Get the Most From Your Contact Lens Inventory
Get the Most From Your Contact Lens Inventory
Increase your bottom line by following these three tips.
PETER VAN HOVEN, O.D. Brentwood, Ten.
You ask yourself, "Contact lens inventory, why in the world do I need a costly inventory of lenses in my office?" Let's answer that question first, and then I'll lend some thoughts on how to best manage your inventory and increase your bottom line by using this extremely valuable in-office commodity.
A few years ago, my partner and I decided we would be better served if we rid ourselves of our present inventory and shipped all our contact lenses directly to our patients. We estimated we had roughly $16,000 to $18,000 worth of dispensable stock just sitting around and determined that, that money could be better used elsewhere in the practice.
So, much to the chagrin of our sales reps, we boxed up our inventory and shipped it off for credit — Ah, the thinking of young naïve leadership. We quickly realized within a few months what a grievous error we had made. Patients had come to expect us to have their lenses in stock. They were accustomed to swinging by the office to pick-up a six-month supply. In the end, we realized not having an inventory decreased our immediate revenue and patient satisfaction.
I now contest, that — if at all possible — every office should maintain some sort of in-house inventory. In the "gotta have it yesterday" society we live in, you can loose your competitive edge if you don't stock a supply of dispensable lenses. I feel that having an inventory of your most prescribed contact lenses helps to maintain and strengthen patient loyalty and overall satisfaction.
Certainly, each practice is unique in its inventory philosophy. An easy point to make is that a large inventory would potentially serve more of your patients with same-day service. The downside to that idea is that you must have the space to store a large inventory, someone to manage it and the cash flow to maintain it. Conversely, as we discovered in our practice, having zero inventory can cause a whole different set of problems. Patients who don't want their contact lenses shipped directly may be unhappy that they must make a return trip to the office to pick-up their supply.
Another familiar scenario that may arise involves Mr. Last Minute Patient, who walks into your practice Friday afternoon at 4:45pm. He is leaving town in two hours to go on a Mediterranean cruise for ten days and needs more contacts. Of course, he is wearing his last pair, and they should have been replaced two to three weeks ago. What do you do? If you have an inventory, then there is a chance for you to sell him a box of contacts for his trip, rather than giving him a pair for free. Two things then happen: the patient gets what he wants and you increase your cash flow.
Without an inventory, on the other hand, you lose the sale and likely end-up giving the patient a pair of trial/diagnostic lenses to get him by. Each time you dip into your trial lenses to give to a patient it's a potentially lost sale. Now, consider how many times a week you pull from your trial/diagnostic supply and calculate the potential lost revenue. Over the course of a year, this could be a financially significant amount of money. Also (and I think we can all attest to this fact), people like to get stuff. Just look at the glee on your patient's face the next time you hand her an eye-care bag with a six-month or annual supply of contact lenses, a kit or two of your recommended starter solution, a lens cloth for cleaning their sunglasses and your business card (showing a link to your Web site, from which they can place future contact-lens orders if needed). Seriously, look at their faces! They look like kids on Halloween with a bag full of candy. We all strive to provide a phenomenal eye-care experience, and the ability to dispense from stock helps to achieve this goal.
You can use these three tips to maximize your contact lens inventory and retain patients.
1. CHOOSE YOUR "WORKHORSE" LENSES. So now we must determine what size inventory you need. I would suggest that the correct amount of inventory is the amount that minimizes maintenance costs, yet maximizes patient satisfaction and retention. In our office, after recognizing the error of our ways, we decided that we would no longer maintain a large inventory of multiple lenses from multiple manufacturers. Rather, we chose our "workhorse" lenses in their core powers from two of the manufacturers we fit the most. Streamlining our inventory has kept our costs much lower and allows for easy maintenance.
2. PUT ONE STAFF MEMBER IN CHARGE OF INVENTORY. We then designated one staff member (who turned out to dislike direct, one-on-one patient communication, but has a fantastic phone rapport with patients) to maintain our stock. This staff member's sole job is to maintain our lens inventories of revenue stock, replenish all diagnostic fitting lenses for our diagnostic kits, handle any patient phone orders, manage all orders received through our Web site and communicate with patients regarding the status of their order via e-mail or phone call. This has taken the responsibility from several staff members and placed it squarely on the shoulders of one.
Consequently, we have virtually eliminated the problem of refill orders not being placed in a timely fashion and the occasional lost order.
3. ASK YOUR SALES REP WHICH POWERS TO INVENTORY. Discuss with your sales reps the powers you should inventory. I can promise you, they know exactly how many boxes you buy/sell per month. A quarterly statement, obtained from your rep, will give you a good basis from which to start your inventory. For the powers you don't stock, I would recommend shipping the lenses directly to the patient. This system will minimize, if not eliminate, excess inventory that is of little use to your practice. Also, have your reps consistently "work" your existing inventory — much like your frame reps "work" your frame boards — to minimize random powers, base curves and odd numbers of boxes.
Other purchasing opportunities to look for include special pricing for inventory orders and manufacturer promotions that run periodically throughout the year. Have your rep notify you when these opportunities occur. All these steps used together will help to ensure that you're able to maximize profits.
A recent trend in the world of contact-lens inventory is the implementation of mini, hand-held scanners, which make for an extremely consistent and efficient one-stop inventory replacement system. When a practice purchases a set amount of inventory, the manufacturer gives that practice a scanner (which works with a bar-code system) and the necessary software to run the device. The scanner works with a bar-code system, and our staff member scans the necessary inventory of stock or diagnostic lenses as deemed necessary, uploads them and sends them to the manufacturer. A few days later, the shipment arrives.
Lets also look at the rough costs of acquiring a working dispensable inventory. Say you were to bring in two different two-week disposable lenses from two different manufacturers. If you stock both with eight boxes for the core powers (-0.50D to -6.00D) you would need about 360–370 boxes. The total cost for this would be roughly $5,000 and you can likely obtain 30-, 60- or 90-day billing period from the manufacturers. This is approximately what we maintain in our practice and it works nicely for us. Obviously, all practices are different and what works for one may not work for another.
For patients who comply with the recommended yearly eye exams, we simply dispense a six-month or annual supply of lenses (along with any manufacturers rebates) on the day of their visit. It doesn't get much easier for the patient than that.
We've even been known to fill-out and mail-in the rebate coupon for the patient.
So you may ask: Do you have patients who leave the office with their contact lens prescriptions but no lenses? Absolutely, we still have patients that buy their lenses over the Internet or request we send their contact-lens prescription to a big box retailer. However, I feel fairly certain that we would see more of this if we didn't dispense from stock.
Determining the correct inventory for your office will depend on the size of your contact lens patient base and the specific needs of your patients. It may take a year or so of manipulating for you to determine the correct amount for your office. I challenge you to look at your own unique situation and determine what will work best for your office and your patients. When maintained properly, an in-office contact lens inventory maximizes benefit to everyone. OM
||Dr. Van Hoven is in private practice in Brentwood, Ten. E-mail him at firstname.lastname@example.org|
Optometric Management, Issue: June 2007