Optician Is Netting 33% On Dispensary Sales

Dear Jerry,

I am an optician who owns the optical side of our practice in a 50/50 relationship with an MD.

We do about $400,000 in gross optical receipts with a single doctor working three clinic days a week. We employ two full-time opticians who work only in the optical area of our practice.

Our practice strictly divides out professional fees from our retail optical receipts.

When you speak of $400,000 in gross revenues, I assume that number also includes professional fees along with optical receipts?

We are maintaining around a 33% net profit margin, with all optical salaries and overhead coming from these receipts. Does this seem healthy?

In my small world, it seems to be a good working ratio. What are your thoughts?

David Bressette, LDO

Dear David,

This is an interesting scenario because it is becoming more common for both ODs and MDs to have separate optical departments in their practices.

Yes, is the answer to your first question. Unless otherwise stated, I am writing in terms of total practice revenues when I refer to collected gross income of $400,000 for an OD.

This would include exam fees, professional services, and the sale of eyeglasses and contact lenses.

By contrast, your $400,000 revenue figure does NOT include any revenue from doctor fees. Let me make some assumptions just for the sake of illustration.

Seeing ten patients per day, three days a week, your doctor partner could easily generate another $100,000 to $150,000 in revenue on exam fees. (10 exams x $80 x 3 days x 50 weeks = $120,000).

That would make your practice the equivalent of a $520,000 OD dispensing practice.

In answer to your second question, I think a net of 33% on just the dispensary sales (not including professional fees) is excellent!

That means you are grossing $400,000 and netting $132,000.

I hope all of my OD readers with a low net (anything less than 30% of total gross) are paying attention here! A dispensary with no exam fees is netting 33%!

If we assume your doctor partner generates $120,000 in exam revenue and professional fees, your combined gross is $520,000.

Let’s say your doctor’s overhead for floor space, equipment, phone, staff, supplies, etc. is 50%.  That means he could easily net $60,000 ($120,000 x 50%).

Now let’s add those two figures, $132,000 net in the dispensary + $60,000 net for the doctor = $192,000.

That means you are netting 37% ($192,000 ÷ $520,000) on total gross revenues of $520,000.

My closing thoughts are that you are doing a very nice job of bringing profits to the bottom line.

Best Regards,
Jerry Hayes, OD

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Disclaimer: The information and opinions contained on this site are for discussion purposes only and are NOT intended to serve as legal, accounting or investment advice. ©2009 Jerry Hayes, OD. Not to be reproduced without written permission of the author.