A New Perspective on Profit
A New Perspective on Profit
Recent data reveal you should actively pursue combination spectacle-contact lens sales.
STEPHEN M. PULLEN, O.D., Jacksonville, Fla.
Like most optometrists, I had always subscribed to the prevailing wisdom that dispensing spectacles was more profitable for a practice than dispensing contact lenses. Yes, I fit contact lenses. But if a patient didn't explicitly request contact lens wear, I might not offer it as an option. (Chair time is valuable and in short supply.)
However, after participating in and seeing the results of recently completed Vistakon market research in U.S. Optometrie practices in which a field research team evaluated random samplings of patient finances, purchasing habits, insurance benefits and actual orders placed, it's clear to me now that a combination purchase of glasses and contact lenses deserves to be placed on the profit pedestal.
Here, I explain why.
Dig into the details
To see the profitable results of dual vision-correction patients in your own practice, examine how health insurance, cost of the goods (e.g., frames, spectacle lenses, contact lenses), frequency of patient visits and purchases affect your bottom line, or profit. (Remember: A big difference exists between revenue and profit. You can't take revenue to the bank, but we all have a tendency to compare that initial top-line revenue number with competing forms of vision correction rather than what really matters, which is net profit on a per-year, per-patient basis.)
Associate insurance deductions with individual patients — tough to do, as insurance reimbursements arrive late and in batches. Still, because insurance adjustments can trim 20% to 30% off your usual and customary charges for spectacles and eye exams, and they don't affect all services equally, you can't afford to ignore the impact of health insurance on your bottom line.
Keep track of initial charges, health insurance deductions, cost of the goods (e.g., frames, spectacle lenses, contact lenses) and frequency of patient visits for a minimum of one year. After doing so, you'll find that when you combine all visits and purchases for a given patient throughout a year, a combination of both spectacle and contact lens sales are more profitable for a practice than either a glasses-only or a contact lens-only sale. (See “Profit Per Patient Per Year,” below.)
*Notes: This table shows real data for a sample practice (not the author's practice) through a two- to three-year period. Factors that are identical across patient types, such as the base exam fee, are not included. A “combination” patient is one who has purchased both contact lenses and glasses at the same visit. Insurance deductions and insurance types vary because each group (e.g. “Glasses Only”) is a different sampling of patients than the other groups.
For one thing, there are more sales opportunities (glasses, contact lenses, piano sunglasses) for these patients. Something else to keep in mind: You may examine contact lens or combination patients more frequently than spectacle patients. This offers additional opportunities to collect professional fees.
Track your combination patients' lifetime with the practice, and you'll uncover an even more profitable story.
Due to this data, I am now sure to offer the option of contact lens wear to all those spectacle-wearing patients whom I believe are good candidates for contact lens wear regardless of whether they request contact lens wear.
As a result of doing this, many of my patients have told me and/or my staff that hearing about all their vision-correction options has enhanced their satisfaction with my practice. This, in turn, has increased patient loyalty, referrals and the financial strength of my practice.
“We really wanted to make the [practice] experience a better one for the patients,” explains optometrist Brian Blount, who's in private practice in Beaumont, Texas and also participated in Vistakon's market research. 'tve found that patients are thrilled to be offered contact lenses, whether they decide to try them or not,” he says.
Dr. Blount adds that when his receptionist takes a patient appointment, she now asks: ‘Are you coming in for glasses and contact lenses?’
“Just that one word —'and'— immediately sets up the expectation that both are possible,” he says.
Jenna Jorgensen, a Vistakon senior financial analyst, says the financial impact of the shift in the mind-set of the practitioner from “either/or” to “and” can be huge.
“In our research, simply by switching patients who only purchase one type of vision correction to combination patients, you can increase the profit earned from that patient by 50%,” she says.
Making it work
In an already-busy practice, figuring out how to fit in more contact lens fittings and insertion/removal training for those former spectacle-only patients can be tough.
To be honest, I didn't think I could do it, as I felt my practice was approaching full-patient capacity. In fact, to increase our patient load and revenues, I considered adding staff and expanding my existing office. Instead of doing these things, however, my staff and I focused on increasing the practice's efficiency, eliminating steps in patient flow and reallocating our time to generate greater revenue than before within the confines of our existing space.
The steps we took:
► We decreased patient wait times. We used to have logjams in the pretest area. Now, when we're ready to pretest two patients at the same time, one technician follows the usual testing order, while the other goes in reverse order. This way, neither patient has to wait.
Also, we cross-trained staff. This enabled us to spread out the pretesting workload among several employees to move more patients through the process than before, so they don't have to wait as long as they once did. We analyzed the “touch points,” or key interaction areas, that define a patient's experience in the office. These include the initial phone call, check in, pretesting, exam, optical selection, contact lens training and check out. We determined that limiting each of these interactions to a maximum of 19 minutes is key to running the practice efficiently.
► We staggered appointments and reserved the first appointment block for a contact lens check that doesn't require pretesting or paperwork. As a result of doing this, patient flow is more smooth and consistent than before, putting both staff and patients at ease. In addition, I can now use my time more efficiently, seeing the next patient right away instead of waiting for staff to finish pretesting. And by delegating data gathering to staff, I can spend more of my time interacting with patients. This has built additional rapport with patients and has heightened the quality of care we provide. Further, getting staff involved in the process from the start not only made their workload easier, but it also increased their efficiency — something else that has resulted in happy, loyal and well-served patients.
Looking at the results of our efforts from a numbers perspective, I'm happy to say that my practice's patient load increased from about 25 patient encounters a day to 40 patient encounters on a busy day — again, without adding space or staff.
Although spectacle sales comprise a significant share of an Optometrie practice's profit, the Vistakon marketing research program reveals that when you take insurance adjustments, cost of goods and the frequency of patient visits and purchases into account, a combination of both spectacle and contact lens sales are more profitable for a practice than either a glasses-only or a contact lens-only sale. Given this information and the fact that fitting in more contact lens fittings and insertion/removal training is possible in one's current practice, isn't it time you started focusing on combination sales? OM
Take Home Pearls|
■ Think about your patient base differently. Revenue does not equal profit.
■ View profit in terms of amount per patient per year (not one transaction), and look at this data through several years for an even greater profit picture.
■ Analyze your financial data to understand the factors that drive practice profit (insurance deductions, contact lens fitting fees, profit through time, etc).
■ Examine the ways in which you corrected your patients' vision and the associated profit as a critical way to analyze your business.
■ Streamline your patient flow processes to create the needed capacity to always present glasses and contact lenses.
||Dr. Pullen is in private practice in Jacksonville, Fla. He is a paid consultant for Vistakon and has done some consulting work for Allergan, Inc. as well. E-mail him at firstname.lastname@example.org.
Optometric Management, Issue: September 2009