Optometric Management Tip # 335   -   Wednesday, July 02, 2008
Good Question!

I get lots of emails with excellent questions from readers about all kinds of practice management topics. I've always felt that if one person asks a question, there are many more who wonder the same thing, so this tip and some future ones will share actual (honest!) email questions I've received and my answers.

Q. (Editor's note: this question was in response to Tip #333) Interestingly, I read your column, most all of the time. You really threw me a curve this time. I believe as you do that discounts do not belong in a professional office. Several months ago you stated you disagree with all discounts or courtesies, except on second pairs of prescription specs...so I started giving courtesies (I hate the word discount) to patients desiring 2nd pairs. We used to only sell 2nd pairs once in a blue moon, now it's very common...why do you now contradict yourself??

A. You have really summarized my feelings perfectly. The only discount I offer in my practice is the multiple pair of prescription glasses discount, and then I go big with the 50% discount. I've found, just as you have, that the discount in this case truly creates additional sales that would not have occurred without it. That's when accepting a reduced profit makes sense. I've done the math and with my fee structure, we still make a decent profit on the additional pairs of glasses even with the discount. And, as I tell our patients, it's easier for us to process multiple pairs of glasses at the same time. We write the order once, we cut and edge them at once, we call the patient once and we dispense both pairs at the same time. There is some economy of scale. The dramatic example in Tip #333 was to get you to see the true impact of a discount on net income, but there are still some special cases where it makes good business sense to offer a discount.

Q. (Editor's note: This is a long one, but it's worth it!) Thanks for all the great tips, I already implement a lot of them and they seem to work a lot of the time. As a new practice (two years old this July) in a rural, but very competitive area, it's been a challenge just getting patients through the door. I feel we are doing quite well for a new practice, but still have a very long way to go. Most patients come because we are on their insurance panel -- fine enough, I've made that agreement. We also receive more and more referrals by word of mouth from existing patients because we do a great job. We have some private pay and small benefit insurance plans which pay some towards an exam and materials with the patient required to pay the difference.

My question is this: If I don't discount my high, modern fees, will patients leave their current docs, when many do a great job at a much lower fee, to come to me to pay more? Or more specifically, should I have different levels of fees, or discount the difference on what they owe for an exam when insurance doesn't cover the full fee, so they aren't paying way more than ever before for an eye exam?!

For example, the plan (not Medicare) pays $60 towards an exam. I've set my fees to a level so a 92004 and 92015 would be more than $150 (not too outrageous according to your philosophy of setting fees high and providing great service which we do). So the patient's balance is over $100 with this insurance. The patient's previous doctors do not even charge $100 for their eye exam so the patient's balance with the same insurance was $50 or less! I feel almost compelled to give a significant discount so they don't go screaming out the door, never come back and never refer their friends! Many private pay patients have never paid more than $60-$90 for an eye exam. Also, many of my competitors are also doing great, eye exams including retinal screening photos or optomap (at no extra charge), dilation when needed, automated refractions, medical care at the same time as the vision exam, etc. for MUCH less than most medical plans, Medicare, or Medicaid reimburse and for much less than I charge.

So you can see a new practice's dilemma to be competitive with existing practices which do an excellent job, have great service, technology, etc. but which still charge well below what they should. I implemented a lesser fee S code exam for non-medical, routine private pay exams and discounts for 92 codes for small benefit vision plans. Of course, for most vision plans with contracted amounts, there's nothing that can be done no matter what I charge.

However, I would starve to death and not be able to pay school debt, business debt, operating expenses and of course, myself (last to be paid), if we did not take vision plans or if patients didn't come because we only had one high fee for everything. Some patients don't schedule once they hear our exam fees from phone shopping or are shocked at how much we charge and don't come back (not too often but it happens). And it is somewhat tiresome trying to explain fee schedules, discounts, figuring out how to code the exam, etc.

I feel like my frame/lens prices are fairly profitable, actually more than at least two of the practices in the area that I know of, but again I don't want to cut my own throat by being extremely high. Also, most patients don't shop around for specific frame and lens models.

I want every patient possible to come through the door, and I'm afraid they won't schedule or return if our fees are too high (the highest fees in the area before any discounts). Ideally I want just the great, private pay patients that spend $700-$900 every time they come in, but that's not realistic since our town has only 13,000 people with three ODs including me, with a larger community of 30,000 with nine or ten ODs plus one OMD only 15 minutes away.

We provide great service in a modern, clean office with sharp looking wooden bookcase displays and at least 450 frames. The practice includes autorefractor/topgrapher, visual fields, computer VA chart system, computerized records, a fundus camera - used only for medical photos, pach, etc., return medical visits utilizing medical insurance....

I've thought about charging only one fee for a comprehensive exam like you recommend with no discounts for anyone, maybe somewhere in the middle, less than what I currently charge for the most expensive codes/plans but more than an S code private pay exam. I'm just a little timid about patients not coming in based on price or leaving money on the table with Medicaid, Medicare, and medical insurance by not charging enough!

Any help or comments would be appreciated.

A. You raise many excellent points and questions and your email describes very well the issues that many eye care practitioners (ECPs) are wrestling with. I'll itemize my responses to correspond with your main points.

Best wishes for continued success,

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