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 By Neil B. Gailmard, OD, MBA, FAAO, Editor January 21, 2009 - Tip #363 
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Seeing the Good in Vision Plans

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While we are often accustomed to hearing complaints from eye care providers about vision plans, I thought it was time to acknowledge some of the good things.

  1. In tough economic times, vision plans keep patients coming in the door for routine eye care. Many private pay patients will simply postpone routine care if they feel a financial pinch.
  2. Vision plans can provide significant patient volume and most practices need it. Many ECPs look at the discounts they provide to vision plans as a marketing cost. From a business standpoint, I look at the lower fee schedule as a volume discount. If a vision plan does not provide much patient volume, I would question the benefit of participating.
  3. Many vision plan patients have other eye care needs. All we have to do is identify those needs and fulfill them. After all, these people are already in your office! Examples of unmet wants and needs may include medical eye care, additional visual or optical products beyond the covered elements, contact lenses, vision therapy and low vision. That is a lot of opportunity!

Evaluating profitability

It's a good idea to conduct your own profitability analysis on the vision plan segment of your practice. As you do this, you'll see that it's not as easy as you might think. Here are some important nuances that are frequently overlooked.

  • Consider the value of the paid lab bill for vision plans that have that policy. That's not easy to do since the covered part of the lab bill is completely invisible to the provider. You would need to add some fictitious value to your total reimbursement to compare apples to apples with other vision plans and with private pay patients. How much to add back depends on how you supply the frame and your mix of single vision and multifocal lenses, but even then it's an estimate.
  • Consider what the patient paid you. The payment summary sent to you by vision plans is not the whole story. You may see charge backs for lens options deducted from your payment which gives the impression you made very little profit. You have to pull the patient's chart or look up the record in your office system to see the amount the patient paid you for those lens options.
  • Consider all non-covered items. There are usually other non-covered services or products that the patient paid for and those should go into the analysis. See more on this below.
  • Looking only at direct chair cost as a way of assessing a vision plan is oversimplified and inaccurate. There is a marginal chair cost which refers to the additional cost of seeing a group of people, once the usual fixed costs have already been met. In other words, if you have unused capacity (an empty exam chair at times when you could see a patient), how much more cost is incurred by seeing some additional people? None or very little. Isn't some profit better than none at all? Of course, this approach can be taken too far if vision plan patients begin to squeeze out your availability to care for the private pay group, but it's still valid to a point.
  • Consider the percentage of patients with vision plans and the amount of revenue that comes from vision plans. Those are usually quite different. For example, if 50% of your patients have a vision plan and 30% of your practice revenue comes from vision plan payments, what does that really mean? It's complex because patients with vision plans also purchased items privately and they also have medical insurance which they may have used for other services. So some of the 70% of that revenue that you're assigning to private pay and medical plans actually came from vision plan patients!

Increasing profitability

We would all like to see higher fees paid by vision plans, but since we can't directly control that, all you can do is decide if plan participation is in your best interest or not. Once you decide to opt in, here are three basic strategies that will increase your gross and net revenues with vision plan patients.

  • Look at the things that are not covered and don't have a mandated price schedule by the plan. Be sure your practice is capable of providing as many of these services and products as possible and improve your ability to recommend and educate appropriate patients. These may include contact lens evaluations, contact lens fittings, contact lens materials, routine retinal photos, medical diagnostic procedures, follow up visits, additional exams, multiple pairs of glasses, sunglasses, vision therapy, low vision care, refractive surgery co-management and more.
  • Raise your fees. The usual mantra is that raising fees has no practice benefit with vision plan patients, but nothing could be further from the truth. Vision plan members buy things that are not covered and when they do, we need to gain maximum profitability. Higher fees are well accepted when you provide a high level of quality and service to match.
  • Delegate and become more efficient. Train your staff to assist you with more clinical and optical procedures. Increase the size of your staff and invest in automated instrumentation. Reducing doctor time with each patient increases profitability and allows you to see more patients per day without working any harder. Delegate before you actually have the demand that requires it and the demand will come.

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.

Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.
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