Welcome to Optometry Simplified.
In this weekly newsletter, I've curated the best resources to help you grow personally and professionally.
My mission is to find what's best for my patients and my practice.
Here's what I've found...
Links I Liked
Here is the final word on "the diabetic eye exam."
I'm guilty of misguiding my audiences and leaving them in ambiguity on this topic. So, here's my opportunity to appease my guilt: listen to PPP's Chris Wolfe, OD, and John Rumpakis, OD, unpack what you need to know about the "diabetic eye exam" and how to more confidently manage the vision vs. medical insurance tension. Compliance Corner
Are you asking your dry eye patients about their sleep?
Perhaps you should, says Pamela E. Theriot, OD, in her recent article summarizing the new DEWS III guidance on sleep and dry eye disease. Optometric Management
Protecting your practice starts with understanding your biggest risks.
PPP Practice Risk Assessment helps identify potential compliance, billing, HR, and operational gaps that could be impacting your growth and profitability — before they become bigger problems.
Research I'm Reading
Should we be performing 10-2 visual fields on all glaucoma patients?
About a decade ago, evidence suggested we might be undersampling the macula with 24-2 fields, since nearly 40% of retinal ganglion cells live there, and the argument was that macular testing should become routine across glaucoma severities. A new prospective study found that, overall, 10-2 added no real advantage over 24-2 for detecting progression. The one real exception: in patients progressing fastest and with worse baseline central field loss, 10-2 did outperform 24-2. Ophthalmology
Deep Thoughts
I've argued before that Rev/OD Hour should replace Rev/Exam as the north star metric for a comprehensive practice.
The logic held up: a refraction-based number rewards refraction in a model that's no longer just about the number of comprehensive exams with refractions we do. But if that KPI needed rethinking, what else does?
I keep coming back to COGS.
Every benchmark report puts the "healthy" range somewhere in the low-to-mid 20s to low 30s. Books & Benchmarks' 2024 data has the median at 27%, with the middle 60% of practices between 23% and 32%. That number has been treated as gospel for a decade.
But was it ever describing a comprehensive practice, or was it describing a traditional one with mostly routine care, glasses, contacts, and minimal medical?
Here's what initiated this thought. I bought a heavy-disease practice with a COGS in the low 20s. On paper, that looks efficient. In reality, it wasn't smart buying or negotiating or inventory discipline. It was just a practice that ran meager on materials because it ran meager on optical, full stop. The COGS looked great for the wrong reason.
So which is it? Is a COGS in the low 20s a sign of a savvy, medically-driven practice extracting more value per revenue dollar? Or is it a sign of an optical that's underperforming and quietly leaking revenue nobody's tracking? Can you actually tell the difference just by looking at the ratio?
I don't think you can. Not without knowing the revenue mix behind it.
This matters because COGS as a single number was built for a single business model. A traditional practice's COGS tells you almost everything because it's largely a proxy for optical performance, since optical is most of the revenue.
A comprehensive (optical + medical) practice's COGS tells you something murkier, because now it's diluted by a medical revenue stream that carries almost no COGS at all.
So, a practice can post a great COGS percentage while its optical profitability is mediocre.
So what's the right range for a comprehensive practice? Under 25%? 18-22%? I don't have a clean answer yet.
In practice, what this probably means is we need to stop asking "what's my COGS" and start asking "what's my COGS as a percentage of optical revenue, and what's my medical revenue as a percentage of total." Two numbers, not one.
The benchmark isn't wrong. It's just answering a question we're not asking anymore.
How do you measure optical profitability? How do you ensure your COGS isn't too far out of hand?
Can you do me a favor? If you found any of these resources helpful, share this newsletter with one of our colleagues!
See you next week!
--Kyle Klute, OD, FAAO