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 By Neil B. Gailmard, OD, MBA, FAAO, Editor July 6, 2011 - Tip #489 
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Raising fees: Why it's important even with vision plans

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Most of the optometric practices I analyze need to raise fees, yet practice owners are extremely reluctant to do so.  Staff members echo that fear.  I realize that the economy is still very shaky, but most practices have not implemented a fee increase in well over a year and even when they did, it was too little, too late.

Optometrists routinely undervalue their services.  Just look at a few other fields as a guide to relative value. Have you had a plumber come to your house lately?  Do you know what dentists charge for a routine cleaning and x-rays?  Have you experienced lawyer fees?  For female readers: what do you pay for a "cut and color" at the hair salon?  I rest my case.

What is your worry?
Most eye care professionals (ECPs) worry they will lose patients if they raise fees, yet if you think back to the last time you actually implemented a fee increase; you will likely agree that the vast majority of patients do not even notice.  Eye care services in independent private practice are just not very price sensitive.  Patients come to you because they trust you and want the best eye care; price is secondary.

Even if you lost a small percentage of patients, which I highly doubt, most practices would still make a greater profit with a moderate fee increase.  Anything wrong with that?

Think of a fee increase as market research.  Implement it and monitor the reaction.  Ask your staff if patients make any comment in the first week or two.  See if you can detect any dip in sales or appointments.  The great thing about running a small business is that you can make changes very easily and quickly.  If you detect a strongly negative response to a fee increase, you can always just move them back to the old fee levels.  How much harm can you do in two weeks?  Virtually none.

Why do it if vision plans dominate?
In many cases, practice owners don't bother to raise fees because they reason that vision plan payments are fixed anyway, so it will not make much difference.  My response to that logic is: then why not raise them?  Who will care?  Most of your patients won't be affected by the increase anyway so it is extremely safe to do it.  But there are two very good reasons why you should raise fees even with strong participation in vision plans.

  • A higher fee increases the patient's perception of your services.  Vision plan patients may have the exam fee covered, but they are still aware of the usual fee.  They may hear it quoted over the phone or see it on their office receipt.  And when patients see a higher fee they place a higher value on your services.  People judge services based on the price, especially when they don't have the technical expertise to judge it in other ways.  Why not build a reputation as the best eye care provider in the region?
  • Patients with vision plans still buy many non-covered services and products from your practice and when they do, you must make a good profit.  The discount provided to vision plans by panel doctors is substantial, so you must make up for that with non-covered services.  Don't write off vision plan patients as low-profit margin cases; consider that the following services may be non-covered:
    • Exams.  Patients may need a mid-year progress exam or may have an eye emergency.  Why not make your routine eye exam fee the same as your medical eye exam?
    • Special testing.  This could be for routine screenings like retinal photos or could involve medical diagnostic procedures.
    • Contact lenses.  Most vision plans provide an allowance to use towards contact lens fittings and products.  The plan may also require a small discount, but you can still bill the balance to the patient.
    • Frames.  Many patients select a frame that is not fully covered by the vision plan.  Raising your frame mark-up formula can increase your frame overage fees.  Besides that, patients with vision plans sometimes buy a second pair of glasses or need to replace glasses when there are no benefits available.
    • Lenses.  Base lens prices and additional lens features may be capped by vision plans, but think about additional pairs of glasses throughout the year.
    • Other non-covered services.  Medical eye care, low vision, sports vision, vision therapy, non-Rx sunglasses and many other services and products are not covered by vision plans and should carry a high fee in your practice.

Customer service can improve
When you increase your exam fees, you will find that customer service can also improve.  You and your staff will develop a mental attitude that allows you to be more generous and creates a feeling of letting the patient have his way.  As much as some practices try, you really can't have great customer service and low fees.  The high fee - great service combination will generate an upward business cycle for your practice.  The new emphasis on customer service creates more patient demand through loyalty and word of mouth referral.  The strong patient demand will allow you to raise fees again because there is always a market for the best.  The increased revenue from higher fees will allow you to invest in your practice, creating more competitive advantages.

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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