Optometric Management Tip # 150   -   Wednesday, December 01, 2004
Are Contact Lens Service Agreements Still Viable?

Iíll admit that the answer to that question is certainly subject to personal opinion and I know many respected optometrists who passionately stand by them Ė but I have to say no. I think itís time to revamp our approach to contact lens services and fees in a proactive, patient-friendly way.

I hear from colleagues who are pro-service agreement that the strategy (a) ties patients to their practice and (b) is a good money-maker. But I think efforts to tie patients to a practice often backfire. You canít force patients to stay with you, and they can usually sense it if you try. They have to want to stay with you and the only way to achieve that is with excellent, patient-first service. A program is not a good money-maker if it drives some patients away.

Why change?

Contact lens service agreements were devised decades ago to meet the needs of contact lens practice at the time. Hard and soft lenses were very expensive single items, which were easily lost or frequently wore out due to protein deposits. Contact lens insurance plans were sold by insurance companies to ease the financial burden of replacing lenses, and doctors devised their own discount plan to serve the same purpose. This went well, until contact lenses became disposable and were sold in multi-packs. With per lens prices as low as they are today, and with so many buying options available to the consumer, paying an annual fee in advance in order to buy lenses at a discount no longer seems necessary. It seems out-of-date.

Office visits

The other main feature of some CL agreements is pre-paid exams and office visits. This could be good in theory, except patients today arenít planning on needing many office visits. And, in truth, most donít need very many. Most successful contact lens wearers only need an annual eye exam (with CL evaluation). Efforts to try to tell todayís consumer that they need more care could create a lack of credibility and cause invisible attrition from the practice. Sure, there will be an occasional red eye or other problem, but most patients can look at their own history and figure thatís not likely. And if they did need interim care, they are willing to pay for the office visit Ė or bill their medical insurance in many cases.

Other benefits

Many service agreements include other benefits Ė such as discounted eyeglasses and sunglasses and contact lens solutions. Iím not convinced that these discounts are really good for practice profitability because the price cut falls right to the bottom line. Most of these optical purchases occur in your office anyway Ė without the discount. Bundling solutions takes a lot of staff time and there is very little profit. Patients prefer the convenience of buying solutions at supermarkets or retail stores.

The Circuit City Syndrome

Take an objective look at how patients feel when they are faced with paying for services they think they donít need. How does the explanation of the annual service agreement fee really sound? Weíre all accustomed to the 19-year-old sales associate in the big electronic stores who tries a little too hard to sell the extended service warranty. When some one tries to tick off a multitude of reasons why I need to spend more money, I start thinking there must be some big profit in it for the store. I also have to put on my consumer hat and analyze the offer for myself to see if itís a really good deal, or just a lot of smoke. I donít want my patients going through these mental gymnastics in my office. Itís bad for our image.

Patients not complaining?

Doctors often feel that if they hear no complaints from patients, it proves that the system must be good. In truth, most patients wonít question a doctorís policies, so it doesnít mean much. Many patients will stay with their optometrist because they love him or her, in spite of some policies that are outdated or donít make sense. But its still not good business practice. If enough negatives add up in the patientís mind, some will silently leave the practice.

A better system

It may seem scary to change well-established policies, but businesses must change to stay competitive. I dropped my CL service agreement program many years ago and it didnít hurt a bit. I was worried, because I looked at the annual revenue that had been produced by that agreement, and it looked significant. As I dropped the service agreement, however, I raised my CL fitting fees, annual CL evaluation fee, and even lens materials. Everything went just fine and contact lens revenue still grew nicely from the previous year. I could tell patients were happy about the move to a fee-for-service, pay-as-you-go basis. I got rid of the nuisance cases who came in for office visits because they were free, we no longer had to argue if an eye problem was contact lens related or not, and my staff got to drop the administration of the program. The office ran smoother with everyone paying the same fees and prices.

Patients will pay high fees for excellent care, but no one wants to pay in advance for services they donít need and may not use.

Best wishes for continued success,

Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management