RESEARCH | Dispenser Survey | January 2014 HR
2013 Survey of US Dispensing Practice Metrics
Part 2: Gross revenues, revenue sources, new patients, and marketing performance
The data from Parts 1 and 2 of this article show clearly that it doesn’t matter who you are—whether it’s practice size, number of locations, revenues, or units sold—as much as what you do to achieve business success in private practice dispensing.
This is Part 2 of a 2-part report on a survey of 268 dispensing practices during 2013, which was commissioned by Phonak Hearing Systems and conducted by Customer Care Measurement and Consulting, LLC (CCMC). Similar studies have been sponsored by Phonak from 2008 to 2011, with the latter being published in the August 2012 edition of The Hearing Review (Part 1)1 and September 2012 edition of Hearing Review Products (Part 2).2
These surveys are designed to provide individual hearing practices with a benchmarking tool to compare their performance against industry standards. The statistics generated can be used as a basis for assessing and setting realistic, continuous, and fact-based benchmarks and improvement goals.
Part 1 of this year’s survey, which appeared in the December 2013 edition of The Hearing Review, reported on a special roll-up of results that highlight those “Best in Class” (BIC) practices—those metrics that the top practices held in common and that may have distinguished them from lower-performing practices in terms of profits. In Part 2, we will revisit several important business metrics, with special emphasis on gross revenues, new and previous customers, and marketing performance tracking.
Gross Revenues and Practice Characteristics
The most common type of hearing practice in the United States was a single full-time location. (Unless otherwise noted, when the term “professional” is used in this report, the designation means full-time licensed professional.) About two-thirds (62%) of practices were of this type, including 29% staffed by one hearing professional, and 33% of practices with two or more professionals working at a single full-time location. A total of 26% of practices had multiple full-time locations, while 12% of respondents indicated “other” practice types, which included satellite offices and those that had no full-time professionals.
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| Table 1. Practice size quintiles. |
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| Table 2. Gross revenue by practice type. |
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| Table 3. Range in 2012 gross revenue by practice type. |
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| Table 4. Practice characteristics by practice type. |
When separating the 268 surveyed practices into 5 equal groups (quintiles), it can be seen that gross revenues vary widely (Table 1), with the largest one-fifth of practices having a median revenue of $2.25 million, while the smallest one-fifth have gross revenues of only $96,000.
The median hearing practice earned gross revenue of $600,000 during 2012. The higher gross practice revenue reported by the top two quintiles can be explained by the higher revenue reported by the multi-full-time-unit and multi-professional practices.
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| Figure 1. Gross revenue percentage change by practice size quintiles (includes only practices reporting gross revenue for both 2011 and 2012. |
In aggregate, all practice quintiles reported growth (Figure 1), and the median gross practice revenue growth during 2012 was +6.7%. The median, the largest, and smallest sized practices (quintiles 1, 3, and 5) enjoyed the highest rates of growth during 2012.
For single full-time-location/solo professional practices, median 2012 gross revenue was $308,630 (Table 2). These offices were typically open 40 hours per week and the solo professional typically worked 2,000 hours annually (Table 4). Single full-time-location/solo professional practices had median office space of 1,000 square feet. They typically employed one non-hearing professional staff member.
Single full-time-location practices with two or more full-time professionals had median gross revenue of $650,000 during 2012—more than double the median of solo professional practices (Table 2). Single full-time-location/2+ professional practices were also typically open 40 hours per week and had two full-time hearing professionals. The median square footage of these practices was 1,425. They typically employed two non-hearing professional staff members.
Multi-full-time-location practices had median gross revenue of $1,110,000. The median number of full-time locations for these practices was three. The total median square footage of these practices was 2,100. The median number of non-hearing professional staff members in multi-full-time-location practices was five.
Within each practice type, there was a considerable range of median gross revenue reported (Table 3). For example, among solo professional practices, the largest third of practices achieved a median gross revenue of $645,500—109% higher than the median for this type of practice. Multi-full-time-location practices in the top third of that practice type had median revenue of just under $3.7 million and accounted for 37.5% of the total revenue for all of the practices that responded to the survey.
The median gross revenue per full-time hearing location was $450,000 during 2012. Among multi-full-time-location practices, the median gross revenue per location was $450,000, while the median gross revenue for a solo professional working at one location was $308,630. As would be expected, single full-time-location/2+ professional practices earned the most revenue per location—a median of $650,000.
