Cosmetic Physician Income Up Slightly

LAS VEGAS—The average net collected revenue per full-time equivalent physician in 2005 was $1,436,837 for cosmetic medical practices, according to a benchmarking survey of 61 offices, said William Miller, a management consultant with the Allergan Practice Consulting Group of Allergan Inc., a pharmaceutical company based in Irvine, Calif.

Mr. Miller and his associates have been conducting comprehensive economic evaluations of dermatology and cosmetic surgery practices for years so that other physicians can see how they measure up.

The latest twist is a survey of cosmetically oriented practices, including 19 cosmetic dermatology offices, 12 facial plastic surgery offices, 2 oculoplastic surgery offices, and 28 plastic surgery offices.

Comparative data from the 2003, 2004, and 2005 surveys of these practices were released at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

The practices selected for the benchmark survey are not necessarily "average," Mr. Miller emphasized. They are selected by the Allergan consulting group and may be either more or less profitable than the average cosmetic practice in the United States.

They are, however, quite geographically representative because they draw from cities in the eastern, southern, midwestern, and western regions of the United States.

To verify its numbers, the firm analyzes financial statements, income tax returns, employee census data, and productivity reports.

The net collected revenue per full-time equivalent MD or DO in cosmetic practices was $1,436,837 in 2005, up from $1,416,326 in 2004 and $1,291,392 in 2003, Mr. Miller said.

The revenue rate per hour per full-time equivalent MD or DO (based on 1,600 hours per year) averaged $898 in 2005, $885 in 2004, and $807 in 2003.

The net collected revenue per full-time equivalent aesthetician decreased slightly in 2005, totalling $149,145, compared with $151,046 in 2004 and $134,905 in 2003.

Retail sales in cosmetic offices vary tremendously, from $10,000 a year to more than $500,000 annually, he said.

The benchmark survey found that average retail sales added up to $138,865 in 2005, $135,065 in 2004, and $117,842 in 2003.

Operating expense ratios, which do not include provider compensation, bonuses, or retirement contributions, averaged 63.6% in 2005, 63.4% in 2004, and 65% in 2003.

Rent expense ratios (not including utilities and other peripheral expenses) averaged 5.0%, 4.9%, and 5.5% in 2005, 2004, and 2003, respectively.

"Five percent to 8% is a healthy range" when including utilities and insurance, he said.

Wide variations were seen in marketing expenses, which totalled from 3.9% to 4.3% between 2003 and 2005.

Mr. Miller strongly encouraged clinicians to track the efficacy of their marketing "somehow," if only on a spreadsheet used by a receptionist to find out how new patients heard about the practice.

When deciding if you have the right number of staff members, Mr. Miller said, it is important to look at three data points: "How productive is my staff?" "Do I have the right number of staff?" "What is my payroll ratio?"

The net collected revenue per full-time equivalent employee was $300,582 in 2005, $325,880 in 2004, and $313,807 in 2003.

The number of full-time employees per full-time provider was another figure that varied among practices, explained Mr. Miller. The healthy range is four to six full-time equivalent employees per provider.

He noted that many cosmetic dermatology practices in the survey also perform general dermatology, resulting in a higher patient volume than is typically seen in a plastic surgery practice, for example.

On average, though, cosmetically-oriented practices had 5.4 full-time equivalent employees per each full-time equivalent provider in 2005. That compared with 5.2 in 2004 and 4.9 in 2003.

To conclude his talk, Mr. Miller said that in his visits to many practices, he has found that a key element to success lies with hiring and appreciating excellent staff members.

Begin with a job description, he suggested.

"You cannot hire the right person if you don't know what skill set is required," he said. "I don't believe in merry-go-round jobs within the practice."

Make sure each employee's strengths match the tasks he or she is assigned, and offer frequent training opportunities, he said.

Finally, practice simple good manners and collegiality from the moment you step in the door.

"Say good morning. Say thank you at the end of the day," he said.

"It's amazing. I've been in offices where the employees don't even know if the doctor's in the office or not."

