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Continuing with our discussion on office policies and writing the office manual,
let's consider discounts and courtesies. How do you decide what to offer and to
whom and how do you design a system so discounts are applied fairly?
Know your objectives
Half the battle in managing your policy on discounts is getting organized and
writing things down. Before deciding on a policy, consider what you want to
accomplish. Providing a gesture of good will to people you care about is one
thing, offering discounts as a marketing tool is another. The former is done for
altruistic reasons and is purely up to the practice owner, the latter is not very
effective, in my experience.
I think providing discounts on services and products have a place, but many
practices look to discounts as a major way to attract business. Discounts can
really hurt practice profitability and most of the time they do not actually increase
business, but rather just lower the cost for people who were going to buy at full
price anyway.
Groups
Discounts often vary based on the relationship. Let's look at some major groups
of people and consider what discount policy might be appropriate. While many of
these decisions are purely up to the owner's discretion, I'll give you some food for
thought. Be aware that insurance plans have policies that vary widely about how
to handle discounts and write-offs. In some cases insurance may cover all of
your charges and in other cases you may be prohibited from offering discounts or
waiving co-payments. Be sure to follow the rules of any plan you participate with,
but let's consider discounts when insurance is not involved.
- Friends and family of practice owner
This is totally up to the owner, and some discount or free care is often
appropriate, but one should not feel pressured into giving away services.
Many friends and distant relatives should not receive any discount, in my
view. Remember that relatives and friends know they will receive special
attention and care because they know the owner, and that has
considerable value without any discount. The closeness of the relation or
friend often affects the amount of a discount. See the section below for
ideas, but parents, spouse and children of the doctor may receive free
care while cousins receive no discount at all, as an example. Much of this
can be handled on an individual basis, but when you decide on a discount
for any given person, record it in the file so you and staff members can be
consistent.
- Staff members
This is really part of your employment benefits, and be sure to list it as part
of your package because it has real value. I like to provide free eye care
services to all employees (full time or part time) and optical materials at
our wholesale cost. I require an authorization form to be filled out by the
employee whenever services or products are provided and this is
approved and filed by the office manager. We do not allow suppliers or
vendors to provide free goods or other rewards to individual staff
members. Labs and vendors must be willing to supply any discount to all
employees of our practice. All gifts are directed only to the owners.
- Family of staff members
We offer some discounts to the families of our employees, and we are
very specific about the definitions of family in our office manual. Defining
family members in advance makes the policy non-personal. Here is how I
word the policy: Eye care services will be provided at no cost and optical
products will be provided at our wholesale cost to employees, their
spouses and children under the age of 21. An employee's mother, father,
brothers, sisters, and children over the age of 21 shall receive a 20%
discount off normal professional and material fees (our normal contact
lens prices are excluded from this discount).
- Other professionals
Isn't it ironic that some of the wealthiest people receive discounts? I'm not
a believer in professional courtesies for all doctors, but I do extend
discounts to doctors whom I see personally, and they reciprocate. Use
your judgment for other professions like attorneys, CPAs, IT specialists
and clergy.
- Special civic groups (Chamber of Commerce, service club members)
I'm not a big believer in discounts like this. Participate in the
organizations, support some of the programs with ads, but no discount is
needed to members.
- Senior citizens
With Medicare, I don't think a senior discount is needed. I don't think it's a
good business strategy even for optical products.
- Self-administered vision plan for local employers
I know some practices feel they do well with these special programs for
local companies, but I would rather reduce the vision plan discounts, not
seek them out.
- Charity and pro bono work
This type of free care or discounting is an individual decision. There are
many worthwhile programs through our professional associations, church,
or civic organizations like the Lions Club or Salvation Army.
Amounts
Discounts should vary based on the relationship. Consider these options:
- Completely free services and products
There should be some limit on the product side to prevent abuse, but
many practices provide one free pair of eyeglasses per year or a supply of
contact lenses for employees. This has the benefit of staff members
wearing great looking eyewear or having contact lens experience, either of
which can have a positive influence on patients.
- Free exam services and 50% off materials
This is a very generous discount that approximates a "cost only" approach
without having to provide wholesale pricing to the recipient.
- 50% off total
Still very generous and reserved for only very close relatives and friends.
Very little profit realized when operating costs are considered.
- 20% off total
A nice discount that still allows the practice to make a profit.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week
A Proud Supporter of
Send questions and comments to neil@gailmard.com.
Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.
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Please Note: The views expressed in Management Tip of the Week do not necessarily reflect those of the sponsor.
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