Understanding practice business costs

To help practices with benchmarking and inform future policies, University of Auckland BOptom student Georgia Cheng is conducting a study into optometry practice charge-out rates and operating expenses in New Zealand.

 

To date, there has been no data published regarding the economics of running an optometry practice in New Zealand, said Auckland University teaching fellow Robert Ng, one of Cheng’s supervisors at the School of Optometry and Vision Science. “This makes it difficult for independent practices to know where they stand compared with other practices.”

 

It also makes it difficult for government agencies to set pricing for optometric services, for example the Ministry of Social Development’s $249 support package for eye tests and glasses for low-income New Zealanders.

 

Since practice management, accounting and finance don’t form part of the University’s optometry course, directors and shareholders often have limited knowledge in this area, said Ng, although optometry practice-member groups, such as the Independent Optometry Group (IOG) and Eyepro, collect some data to support their practices.

 

Cheng is seeking to enrol as many practice owners as possible in the study, who will be asked to share their operating expenses.

 

“Based on the data collected, we will then determine the average minimum charge-out rate for businesses to break even. Even though this is commercially sensitive, operating expenses are only one part of the financial statement and no other information will be requested,” said Ng, adding that certain assumptions will be made on the profitability of the business and related analysis. “As this is only an average calculation, there will also be variables particular to an individual practice that affect their own pricing formula.”

 

Data will be collected via an anonymous online questionnaire that takes about 15 minutes to complete. Participants need to be a director or a shareholder of the business with authority to access the financial statements. All those who are kind enough to help with the study, will be entered into a draw to win one of four $50 Westfield or MTA gift cards, said Ng. To participate, please visit, https://tinyurl.com/nzoptom2021.

 

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