The median gross revenue earned per hearing professional during 2012 was $280,000. Revenue reported per professional was highest in practices with multiple locations ($340,000), while revenue per professional for single full-time-location/solo professional practices was lower ($308,630). The median revenue per professional for single full-time-location/2+ professional practices was lower ($232,500).
Table 4 shows the medians for a number of key practice characteristics. For all hearing practices, there was a median of 1.0 non-hearing professional staff members per hearing professional. The median for single full-time-location/solo professional practices was the same (a median of 1.0), while single full-time-location/2+ professional practices employed a median of 0.8 non-hearing professional staff members per professional. Among multiple full-time-location practices, the median was higher (1.2).
Full-time hearing professionals outnumbered part-time professionals by almost 4 to 1 in hearing practices nationwide. Fewer single full-time-location practices hired part-time professionals; 63% of single full-time-location practices hired part-time professionals, while 87% of multi-location practices hired part-time professionals.
Revenue Sources
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| Figure 2. Source of gross revenue. |
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| Figure 3. Instrument fitting revenue by practice size. |
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| Figure 4. New patient ratio performance quintiles for 2012. |
In respondent hearing practices, revenue from fitting hearing instruments was an average of 67% of practice gross revenue during 2012 (Figure 2), compared to 72% in 2011. This category has been further broken down into revenue from “practice generated patients” and revenue from “referral networks.” A total of 59% of gross revenue was from “practice generated patients” while 8% was from “referral networks.” Diagnostic testing contributed an average of 21% to gross revenue, compared to 18% in 2011. Source of revenue did not vary greatly by practice type or practice size, although single full-time-location/2+ professional practices tended to have a lower proportion of their fitting hearing instruments revenue from “practice generated patients” and more revenue from “referral networks” when compared to other practices. Single full-time-location/solo professional practices also had a somewhat higher proportion of their revenue from diagnostics than other practices. Practices in the largest practice size quintile earned almost 38 times the instrument fitting revenue as those in the smallest quintile (Figure 3).
Hearing Aids Dispensed & New Patients
The median number of instruments dispensed per full-time hearing professional in 2012 was 126. The median number of hearing aids dispensed per full-time professional was:
- 1 full-time professional: 130 hearing aids
- 2 full-time professionals: 128 hearing aids
- 3 full-time professionals: 115 hearing aids
- 4+ full-time professionals: 130 hearing aids
Multiple full-time-location practices achieved the highest dispensing rates per full-time professional—a median of 167 instruments dispensed per full-time professional versus 120 for single full-time-location/solo professional offices and 106 for single full-time-location/2+ professional practices.
An average of 65% of instruments dispensed in 2012 were fit on patients new to the practice (Figure 4), almost the exact same result as in 2011 (64%). The new patient ratio did not vary much by practice type.
Practices with higher ratios of new patients tended to be smaller (Figure 5), and at their current locations for fewer years. The respondents from these practices also tended to be newer licensees.
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| Figure 5. New patient ratio by practice size. |
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| Figure 6. Metrics used to track marketing effectiveness and ROI. |
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| Figure 7. Methods used to track marketing effectiveness and ROI. *This response option was changed in the 2013 survey to include “(eg, Call Source). |
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| Figure 8. Overall marketing program effectiveness rating. |
Tracking Marketing Performance
The majority of hearing practices reported that they tracked the instruments sold and appointments scheduled. Just under half of practices said that they tracked total call volume (Figure 6). To track these metrics, 67% of practices reported that they used various office management systems (OMS). Of practices that used OMS, 46% said that they used Sycle, 19% HearForm, 9% TIMS, 4% Blueprint Solutions, and 31% used other systems. Just under half (49%) of practices said that they used Excel spreadsheets, while 39% reported that they used handwritten tracking forms (Figure 7).
Just under one-half of hearing practices (46%) rated their 2012 marketing program as only somewhat effective, indicating an opportunity for many practices to improve their marketing efforts (Figure 8). The percent of practices that rated their marketing program as very/somewhat effective slightly decreased from 68% in 2011 to 60% in 2012. The percent of practices that felt their marketing programs were somewhat/very ineffective rose slightly from 15% in 2011 to 16% in 2012.