LAS VEGAS—The average net collected revenue per full-time equivalent physician in 2005 was $1,436,837 for cosmetic medical practices, according to a benchmarking survey of 61 offices, said William Miller, a management consultant with the Allergan Practice Consulting Group of Allergan Inc., a pharmaceutical company based in Irvine, Calif.

Mr. Miller and his associates have been conducting comprehensive economic evaluations of dermatology and cosmetic surgery practices for years so that other physicians can see how they measure up.

The latest twist is a survey of cosmetically oriented practices, including 19 cosmetic dermatology offices, 12 facial plastic surgery offices, 2 oculoplastic surgery offices, and 28 plastic surgery offices.

Comparative data from the 2003, 2004, and 2005 surveys of these practices were released at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

The practices selected for the benchmark survey are not necessarily "average," Mr. Miller emphasized. They are selected by the Allergan consulting group and may be either more or less profitable than the average cosmetic practice in the United States.

They are, however, quite geographically representative because they draw from cities in the eastern, southern, midwestern, and western regions of the United States.

To verify its numbers, the firm analyzes financial statements, income tax returns, employee census data, and productivity reports.

The net collected revenue per full-time equivalent MD or DO in cosmetic practices was $1,436,837 in 2005, up from $1,416,326 in 2004 and $1,291,392 in 2003, Mr. Miller said.

The revenue rate per hour per full-time equivalent MD or DO (based on 1,600 hours per year) averaged $898 in 2005, $885 in 2004, and $807 in 2003.

The net collected revenue per full-time equivalent aesthetician decreased slightly in 2005, totalling $149,145, compared with $151,046 in 2004 and $134,905 in 2003.

Retail sales in cosmetic offices vary tremendously, from $10,000 a year to more than $500,000 annually, he said.

The benchmark survey found that average retail sales added up to $138,865 in 2005, $135,065 in 2004, and $117,842 in 2003.

Operating expense ratios, which do not include provider compensation, bonuses, or retirement contributions, averaged 63.6% in 2005, 63.4% in 2004, and 65% in 2003.

Rent expense ratios (not including utilities and other peripheral expenses) averaged 5.0%, 4.9%, and 5.5% in 2005, 2004, and 2003, respectively.

"Five percent to 8% is a healthy range" when including utilities and insurance, he said.

Wide variations were seen in marketing expenses, which totalled from 3.9% to 4.3% between 2003 and 2005.

Mr. Miller strongly encouraged clinicians to track the efficacy of their marketing "somehow," if only on a spreadsheet used by a receptionist to find out how new patients heard about the practice.

When deciding if you have the right number of staff members, Mr. Miller said, it is important to look at three data points: "How productive is my staff?" "Do I have the right number of staff?" "What is my payroll ratio?"

The net collected revenue per full-time equivalent employee was $300,582 in 2005, $325,880 in 2004, and $313,807 in 2003.

The number of full-time employees per full-time provider was another figure that varied among practices, explained Mr. Miller. The healthy range is four to six full-time equivalent employees per provider.

He noted that many cosmetic dermatology practices in the survey also perform general dermatology, resulting in a higher patient volume than is typically seen in a plastic surgery practice, for example.

On average, though, cosmetically-oriented practices had 5.4 full-time equivalent employees per each full-time equivalent provider in 2005. That compared with 5.2 in 2004 and 4.9 in 2003.

To conclude his talk, Mr. Miller said that in his visits to many practices, he has found that a key element to success lies with hiring and appreciating excellent staff members.

Begin with a job description, he suggested.

"You cannot hire the right person if you don't know what skill set is required," he said. "I don't believe in merry-go-round jobs within the practice."

Make sure each employee's strengths match the tasks he or she is assigned, and offer frequent training opportunities, he said.

Finally, practice simple good manners and collegiality from the moment you step in the door.

"Say good morning. Say thank you at the end of the day," he said.

"It's amazing. I've been in offices where the employees don't even know if the doctor's in the office or not."

