Article Date: 9/1/2001

Capture Rate
Turning Your Revenue Around
A simple practice analysis revealed that this doctor was losing a considerable amount of contact lens and spectacle prescriptions. Find out how he solved this problem.
BY DEEPAK GUPTA, O.D., Stamford, Conn. 

Do you have any idea how many contact lens and spectacle prescriptions you're losing to mail-order companies? I didn't until I performed my own practice analysis and was unpleasantly surprised at what it revealed.

After performing a simple evaluation of my contact lens and spectacle prescription sales, I found that I was losing 31% of my contact lens prescriptions and 45% of my spectacle prescriptions to outside sources. At this point, I knew I had to take quick action. I'll share with you what I did to remedy the situation.

ILLUSTRATION BY LAEL HENDERSON

Taking action

Understanding that losing a prescription means losing revenue, I decided to analyze how many contact lens and spectacle prescriptions I was losing to the competition. I made several changes in the way I practice based on the results of my analysis and in doing so, increased patient satisfaction and revenue for my practice.

Tracking contact lens sales

I personally order and receive all of the contact lenses in my practice. So I proceeded a little differently one month to track what was happening with contact lenses. Any time I wrote a prescription for contact lenses, I noted it on a daily log sheet. I also documented any time a patient purchased contact lenses or called for a copy of his contact lens prescription.

I also broke the contact lens prescriptions into the following categories so I could evaluate differences among them:

If you don't do the ordering in your office, make a copy of your patient schedule and every time you prescribe contact lenses for a patient, highlight his name. At the end of the day or week, have the person who orders the lenses go through the list and note who ordered and who didn't.

Have that same person also send copies of contact lens prescriptions when patients request them. That way, your staff member can document lost prescriptions. If possible, have this staffer call these patients and ask them why they're making their purchases elsewhere.

Revealing the numbers

Looking at the five categories, I was losing about 42% of the soft, planned replacement fits; 30% of torics; 25% of bifocals; 10% of RGPs; and 0% of the medically indicated (keratoconus and aphakia) lens fits.

When I received phone calls from discount chains requesting a verification of a patient's prescription, I'd call that patient and ask her why she chose not to get her prescription filled at the office. The two main reasons were convenience (patients didn't want to come back to the office to pick up their lenses) and cost.

Recapturing sales

To improve the numbers for contact lenses, I decided to find out about local competition and what they charge for contact lenses. I shopped the Internet and the 1-800 distributors once a month or so to get a feel for what they were charging.

Even if you decide not to be the "cheapest guy in town," be aware of what your competition is doing. Regardless of the area and demographics of your patient base, money is always a consideration for patients.

The two biggest ways I've found to increase patient retention in contact lens orders are directly shipping to the patient and offering discounted prices for a year's supply of lenses.

Direct shipping. Many patients don't want the hassle of returning to the office to pick up their contact lenses. In most cases, direct shipping represents no additional cost to you. As long as your patient orders a 6-month or a year's supply of lenses, most companies will ship directly to her free of charge. It costs you anything, and you actually save money in terms of soft dollars because you don't have to check the lenses when they arrive or call the patient to pick them up. Plus, because you're shipping directly the patient will pay for the lenses in advance, which always helps decrease accounts receivable.

Discounted prices. When you offer a discount on the yearly purchase, you'll find that more patients actually purchase a year's supply, which has many fringe benefits. You'll make less per box, but you'll compensate for that in increased volume.

Plus, if a patient has enough lenses to last a year, he has no reason to price-shop in 3 or 6 months. And, when he starts to run out of lenses he'll also know that it's time for a new exam, so it serves as a recall notice as well.

Helpful advice

Don't shy away from more challenging fits. The straight spherical fits are often easier, but these patients also tend to be less loyal. Whether it's toric soft planned replacement lenses, bifocal contact lenses or rigid gas permeables, fit all modalities of lenses that you're comfortable with fitting. You probably won't be surprised to hear that my analysis showed me that the more complicated the prescription and fit, the higher the retention for contact lens purchases.

Tracking spectacle sales

In terms of spectacles, I wanted to see not only how many prescriptions I was losing, but also where they were going. To do this, I kept a copy of the schedule on my desk. Any time I wrote a spectacle prescription, I highlighted that patient (in a different color than contact lens prescriptions), and at the end of the day I went to our optical and found out how many of those patients actually purchased spectacles. I also gave the optician a copy of my schedule so she could highlight patients who purchased spectacles.

To keep the numbers real, whenever I wrote a prescription for spectacles during an exam, I asked the patient if he was interested in purchasing spectacles. If there wasn't a significant change in the prescription and the patient said he wasn't interested in purchasing new spectacles, then I didn't include him in the numbers because theoretically he wasn't lost to competition.

