Plugging Hidden Profit Leaks

When your practice seems productive, but the numbers are falling short, I’ve found that there’s a good chance you have a profit leakage problem. This is what happens when revenue is quietly lost through small, repeated inefficiencies. The good news: Plugging profit leaks is possible through identifying the common causes and addressing them. I’ve outlined how to do so here:

POOR TRAINING

A well-trained team supports the doctor and the practice more effectively, which, in turn, encourages better profitability. You know there is a leak in this area when the doctor is routinely doing delegable tasks or testing, optical opportunities are missed, or performance metrics vary widely by staff member. Plug the leak using standard operating procedures, checklists, scripts, competency testing, and cross-training.

OUTDATED FEES

One of the next places to look is the fee schedule. Keep an eye out for billing codes in which your set rate falls below your highest contracted allowable. To plug this leak, practice owners should review whether their fees reflect the value of the care being delivered—at least twice per year. Specifically, contact lens evaluations, medical testing, specialty visits, dry eye disease services, myopia management, and private-pay services all deserve careful review. If a service requires doctor time, staff time, technology, expertise, and follow-up, the associated fee should reflect that. Determine fair market value by comparing your fees with other offices and your insurance payers.

UNDERBILLING

Unfortunately, many practices perform legitimate services that never make it onto the claim. Confirm there is a leak by performing chart audits and comparing the doctor’s documentation, orders, testing, diagnoses, and follow-up plan against what was actually charged and submitted. To plug this leak, the practice owner must be diligent in proper medical coding and billing and in charging for all the services they provide, such as a contact lens follow-up visit. Additionally, they must be diligent in documenting all services provided.

OPTICAL LOSS

While some practice owners tend to blame online retailers or price shopping for this profit leak, I have found that the real cause is often a weak process. As an example, the practice owner may let the patient walk out the door with their prescription to purchase elsewhere and miss out on the opportunity for a strong patient handoff. I would describe this as walking the patient to the optical, introducing them to the optician, and making a statement such as, “Because of the amount of time you spend on the computer, I’m prescribing a dedicated pair of computer glasses with prism to optimize clear, comfortable vision." To determine whether this is a profit leak cause, try this and see whether fewer patients leave with their prescriptions.

DISCOUNTING

To determine whether discounting is the cause of a profit leak, run a discount/write-off report. Next, compare the collected amount against the service cost. 

Discounting is not always wrong, but it should be intentional. You can make discounting intentional by implementing a policy and reviewing it routinely to ensure discounts are strategic, documented, and profitable.

INEFFICIENT SCHEDULING

A full schedule is not always a profitable schedule. Too many low-value visits, poorly placed follow-up visits, long patient flow bottlenecks, or no-show patients can reduce the value of the doctor’s day. When certain visit types or time blocks consume significant doctor capacity and produce low collected revenue or high bottlenecks, you have a profitability leak in scheduling. To address this, practice owners should create a schedule designed to support good care, efficient flow, and strong revenue per doctor hour. Do this by building appointments around visit complexity, staff time, testing needs, and expected revenue.

RECALL

This profit leak occurs when a practice spends more time and resources on attracting new patients than reactivating the patients already in its database. Start by pulling your active patient data and determining how many patients are overdue for comprehensive examinations, contact lens visits, or medical follow-up visits. If a large portion of the database is overdue and recall conversion is low, your practice is likely overspending on new acquisition while under-monetizing existing patients.

DON’T REINVENT THE WHEEL

The most profitable practices retain more of what has already been earned and optimize what they have.