LAS VEGAS—The average net collected revenue per full-time equivalent physician in 2005 was $1,436,837 for cosmetic medical practices, according to a benchmarking survey of 61 offices, said William Miller, a management consultant with the Allergan Practice Consulting Group of Allergan Inc., a pharmaceutical company based in Irvine, Calif.

Mr. Miller and his associates have been conducting comprehensive economic evaluations of dermatology and cosmetic surgery practices for years so that other physicians can see how they measure up.

The latest twist is a survey of cosmetically oriented practices, including 19 cosmetic dermatology offices, 12 facial plastic surgery offices, 2 oculoplastic surgery offices, and 28 plastic surgery offices.

Comparative data from the 2003, 2004, and 2005 surveys of these practices were released at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

The practices selected for the benchmark survey are not necessarily "average," Mr. Miller emphasized. They are selected by the Allergan consulting group and may be either more or less profitable than the average cosmetic practice in the United States.

They are, however, quite geographically representative because they draw from cities in the eastern, southern, midwestern, and western regions of the United States.

To verify its numbers, the firm analyzes financial statements, income tax returns, employee census data, and productivity reports.

The net collected revenue per full-time equivalent MD or DO in cosmetic practices was $1,436,837 in 2005, up from $1,416,326 in 2004 and $1,291,392 in 2003, Mr. Miller said.

The revenue rate per hour per full-time equivalent MD or DO (based on 1,600 hours per year) averaged $898 in 2005, $885 in 2004, and $807 in 2003.

The net collected revenue per full-time equivalent aesthetician decreased slightly in 2005, totalling $149,145, compared with $151,046 in 2004 and $134,905 in 2003.

Retail sales in cosmetic offices vary tremendously, from $10,000 a year to more than $500,000 annually, he said.

The benchmark survey found that average retail sales added up to $138,865 in 2005, $135,065 in 2004, and $117,842 in 2003.

Operating expense ratios, which do not include provider compensation, bonuses, or retirement contributions, averaged 63.6% in 2005, 63.4% in 2004, and 65% in 2003.

Rent expense ratios (not including utilities and other peripheral expenses) averaged 5.0%, 4.9%, and 5.5% in 2005, 2004, and 2003, respectively.

"Five percent to 8% is a healthy range" when including utilities and insurance, he said.

Wide variations were seen in marketing expenses, which totalled from 3.9% to 4.3% between 2003 and 2005.

Mr. Miller strongly encouraged clinicians to track the efficacy of their marketing "somehow," if only on a spreadsheet used by a receptionist to find out how new patients heard about the practice.

When deciding if you have the right number of staff members, Mr. Miller said, it is important to look at three data points: "How productive is my staff?" "Do I have the right number of staff?" "What is my payroll ratio?"

The net collected revenue per full-time equivalent employee was $300,582 in 2005, $325,880 in 2004, and $313,807 in 2003.

The number of full-time employees per full-time provider was another figure that varied among practices, explained Mr. Miller. The healthy range is four to six full-time equivalent employees per provider.

He noted that many cosmetic dermatology practices in the survey also perform general dermatology, resulting in a higher patient volume than is typically seen in a plastic surgery practice, for example.

On average, though, cosmetically-oriented practices had 5.4 full-time equivalent employees per each full-time equivalent provider in 2005. That compared with 5.2 in 2004 and 4.9 in 2003.

To conclude his talk, Mr. Miller said that in his visits to many practices, he has found that a key element to success lies with hiring and appreciating excellent staff members.

Begin with a job description, he suggested.

"You cannot hire the right person if you don't know what skill set is required," he said. "I don't believe in merry-go-round jobs within the practice."

Make sure each employee's strengths match the tasks he or she is assigned, and offer frequent training opportunities, he said.

Finally, practice simple good manners and collegiality from the moment you step in the door.

"Say good morning. Say thank you at the end of the day," he said.

"It's amazing. I've been in offices where the employees don't even know if the doctor's in the office or not."