’s dive into actionable, specific steps tailored to your practice.
What Financial Reports Are Telling You About Your Practice
Profit & Loss Statement (P&L): Breaking Down Revenue
Your P&L is like the visual field test for your practice’s financial health. Here’s how to analyze it:
• Service Revenue:
• Break out exam revenue, contact lens fittings, and specialty services (e.g., myopia management, dry eye clinics).
• Compare these categories to last year—did one grow or shrink? Why?
• Optical Sales:
• Look at revenue from glasses, contact lenses, and other optical products.
• Calculate your optical capture rate (patients purchasing eyewear vs. those with prescriptions). A strong rate is 60% or higher.
• Check your average revenue per pair of glasses. Are you upselling premium lenses?
• Revenue per Exam:
• Divide total exam revenue by the number of exams performed. Is it aligned with benchmarks? ($300-$400 per exam for comprehensive services is a solid target.)
Expense Categories to Focus On
• Cost of Goods Sold (COGS):
• COGS for optical should be 25-30% of revenue.
• Are you leveraging vendor discounts and rebates? If not, it’s time to renegotiate.
• Payroll Costs:
• Non-doctor staff salaries should be 20-25% of total revenue.
• Review overtime costs—are staffing schedules optimized to reduce unnecessary overtime?
• For associate doctors, ensure compensation aligns with industry standards (30-40% of collected revenue).
• Occupancy Costs:
• Rent and utilities should not exceed 8-10% of revenue.
• Are you paying for unused office space? Consider subleasing extra space or renegotiating your lease.
• Marketing Costs:
• Benchmark marketing at 3-5% of revenue.
• Evaluate ROI for ad campaigns (e.g., local SEO, Google Ads, or community sponsorships). Did they bring in new patients?
Cash Flow Statement: Spot the Gaps
• Identify months with low cash flow. Were there predictable patterns (e.g., summer slump)? Plan to save 3-6 months’ operating expenses to smooth seasonal dips.
• Check cash flow from operations. If your practice is profitable but cash flow is tight, assess receivables. Are patients or insurance companies delaying payments?
Balance Sheet: Assets, Liabilities, and Equity
• Assets:
• Review accounts receivable. Is anything older than 90 days overdue? If so, follow up or write it off.
• Look at equipment depreciation—do you need to replace or upgrade diagnostic tools (OCT, visual field analyzer, etc.)?
• Liabilities:
• Review outstanding loans. Are you paying high-interest debt that could be refinanced?
• Check credit card balances and ensure you’re not paying unnecessary interest.
Tailored Checklist for Optometry and Ophthalmology Practices
Revenue
✅ Calculate your optical capture rate (target: 60%+).
✅ Review average revenue per exam (benchmark: $300-$400).
✅ Compare specialty services revenue (e.g., ortho-k, scleral lenses) year-over-year.
✅ Ensure contact lens markup aligns with industry standards (40-50% markup).
Expenses
✅ Confirm COGS for optical is 25-30% of optical revenue.
✅ Check payroll costs for alignment with benchmarks (non-doctor staff: 20-25%, associate doctors: 30-40%).
✅ Evaluate vendor contracts for better pricing or bulk discounts.
Profitability
✅ Compare gross profit margin (target: 60-70%).
✅ Review net profit margin (target: 20-30%).
✅ Identify profit leaks in underperforming services or inefficient processes.
Cash Flow
✅ Ensure you have 3-6 months of operating expenses in reserves.
✅ Look at outstanding patient balances and follow up on overdue payments.
✅ Plan for capital expenses (new diagnostic tools or office upgrades) if cash flow allows.
Pro Tips for Optometry and Ophthalmology Practices
• Automate Receivables: Use tools like integrated patient billing systems or automated insurance claims to speed up collections.
• Review Your Frame Board: Are certain lines not selling? Swap out underperforming brands for ones with higher margins or better patient demand.
• Adjust Exam Fees: If your average revenue per exam is below benchmark, consider modest fee increases or bundling additional diagnostic tests.
• Renegotiate Vendor Contracts: Leverage buying groups or preferred pricing with contact lens and frame vendors.
Let’s Make 2025 Your Most Profitable Year Yet
Your financial reports aren’t just numbers—they’re the blueprint for running a thriving optometry or ophthalmology practice. By taking the time to review your 2024 data, you’ll gain clarity, spot opportunities, and set yourself up for success.
Need help breaking it all down? At Bookkeeping for Optometry, we specialize in helping practices like yours make sense of their financials and plan for the future.
📈 Turn your numbers into actionable insights!