Practices spending the lowest ratio of gross revenue for marketing rated the effectiveness of their programs lower than other practices (Table 5). This was also true in 2011; however, the effectiveness rating given by this group decreased from 27% in 2011 to 21% in 2012.
Part 1, published in the December HR, detailed a number of factors relating to what “Best in Class” practices did in their marketing, including the establishment of marketing calendars and budgeting, websites and analytics, and customer satisfaction surveys.
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| Table 5. Marketing program effectiveness rating by marketing percentage of gross revenue quintiles. |
Benefiting from Experience
In June 2013, Phonak hosted nearly 100 hearing healthcare professionals from across the country at its 6th Annual Practice Development Workshop and Conference held at Trump International Hotel in Chicago. This conference not only highlighted what operational and marketing practices differentiate top performance from the median, but how they execute and measure those best practices. “The data show very clearly that Best in Class respondents are more effective, efficient, and engage in more strategic marketing—well beyond direct mail and newspaper ads,” says Craig VanDeVelde, Senior Manager of Practice Development at Phonak. “Bottom line, it doesn’t matter who you are—whether it’s practice size, number of locations, revenue, units sold—as much as what you do.”
Attendees enjoyed presentations and interactive sessions led by speakers who have built successful practices recognized by many of their peers as strong hearing healthcare brands in their respective markets, including:
- Soriya Estes, AuD, Estes Audiology Hearing Centers, Central Texas;
- Barbara Madden, AuD, Riddle Hospital, Media, Pa;
- Helena Solodar, AuD, Audiological Consultants of Atlanta;
- Mary Mungovan, MS, Whisper Hearing, Carmel, Ind, and President of Resolution;
- Hearing Group, ENT business development company; and
- Beckie Kaczmarski, AuD, Kaczmarski Hearing Services, Grand Rapids, Mich
All shared their best practices in areas including marketing planning and budgeting, branding, physician networking, product demonstration, patient retention, and patient referrals.
Tammy Dunn-Vanover, AuD, owner of A+ Hearing Service in Little Rock, Ark, shared feedback from the conference: “I’ve performed product demos with Audeo Q90s on every patient that’s come to our practice and undergone a hearing test since I returned from the conference,” she said. “As result of the product demonstrations, I fit every one of those patients, with half of them purchasing premium-level technology.
“Another thing I’ve done is to call eight internal medicine and geriatric physician practices to personally thank them for their referrals. I also used the opportunity to update contact information at their offices. I then followed up my calls with goody bags delivered to their offices. I admit that my practice marketing efforts needed to change, and it’s been a positive thing.”
Steven Perlow, AuD, owner of Accura Audiology PLLC in Williamsville, NY, also implemented changes immediately following the conference. “One of the changes we made is have those patients who choose not to seek treatment at their initial visit make a follow-up appointment before leaving the office,” says Dr Perlow.
“Additionally, we are conducting audiograms on a more frequent basis—every year rather than every 2 to 3 years—so that we can assess and compare any hearing changes to the patient’s baseline audiogram. And we’ve created a dedicated ‘tested but not treated’ patient file with scheduled follow-up calls to see if we can be of further assistance. We aim to be present and persuasive, not pushy.”
Those practices that have worked with the Phonak Practice Development team on improving certain aspects of their business have been able to grow revenue an average of 20% in the first year of working with the Phonak team, compared to the industry commercial average growth rate of 2.8% in 2012.
References
1. Phonak Marketing. 2011 survey of US dispensing practices. Hearing Review. 2012;19(8):16-23.
2. Phonak Marketing. 2011 survey of US dispensing practices. Hearing Review Products. Sept 2012:8-13.
The information in this article was submitted to HR by the Phonak Practice Development Department , Warrenville, Ill, and adapted from the company’s publication Key Metrics of Hearing Practices: Results of the 2013 US Hearing Professional Practice Metrics Survey, which reports on the independent survey results conducted by Customer Care Measurement & Consulting, Alexandria, Va.
CORRESPONDENCE can be addressed to Phonak Senior Manager of Communications and Public Relations Kim Rawn at [email protected] and Senior Manager of Practice Development Craig VanDeVelde at [email protected].
Original citation for this article: 2013 survey of US dispensing practice metrics. Hearing Review. 2014: January: 32-41.
