Optometric Management Tip # 356 - Wednesday, November 26, 2008
Can You Prosper in a Down Economy?
Some readers have asked what they should do to weather the tough economic times our nation (and world) is currently facing. While I don't pretend to have all the answers, I'll offer a few thoughts on how economic woes impact eye care practice.
Don't react out of fear
There is no question that our economy is in the worst shape since the great depression. Major industries such as banking and automobile manufacturing are failing and that leads to a huge domino effect that impacts many other businesses. Many of our patients are losing their jobs or fear they will. There is no question that people cut back on spending when times get tough.
Eye care is certainly not immune to a recession, but it may fare better than some other goods and services. As you evaluate your practice and your financial situation, I would use caution about making large strategic changes in your practice based on fear of what may happen.
- Monitor your practice financial data closely, but realize that there are always cycles in data and you need a large sample to declare a trend.
- A few patients who decide to take their spectacle or contact lens Rx to go is not a reason to panic.
- Don't change the marketing approach you've worked hard to develop based on fear. There is always a market for high quality and excellent service. I would not start buying inferior frames and lenses in order to reduce prices. I would not begin offering discounts or sales.
- Be prepared to answer more questions about prices, but don't be defensive about it. Just because people ask why your fees are higher than a big box chain does not mean they won't value your offerings and choose your practice. Train your staff to not be insulted by questions about price. The fact that a patient is asking is an indicator that he does not want to go to the low-priced outlet, but wants to be reassured that he'll get his money's worth with you. So reassure him.
- Stress the professional services you offer as the key difference between your practice and the low priced outlets. There is an important service in optical dispensing; not just products. Contact lens fittings involve eye health care. Discuss this with your staff and make a list of why your services are better than the competition's.
- Work on customer service more than ever. It's always important, but we need to care about the patient's wants and needs more than ever when times are tough. It's a buyer's market. Make them want to do business with you. Schedule staff meetings to work on your policies and making your office more patient friendly.
What services do you offer?
This is a great time to concentrate on medical eye care services, since those are not typically elective. Increase your referral sources by visiting other practitioners and let your patients know that you handle eye care emergencies. Review the medical insurance plans you accept and apply for panel membership for major ones that you‘re missing.
Vision plan participation becomes a bigger asset to your practice during a depressed economy because these patients obtain your services with less out of pocket expense. I advise most practices to participate with the largest and best-paying vision plans, but I would still avoid the bad ones.
Reduce your business risk
Owning and operating your practice always involves some risk; it's a business investment, after all. No one can predict what will happen in a down economy, so it's smart to reduce your exposure to risk. Try to maintain a financial cushion in case practice revenue drops.
- I can't give blanket advice on business investments because much depends on how well capitalized your practice is.
- Some practices with considerable cash reserves could do well to invest in instrumentation or leasehold improvements because suppliers are offering some bargains. Everything is relative, however, and even those practices that are flush with cash should be more conservative than usual.
- If your practice cash flow is tight you may want to delay some major purchases, projects or staff expansion for a few months until the direction of the economy is more certain.
- Speak with your accountant. If you don't have one, find one. Discuss business and personal tax planning.
Your eye care practice can still grow and thrive during these difficult times if you use common sense and follow the time-tested primary rule of marketing: identify and satisfy customers' wants and needs.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management