After good results last month, May has seen fractional monthly decreases in some of our key performance measures but the generally positive trend is continuing. All of our indicators are higher than the same month last year apart from total sight tests and volume of bi/trifocal lenses which are both less than one Index point lower. Annual growth is still negative for our clinical measures and most of the dispensing but positive for our financial benchmarks.
This month our report focuses on the financial factors of practice management and we make comparisons between the turnover per eye examination and the dispensing rate by practice turnover size.
Last month Optician Index reported an increase in total practice turnover to 173 Index points which was the highest value since May 2013, but the adjusted figure (after late submissions are included) is 170 Index points, which is slightly lower than the same month last year. Figure 1 shows this benchmark from January 2012 and the steady increase from December 2012 to the current peak at 174 Index points, up 3 per cent from last month and the same value as May last year.
However, the moving average, which takes into account historic values, has fallen slightly from November 2013 through the first five months of this year and the annual growth is now only marginally positive at less than 0.5 per cent. The linear trend-line, which takes into account only the values included in the chart and no historic data, shows a slight upward trend.
Consistent tests
The total number of sight tests has been consistent through 2014 and the Index figure is the same as last month and May last year at 103 Index points. The percentage of eye examinations which were NHS increased in May by over two percentage points to 77 per cent and this is just over one percentage point higher than May last year.
Turnover per eye examination is not Indexed but a real value based simply on the total turnover of the sample practices divided by the number of eye examinations carried out during the month. Apart from the anomalies we see in December and January, this benchmark went through a step change at the start of 2013 (resulting from the change in the sample to only include independent and regional chain practices). In Figure 2, we can see that the moving average has levelled off at the turn of this year at around £175. This month the figure has increased by £8 over April to reach a peak of £185. In the last two years we have seen a fall from this early summer high through the rest of the year.
Figures 3 and 4 show the turnover per eye examination and dispensing rates by turnover group reported during May 2014.
Generally, Optician Index reports comment on indexed values, so any percentage change means the same to a small practice as a large one. However, the following analysis enables you to position your practice by turnover size and therefore average values become more meaningful.
The categories are based on turnover reported for May, under £20,000, £20-40,000 and £40,000 plus. The quartiles are calculated by sorting the data and dividing into four equal parts. The mid-point is the median quartile, the lower group is the 25 per cent falling below the median, the upper quartile is the 25 per cent above the median, and the middle 50 per cent is the median quartile. In all categories, if your practice falls below the median line, you could perhaps explore new or different opportunities through marketing, range of products offered or operational changes. If your practice falls above the median line, the challenge is to maintain or improve further through continually evaluating all aspects of your business.
Turnover totals
To see where your practice lies, calculate your turnover per eye examination by dividing the total turnover, including VAT, by the number of sight tests carried out in the month. The dispensing rate is calculated by dividing the total volume of spectacles dispensed by the number of eye examinations carried out.
Figure 3 shows the average turnover per eye examination value is lowest in the lower turnover group and increases in line with the turnover category sizes. The lowest and middle turnover groups are very close and the median value for the middle turnover group is less than the lowest turnover group. The highest figure for turnover per eye examination was recorded by a larger practice at £582 and the lowest figure was recorded by a smaller practice at £85. The biggest change we have seen, from the same analysis we did in May last year, is the significant increase in the average value of the largest turnover practices from £229 to £255.
Figure 4, dispensing rates by turnover groups, the lower turnover group achieves the highest average dispensing rate at 78 per cent and the higher turnover group performs slightly better than the middle turnover group. The highest figure was recorded by a smaller practice at 145 per cent and the lowest figure was recorded by a middle-sized practice at 31 per cent. The biggest change we have seen from last year’s analysis is the improved performance of the larger practices from 55 to 63 per cent. The average dispensing rate has improved this month from April by two percentage points to 67 per cent.
Sample average total dispensing was 1 per cent lower than April but 1 per cent higher than May last year, now at a value of 96 Index points. Single-vision lenses reduced fractionally to 69 Index points from April’s figure, 1 per cent higher than May 2013. Bi/trifocal lenses also decreased to 67 Index points, the same figure as last May. Progressive lenses increased 1 per cent from last month, now at 213 Index points, 1 per cent higher than May 2013.
Photochromic lenses increased by 1 percentage point from last month to 14 percent of all spectacles dispensed, 2 percentage points higher than May last year.
All figures shown are adjusted to a 25-working day month. In May 2014 there were 25 working days.