Revealing the numbers

When I reviewed the results from my analysis of patient purchases for spectacles, I was shocked to learn we'd lost 45% of prescriptions. As with the contact lens patients, I called those who didn't purchase their spectacles at our optical and asked them their reasons. Among the main reasons for not purchasing spectacles through our optical shop were cost (45%), lack of 1-hour service (35%) and frame selection (15%).

Recapturing spectacle sales

Here's a breakdown of the factors and what I did to combat each of them:

Cost. I changed our frame selection to incorporate a wider range of prices. While it's nice to sell only high-end frames for greater profitability, I reasoned that I must have some less-expensive frames available for patients who are price conscious because I make zero profit on a patient who purchases spectacles elsewhere. I may only make $35 on a cheaper frame and $50 on the lenses, but that's still $85 more profit than if the patient took his business elsewhere.

Another way to counter some of the discounters is to offer multiple-pair packages. The key to deciding exactly what package to offer depends on your current profit ratio. I've used the "Buy-1-Get-1-Free" and "$50 off the second pair of spectacles" offers. When giving the second pair for a discounted price or even free, the key is to have your optician sell ad-ons, such as tint, UV, scratch coating, etc.

The other special that I've had great success with is offering a premium product, such as anti-reflective coating, for free on the second pair. Just make sure that the profit on basic spectacles (which the customer must purchase) offsets the added expense of the premium feature.

1-hour service. We had an edger in the lab that we weren't using, so I had a lab consultant train the optician to use it. Then we stocked some of the basic single-vision lenses (± 4.00 plus 1.50D of cylinder) so we could offer 1-hour (or same day) service to patients who needed and wanted it. The in-office edger sped up our time for getting bifocals and other specialty lenses to our patients.

As an added bonus, we get a discount because we purchase the single-vision lenses in bulk, so our profit margin on the lenses has increased. Our costs have also decreased because we don't have to pay the extra $5 for another lab to do the edging.

If an employee is unhappy about having to do more work, offer an incentive. For every job edged, give her $2. That'll make both of you happy because you're still saving $3 on each job.

Providing 1-hour service also helps your accounts receivable because the entire transaction is completed that day. Typically, without 1-hour service you get 50% at the time the patient places the order and the remaining 50% weeks later when she comes to pick it up. Considering the costs of edgers, you generally have to edge about six pairs of spectacles a day to break even. Anything more is profit, but if you average less, this may not be a good option for you.

Selection. This is often a tricky subject because you want enough selection for patients to have an adequate choice, but not so many that you carry more inventory than you need. I had sales reps for each account bring a list of the top-10 best selling frames nationally and in the region, and I made sure that we had one of each of those frames.

Talk and browse

Retention of spectacle prescriptions begins with us. Here are some other considerations for retaining these sales in our offices. It's not enough to hand the patient a prescription and say, "We have an optical dispensary here where you can get that filled." If you take an extra 60 seconds and discuss some services, you'll increase retention and your patients will learn about more beneficial options for their spectacles.

For example, for a bifocal prescription, briefly mention progressive lenses to the patient to introduce the product. Write, "Discuss progressive lenses" on your prescription form so the optician will know that you mentioned a specific product, and she can follow-up with a more elaborate discussion. Other popular features that you should routinely mention to patients, depending on the prescription, are polycarbonate/ hi-index lenses and anti-reflective coating.

The other major way to increase spectacle sales is to have the patient start looking at frames while her eyes are dilating. Many people will start browsing, and if they do, they might find something they like. Although some patients will purchase spectacles after being dilated, many of them won't be able to see themselves so they'll "come back later." Once that patient walks out of the door, it's difficult to get her back.

Even if your patient doesn't make a purchase, you've introduced the dispensary to her. When I'm ready to see a patient for the dilated exam, I ask her if she purchased spectacles. If she says no, I ask her why. It's an easy way for me to make sure that we keep adjusting our dispensary to our patients' needs.

Rewarding research

Analyses like the one I did of my prescription purchases are often time-consuming, but they're well worth it. In my own office, I saw contact lens purchases increase from 69% to 85% in 1 month. My spectacle retention rate went from 50% to 75%. These increases resulted in a year-end $15,000 net profit for the practice.

If your patients are going elsewhere to get their contact lens and spectacle prescriptions filled, you can do something about it. Take a closer look at purchases in your office, do a little external investigating and make some changes in your practice.

Dr. Gupta works for Stamford Ophthalmology in Stamford, Conn., where he practices full-scope optometry. He also supervises the contact lens department and the optical shop. You can reach him at deegup4919@hotmail.com.

 



Optometric Management, Issue: September 2001