Research | December 2016 Hearing Review
Follow these suggestions, and you will soon be on your way to reaching that goal
Even in the typical hearing practice with a sole practitioner and one employee, it is possible to generate a million dollars—if you structure things right.
I know some of you think generating a million dollars in gross revenue in one year is impossible, but I would like to help you change your view. Hopefully, this introduction has you wondering how you can accomplish such a feat. In this article, I will share a few tips to help start you on your way to building a million dollar business.
Have Written Goals
Goals drive success. However, the majority of people don’t have goals or, if they have them, they aren’t formal or written down. Goals without a formal action plan are merely dreams that probably will never happen. If you shoot for nothing, you will hit it every time!
Start now with the first step of writing down at least two goals you would like to accomplish this year, and then devise a simple action plan to make them happen. The second step is to make certain to review your goals at least twice a year to help keep your plan on track or to modify it when business isn’t going the way you planned.
Focus on Your “Help Rate”
According to an article1 published in the July 2015 Hearing Review, based on Sikka Software installed in some 850 hearing healthcare offices in the United States, the average practice that employs one professional and one support person generated the majority of their revenue by dispensing hearing aids, selling an average of 19 units a month. However, industry data suggests the average practitioner only convinces approximately 45% of people who need hearing aids to buy them. I like to think of this percentage as the help rate—the number of patients who actually purchase hearing aids compared to the number who need them. When determining your help rate, it’s essential to have a concrete definition of whom to consider as a candidate to ensure that every professional in your practice is following the same standard.
You can define your help rate using different criteria. For example, at my practice, we consider anyone who has thresholds greater than 25 dB at three or more frequencies and patients who are already wearing aids that are at least 4 years old to be “hearing aid candidates.” While there may be other patients with special circumstances who need hearing aids outside of this criteria, this is our standard definition of a candidate.
Personally, I think it is a tragedy that the average help rate is only 45%, especially when we know the devastating effects of untreated hearing loss on cognition and quality of life. Would LeBron James be considered a basketball professional if he only made 45% of his free throws? Would Jason Day continue to lead the way in golf if he only hit 45% of fairways? Of course not.
We all hear the same objections to purchasing hearing aids every day from our patients: “I don’t think my hearing is bad enough”; “Hearing aids cost a lot of money”; “I want to think about it”; and “I need to talk with my spouse or my children.” So we should be prepared and not surprised by these protests. If you want to improve your help rate, you and your staff must learn how to respond to and alleviate these common patient concerns.
There are many practical and helpful videos on YouTube that deal with such objections. The fact is that whether a person is considering a new mattress or hearing aids, the common objections people express are essentially the same—regardless of what they are purchasing.
Your help rate; your business. Professional convictions aside, imagine how revenue would grow in the average hearing healthcare practice if the professional focused on convincing more patients who have sensory loss and need hearing aids to purchase them! I did the math and, if the average practice that was selling 19 hearing aid units per month convinced 65% of patients (instead of 45%), unit sales would increase to 26 units per month. If the professional really honed their skills and was able to convince 80% of patients who needed aids to purchase them—and an 80% help rate is the goal in my practice—unit sales would increase to 32 per month. If the professional is able to improve their help rate to 80%, the average practice would increase their annual gross revenue by over $325,000 (based upon an ASP of $2,100)—not to mention the fact that they are helping so many more patients improve their hearing, their health, and their lives.
What’s Your USP?
With the barrage of competition from Big Box retailers, the Internet, and manufacturer- owned chains, it becomes easy to focus on the price aspect of hearing healthcare. I know colleagues who are reducing their prices to compete with these large entities. Personally, I don’t think that’s a battle we can win, unless we have endless marketing dollars or access to thousands of people each day like the Big Box retailers. Instead, it’s critical to offer good quality at a fair price. If it’s in competition with other similar products or services, it must have what’s called a unique selling proposition (USP)—one or more features or benefits that make it unique, different, and superior to any competitive product or service.
To grow your practice to the million-dollar mark, you’ve got to bring something to the table that wows customers and generates buzz within your marketplace.
This uniqueness is central to success in business. No product or service can succeed unless it’s somehow unique and superior to any other product or service that competes with it. There’s seldom any opportunity to build a business around a “me too” product—a product or service that’s just the same as all the others, where the only difference is that it’s you who happens to be selling it.
The safest business strategy is to start off with an accepted product that already has a widespread market and then find ways to improve it in some way. Deliver it faster, make it better or of higher quality, offer or include wireless accessories, make educational courses available to patients, or partner with a psychologist to offer counseling services to help patients better understand the emotional implications of their hearing loss. If you want to grow your practice to the million dollar mark, you’ve got to bring something to the table that wows customers and generates buzz within your marketplace.
You have to actively strive to become a million dollar business if you want to make it happen. Many people are happy with so much less and that is fine, if that is the strategy of the business owner. But, I believe that it really doesn’t take much to go from Fine to Fabulous in this business. If you want to shoot for the one million dollar mark, you need to be absolutely militant about monitoring your data, knowing what it means to the business, and then taking action when goals aren’t being met. Million dollar practices don’t just happen! You have to make it happen and you can’t make it happen if you don’t even have the facts to know where you are at!
