Optometry Practice Management

Optometry Practice Management and Reviewoptometry-financing

Optometric practice owners deal with a confluence of factors which impact the operational efficiency and financial performance of their businesses. With looming changes in the healthcare environment, optometrists in the private practice setting need to be mindful of strategies to stay competitive. The majority of optometry practice owners are responsible for both management as well as clinical care. As they may consider selling their practice at some point, they should be cognizant of operational issues, trends in Optometry, and other macro factors affecting marketability and valuation of optometry practices. Additional discussion on how to value an optometry practice can also be found on our site.

Running an Optometry Practice

Optometry practices can face a number of internal operational issues. Practices which make efficient use of their time, staff, and space, can generate higher professional service and optical revenues while achieving greater success in patient recall. Staff efficiency is one strategy: When tasks are delegated properly, optometrists can spend more time with patients and less time on managerial operations. By cross-training staff (e.g. into semi-clinical roles), practice owners can cut overall labor costs and streamline workflow. Another way to reduce cost is optimizing frame inventory. Eliminating outdated or excess inventory is one way to free-up cashflow. Increased revenue and operational efficiency can lead to higher value for the practice as a business entity. Furthermore, greater value and consistency makes a practice more marketable when the time to sell comes.

Trends in Optometry

Though the majority of optometrists provide primary care, some specialize in other areas such as vision therapy. According to the U.S. Bureau of Labor Statistics, a growing number of optometrists—specialists included—have been forming group practices. This allows some centers to cater to specialized needs while maintaining the full spectrum of eye care in a single location. Providers are learning to be flexible with the care setting a clinical focus to stay nimble in today's market

The good news is that the optometric industry has continued to prosper despite the economic downturn. From 2006 to 2011, industry revenue has increased by an average rate of 2.8% per year and now stands at $13.1 billion. Some factors which may affect the sustainability of future growth in the industry are Medicare reimbursement cuts, an aging population, and competition. These may influence the way optometrists operate their practices and, consequently, the value of their optometric practices.

Medicare Reimbursement Cuts

Although payor breakdown varies widely across optometry practices in different markets, the industry average is roughly: 52% health/vision plans, 33% direct from patients and 15% Medicare. Medicare shares a small fraction of the payment, because it only covers the diagnoses of vision problems and related medical issues (e.g. diabetes). The optometric industry is less affected by Medicare reimbursement cuts than medical specialties which rely more on insurance reimbursement. However, practices which are more dependent on payment from Medicare and other Federal and State programs will be impacted.

Aging Population

An aging population is contributing to the growth of the field. Approximately 80% of people aged 55 and over require corrective lenses. In fact, half of the industry revenue comes from this constituent. Prevent Blindness America informs that the four leading eye diseases are age-related. The baby boomer population will continue to present demands to be met by optometrists.

Market segmentation by age

Age range

Under 18




65yrs +

% of market







Ophthalmologists and optical goods retailers provide services which often put them into competition with optometry practices. However, each industry presents its own limitations. Laser eye surgery has gained popularity over the past few years, but it cannot correct all types of vision problems. In addition, optical goods retailers do not provide the assessments and care as do optometry practices. Optometrists should recognize the role of competitors from related fields and act accordingly.

While the external trends affecting Optometry can't be fully controlled by practice owners, the internal strategies are areas where the most impact can be made. A good strategy will position the practice to meet external challenges while continuously internal management to ensure a profitable, sustainable practice into the future. For practice sellers, this is of tantamount importance for presale planning. Likewise for a buyer of an optometry practice, future success is one of the most relevant concerns when making a purchase.

Christopher Lee is a healthcare research analyst with Transition Consultants and Medical Practice Appraisers (MPA). He specializes in the research and analysis of reimbursement trends, the private practice environment, and medical economics. Mr. Lee has contributed to multiple projects involving the appraisal of optometric practices and other vision care practices. Also see his latest article entitled How to Value an Optometry Practice for Sale.




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