Dr. Hayes Blog

Jerry Hayes, OD presents a variety of tips and tactics designed to
bring more dollars to your bottom line. You are invited to
comment on the topics we cover.

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How Much Is My Practice Worth?

By Jerry Hayes OD | 8/26/2010 - 11:00 am

Dear Jerry, 

I am in the process of selling my practice and am trying to determine a price that is fair to both myself and the new owner. I know that every practice is different and understand that value is in the eye of the beholder. 

Most of the formulas I have seen recently call for various types of weighted three year averages of the gross income multiplied by 50% to determine the purchase price including equipment, inventory good will, etc.  

I know this is a starting point, but 50% of average gross seems to be much lower than previous guidelines. 

Since a lot of "baby boomer ODs" are in this situation, I would like to hear your opinion. 

Thanks, 

Walter Docker, OD (name changed) 

Hi Walter,  

“How much is my practice worth?” is always a great question and one that I get a lot. 

In my opinion, the key financial metric to consider when valuing a ‘traditional dispensing OD practice’  is not Gross Revenue,




Practice Profits: The Case For Contact Lenses

By Jerry Hayes OD | 8/19/2010 - 11:00 am

From a purely financial standpoint, which modality can be expected to deliver higher profits to your practice; spectacles or contact lenses?  

The answer is, BOTH.  

If you are an OD who views spectacles as more profitable for your practice than contact lenses, you may want to consider the following data presented at Vision Expo East by Dwight Ackerman, OD, Director of Professional Programs for CibaVision. 




Hot Topic! How Much Do You Charge For ‘Refraction Only’?

By Jerry Hayes OD | 8/11/2010 - 11:00 am

I got some great feedback on my blog of 7/22 (click here to read).   

If you thought there was a clear cut answer to Dr. Nobin’s question, “How much should I charge for a refraction only?” you are in for a surprise.  

Here are some typical responses.  

Jerry,  

Give the patient WHAT THEY WANT. To CYA, mark it on their record that that's all the patient wanted. You should charge appropriately, like between $35 and $50. 

Ken B.  

We won't do a refraction only in my office. There is so much more to achieving the end result.




The Case For Including Staff Salaries In Cost Of Goods

By Jerry Hayes OD | 8/5/2010 - 11:00 am

Dear Jerry,

Your writings have been a major influence on how I manage my practice but, I question why I should include my optical staff salaries under cost of goods when calculating my overhead expenses.


You seem to stress this more than other consultants. Are there any other resources or schools of thought this topic?


Thanks,

Patrick Pirotte OD


Dear Pat,


Thanks for the question. The overhead ratios that I developed through the years tend to correlate very closely with the data put out by both the AOA and the CibaVision Essilor MBA program.


What I try to do is speak and write on topics that help private practice OD’s think about how these ratios affect their overhead and ultimately their practice profits.


Staff Expenses And Cost Of Goods


The reason I stress the overhead allocations between staff and cost of goods is because I feel practice owners can make better business decisions when they truly understand where they are spending their money.


Let me use the following example to illustrate.