Optometric Management Tip # 185 - Wednesday, August 03, 2005
Four Trends That Concern Me
I had the privilege of working closely with a group of 50 optometrists at a practice management conference last weekend. After
speaking with these very successful doctors from various parts of the country, which included a balanced mix of male and female,
recent graduate and seasoned practitioner, I noticed four management trends that merit serious thought.
The doctors generally felt that these four trends were either beyond their control or in the best interest of their practices.
I’m not so sure. As Steven Levitt says in his thought-provoking book, Freakonomics, there is a hidden side to everything.
Conventional wisdom is not always right. Taking a contrarian approach can lead to rewards, especially if the conventional
approach is not finding great success.
See if you practice any of these four strategies, and consider bucking the trend.
1. Managed care vision plans dominate private practice, and there is nothing I can do about that. It seems the only practices
that are not embedded with discount vision plans are associated with chain optical stores. This could be due to exclusion by
the plan’s rules or the fact that there is no need to accept discount plans because the fees charged are extremely low.
My view. This is an older belief, but it’s stronger than ever and it’s very damaging. In many cases, the only way a practice
can become more successful is by dropping some discount vision plans. Many ODs still operate out of a fear of being excluded
from a large pool of patients, and they accept fees in some cases that are so low that they are barely breaking even when all
costs are considered. With plans like that, there is no harm in being excluded! In fact, the time you would gain by not
having to see these patients would allow you to concentrate on building the profitable side of your practice. If managed vision
plans dominate your practice, consider gradually reducing that dependence by dropping just one plan and gauging the effect.
Choose one of the lowest paying plans that does not deliver a huge volume of patients. Resign from the plan in the manner
required by your agreement. No announcement to the patient base is needed. Just ask every caller if they have a vision plan,
and when you identify patients with the defunct plan, advise them that you aren’t a provider, but they may file their own claim
for out-of-network benefits (make sure that’s possible with this plan). If the patient asks why you are no longer a provider,
just respond very nicely that the plan pays very low fees and you just could not cut any corners in the eye care you provide.
If patients want to go elsewhere, let them. I would not offer any discounts or make any concessions. Many of the patients who
leave will not like the alternatives and will be back in a year or two.
2. Many practices charge a lower fee or discounted fee to patients who pay privately. This concept is based on the idea that
patients without vision plans, or with healthy eyes that are not covered by medical plans, will not pay the relatively good fees
that Medicare pays for comprehensive eye codes. There are some very clever ways of legally providing a lower fee. Time of
service discounts are offered in many practices, which means the practice charges the Medicare-approved fee and then discounts
it when paid in full at the time of service. Other practices just use different codes for “well-vision” exams, or charge for an
intermediate exam when there is no eye disease present.
My view. The concept that the public will not pay the higher fee is faulty. Many practices are stuck around the $80 fee level
for private-pay patients and they seem paralyzed to raise it. If your practice provides thorough eye care with advanced diagnostic
technology and excellent customer service, are you really not worth more than that? The ideal situation is to have one comprehensive
exam fee near the Medicare-approved level and charge it to everyone no matter how they pay. If that fee is a long way off compared to
where you are now, you may not want to jump to it all at once, but get started.
3. Vision plans limit my professional fees and hold down optical profits, and contact lens practice is not what it used to be, so I’m
shifting my emphasis to medical eye care.
My view. Expanding the medical eye care in a practice is a great idea. Office visits and diagnostic procedures are profitable, but
the disturbing part about this trend is that the emphasis is “shifting”. This implies that we are de-emphasizing routine eye care,
optical dispensing, and contact lenses. The assumption that these areas are doomed to low profits is incorrect. In fact, the
non-surgical primary care fees that ODs can generate are OK, but I wouldn’t call them lucrative. Only if we couple those primary
care fees with a great optical (with premium products at high fees), can we approach lucrative.
4. Since so many premium optical products are only available through wholesale labs, and some vision plans require the use of
approved labs, there is no longer a benefit to having an in-office lab.
My view. This is another sign of how we are giving up control of our practices, at a time when keeping control is so important
to our success. We can recommend premium anti-reflective lenses and ultra-thin plastics, and still surface and edge the lenses
in-house. We can participate in some vision plans that require the use of outside labs, as long as they don’t dominate the practice.
We can reward the suppliers and equipment makers that work with private practice labs so they will develop more premium products for us,
and we can reward the vision plans that allow us to use the lab of our choice. If you see optical as a big part of your practice
(and you should), you want the cost-saving and service-enhancing benefits of owning your own lab.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management