One of the most frequently delegated responsibilities in OD offices is frame-board management. I found out the hard way I needed to keep a closer eye on that aspect of our practice than I expected. Although many thriving optometric practices have evolved into more of a medical-minded model, the optical remains a large profit center in many offices.
For many years I turned over the management of that portion of our business strictly to our opticians until I realized I had turned over control of up to 40 percent of the income in my practice, and I had little insight into what was going on.
I get it–there is so much to keep track of! The management of an optometric office is a full-time job in and of itself, and then to see patients too. It’s overwhelming and something has to give. But is such a large profit center in your office something you want to turn over completely?
Beware of Frame Inventory Creep
When I started to look into my frame inventory, I found there had been an incredible amount of frame inventory creep through the years. Where I “thought” we had about 1,000 frames in inventory– we actually had close to 2,000. Where I “thought” I had a few frames in under-stock– I had hundreds! Where I “thought” I had frames at all price points, I had crept into the more expensive pricing tiers.
Track Carefully to Avoid Overstocking
Why did that occur? Well, it makes sense. Unless you have a computerized tracking system, and are really paying attention to your inventory, it is easy to overstock. Frame reps naturally want to fill any empty spot on your board with their line, and with a more expensive frame than you previously sold off. And frame reps are wonderful, friendly, talented people who make friends with your optical staff, and of course, do a terrific job of selling more frames than you need.
Follow a Formula for Determining Ideal Inventory Levels
So, how many frames should you stock? Well, a simple Google search can give you myriad formulas. I have always tried to stick with the formula of taking the number of frames I sell a year and dividing that by 3. approximating a 3x a year turn rate. You may have a formula that works better for you. In addition, I do not use the same “mark-up” formula across the board. I mark up a lower wholesale-priced frame with a slightly different formula than a higher-priced frame to maximize my profit margin in the optical. A consistent 2.5x or 3x formula across the board, which you sometimes see recommended by optical industry consultants, has never made the most sense for us.
Adapt Inventory to What People Most Need Right Now
Our clinical fees have rebounded completely after our office reopened following the lockdown of the spring. Our optical numbers haven’t quite rebounded 100 percent yet. However, I’m hearing from many of my colleagues that their opticals are performing better than ever. Enterprising offices have capitalized on the new work-and-school-from-home system we have implemented during the pandemic by aggressively marketing computer and/or blue light-blocking glasses.
The optical in Dr. Friedman’s office. Dr. Friedman says optical profitability made great strides when she took a more hands-on approach to managing this aspect of her practice.
Learn Your Practice’s Demographics
If you have an older patient base, do not spend your hard-earned inventory dollars on excessive amounts of pediatric frames. Sounds obvious doesn’t it? But you would be surprised how many doctors slip up here. Often what we think our practice demographics are is really not what they are.
I had a super-young practice demographic for a long time, but as I got older, so did my patients, and now I see far fewer young patients. Use your practice management software to discover the truth– not your perception of the truth.
Reduce the Number of Frame Vendors You Work With
Buying from fewer vendors means you get to be a big fish in a small pond. The discounts will be better. The service will be better. Your knowledge of the frame line will be better. I cut our frame vendors from 12 to five. Our cost of goods plummeted by almost 15 percent the year we did this. Plus, we have no issues now with getting returns on stagnant frames, getting the first pick of closeout specials, and we get terrific customer service for those one-off requests we have need of from time to time.
It’s Worth Taking a Hands-On Approach
It’s easy to turn frame inventory management over to the opticians in your practice. I’m not saying we need to be out in the optical counting frames and meeting with frame reps weekly, but at a minimum, a monthly check-in that keeps you on top of one of the larger income sources of your practice is a must.