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 By Neil B. Gailmard, OD, MBA, FAAO, Editor August 8, 2007 - Tip #289 
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Professional Courtesy Discounts


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Additional Information

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,

Read Past Tips Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week


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Send questions and comments to neil@gailmard.com.

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