Obsessively Track Your KPIs
One simple way to improve your practice is to start tracking the key performance indicators (KPIs) that contribute to revenue, such as help rate, returns for credit, cost of goods sold, number of calls converted to appointments, and insurance reimbursements (if you deal with third-party payers) to name only a few. There have been occasions during my years in practice when things seemed to be going well, the schedule was full, revenue was up, and then despite the forward momentum, everything ground to a screeching halt! When this happens, you can’t help but wonder why. Of course, there can be many contributing factors, such as weather, vacations, or world events. Most often, I am able to attribute a slowdown to some slight and unnoticed change. When this happens, I am forced to get back to the basics of business and review my numbers. Inevitably, it’s always the same problem—taking my eye off the ball. I get busy working within the business, seeing patients, and I forget to work on the business.
In an established business, as in my case, the slowdown is usually a result of a change inside the business. For instance, pricing from suppliers may have increased slightly, patients are getting out the door without booking a future appointment, incoming calls are not being converted to appointments, or perhaps marketing that traditionally worked is no longer attracting new patients. If the business depends on sales of hearing aids, a small decrease in your help rate or the other KPIs mentioned above can make a huge impact.
If your business isn’t doing as well as you’d like, it’s easy to become impatient and try to shake things up with a new approach or a new product. However, businesses that do well stick with what they do best. Make certain to take time to review your profit and loss statement each month, and compare it with your numbers from the previous year. Has profitability increased or decreased? Is the cost of goods higher or lower than previous months? Have your accounts receivables gotten out of control? My CPA suggests that total accounts receivables should be no more than one month of average sales.
Some business owners rely on their accountant to keep the business on track financially, but no one outside the business is as readily equipped to assess the reasons behind a business slowdown as the owner. Unless the business is large enough to afford a chief financial officer, and most won’t be able to, it is our job as practice owners and managers to keep our eyes on the financial stability of the business and to jump into action when change is needed.
Don’t Let Cash Flow Kill Your Business
Unfortunately, I have experienced times when there was more “month” than “money.” A lack of cash flow can be incredibly stressful for a business owner. If you work with any third-party payers, you may have to wait for your money. When dealing with private-pay patients, it’s important to collect your money up front. You can give a small discount (1-2%) if the patient pays their balance in full at the time the order is placed, as long as they pay with a check so you aren’t paying credit card fees. People like to hold onto their money, and it isn’t uncommon to have a patient ask if they can pay their balance over a few months. We offer financing plans through an outside credit source. I also share that my accountant told me years ago that I wasn’t a bank and needed patients to pay up front. Most patients understand and are happy to comply.
The majority of businesses operate from one of two models: either they sell a lot of inexpensive products to a lot of people (the Big Box model) or they sell a few items with a higher margin to a more limited list of consumers. You can’t be everything to everyone. I cringe when I hear colleagues say they are matching Costco’s prices. Unless you are seeing hundreds of patients a week—and a typical practice does not—don’t try to be what you’re not and don’t be intimidated by the lower prices of Big Box and Internet companies.
Focus on adding value to every patient encounter. Send patient satisfaction surveys to patients 3-6 months after they purchase something from you and ask if they are satisfied. If they indicate dissatisfaction, contact the patient and offer possible solutions. Do you provide loaners and repair whatever you can in your office in a short period of time? Do you make the experience one they’ll remember? Do you perform outcome measures to ensure patients are getting optimal benefit? Do you schedule regular appointments (at least every 6 months) to keep patients connected to you?
Rely on Your Patients and Staff
If you aren’t getting rave reviews online or positive comments on your satisfaction surveys (assuming you send them), chances are your patients aren’t as ecstatic as they need to be. Ask your existing patients what you can do to make their lives and their experiences better, and then work hard to make those changes happen. Try to exceed your patients’ expectations. When you do, they will become raving fans of your practice and, if you ask them, they will refer others to you.
Keep in mind that you don’t have to be the one who handles all the appointments. Routine cleanings can be done by support personnel in most states. Visit Asha.org and type “audiology assistants” into the search engine to see the state-by-state list if you need a reminder of what assistants can do in your state.
Hitting $1 million is no small feat, and you certainly aren’t going to achieve this goal if you hire under-performers. I find it helpful to have a professional firm conduct a profile on potential new hires to make certain they are a good fit for the practice. In a small business, everyone needs to pitch in and share tasks that fall outside the lines of their job descriptions.
But no matter how eager you and your employees are to do it all yourselves, it’s important to know when you’re in over your heads. In some respects, the number-one priority of an owner-professional is to generate revenue, because you can’t help anyone if you can’t pay the bills and keep your doors open. Operating a small business is like walking a tightrope. Spending too much time on marketing or managing employees detracts from the necessity of generating revenue. Yet, if you spend the majority of your time working with patients and ignore the key performance indicators of the business, the bottom line can and will suffer.
Perhaps you have never seen yourself as a millionaire or just thought it was an impossible goal. It’s not! Focus on helping more patients, keep track of your numbers, and then deliver exceptional service and an awesome patient experience, and you will find yourself in the million-dollar practice club.
Reference
-
Boechler A. Sales trends in hearing care practices: 2013-2015. Hearing Review. 2015;22(7):32-37.
Gyl Kasewurm, AuD
Gyl Kasewurm, AuD, is a 30-year hearing industry veteran and owner of an extremely successful private practice. She has led many webinars aimed at sharing her professional expertise and experience with the hearing healthcare community.
Correspondence can be addressed to HR or Dr Kasewurm at: [email protected]
VIEW THE WEBINAR “Six Simple Ways to Create the Practice of Your Dreams.”
Original citation for this article: Kasewurm G. How to Make Your Practice a Million Dollar Business. Hearing Review. 2016;23(12):32.
Image credit: © Dreamzdesigner | Dreamstime.com
