Article Date: 2/1/2004

profitability
Finding a Profit in Contact Lens Fitting
You can profit from fitting your patients with contact lenses. Consider this O.D.'s tips.
BY NANCY S. BARR, O.D., F.A.A.O., Atlanta, Ga.

Even though the dust hasn't settled on recent contact lens legislation, it still gives us reason to stop and analyze the profitability of fitting contact lenses in our practices. A spectrum of business models have existed within the contact lens arena for a number of years. Twenty years ago, when contact lens manufacturing still had issues with consistent quality assurance, most practitioners felt compelled to check virtually every lens on the patient's eye to ensure that it fit properly, that the optics were accurate and that it was free of defects. We did this not only for the sake of our patients, but also to help prevent unwarranted product returns that would negatively affect our bottom line.

ILLUSTRATION BY ERIC LINDLEY

Unit cost of contact lenses was also much higher 20 years ago (compared to conventional lenses today), and most of us charged premium prices for these lenses. The high markup allowed us to cover ourselves for damaged lenses that unhappy patients returned well beyond the scope of "manufacturing defects." Inexpensive service agreements were a popular way to cover our professional time involved in these dispensing and problem-solving contact lens visits.

Some heretical practice management experts condemned us for "giving away our services" and encouraged us to price the lenses in a reasonable fashion, earning more of our professional income on professional fees. Most of us ignored the heretics.

A change for the better

With the advent of manufacturing methods that enabled accurate, inexpensive, reproducible disposable lenses, the old way of doing business deteriorated. Suddenly, contact lenses were cheap; A patient could buy a pair of lenses for less than $10 -- as much as 90% less than he paid previously!

Of course, patients were buying into a program of frequent replacement, buying 24 pairs each year instead of only one. Patients were actually spending more on an annual basis for their contact lenses, but they were happy because they had fresh, clean, comfortable lenses without all of the cleaning encumbrances of their conventional lenses. The manufacturers of the disposable lenses were also happy, as they work on a high-volume/low-margin philosophy. But what about the doctors?

Through an O.D.'s eyes

Many of us started out marking up the disposable contact lenses the same way we had priced the conventional contact lenses. However, market forces soon dictated a drop in price, with further price erosion following. Our service agreements no longer made much sense, as many of the formerly common reasons for visits (e.g., damaged and defective lenses) disappeared. Instead of contact lenses being expensive healthcare devices, they became inexpensive commodities. Soon, practitioners were selling their services and their lenses on a low-volume/ low-margin basis -- a recipe for certain failure.

Where are those heretics when you need them? They're still telling us, among other things, to charge a professional fee that's commensurate with our level of care and the services that we render. Basically, the same thing your dentist, orthodontist, internist, C.P.A. and attorney all do. Put most of your efforts into earning your fees professionally instead of on low-margin materials.

A straightforward annual "well visit" with an established contact lens patient merits a basic fee for the additional attention you render during the contact lens portion of the examination. A more complex case -- for example, a patient wearing frequent replacement custom torics of high cylinder -- warrants a higher fee, even if his spectacle refraction hasn't changed (we've all simply renewed a prescription that for some reason doesn't satisfy the second time around).

Level Your Professional Fitting Fees

Level 1 straightforward spherical fit

Level 2 more complex spherical fit (monovision)

Level 3 straightforward astigmatic fit

Level 4 straightforward GP fit

Level 5 disposable bifocal fit

Level 6 custom or monovision astigmatic fit

Level 7 GP bifocal/custom GP

Level 8 complex/post-surgical fit (reverse geometry, cones, post-grafts)

Fussing with fees

In reviewing and modifying your contact lens professional fees, consider mimicking the relative-value scale used in evaluation and management (E&M) billing and coding. You still use time guidelines, but face-to-face time with the patient is of less importance than the history, complexity and modifying factors of the case. Your contact lens professional fees should follow suit. See "Level Your Professional Fitting Fees" for a list of my categories of contact lens professional fees.

You may want to combine, add or delete fees as you see fit. The incremental difference increases with the higher levels; in other words, the difference between Level 1 and Level 3 may be as low as $25. The difference between Level 6 and Level 8 may be $200. Charge for your know-how as well as the time you spend (remember your attorney and C.P.A. . . .).

Someone has the right idea

A colleague who always seems on the forefront of change (his practice has been paperless for about 10 years) recently told me that he stopped selling soft contact lenses from his practice. Even though the sale of lenses made up a large percentage of his revenue, it was also a large cost of his goods. By eliminating both the inventory of lenses and his 1.5 full-time-equivalent contact lens staff, and raising his contact lens professional fees to a more substantial level, he actually increased his profit.

While his contact lens fees are now considered high by comparison to many practices, his patients have a clear understanding that they're paying for his expertise and guidance -- not for their contact lenses. They're happy to shop the Internet or their local discount warehouse for the lenses themselves. Can we all do this? This O.D. did it in a high-tech, gorgeous office with state-of-the-art equipment and staff. His fees match the ambience of the office. Consider following suit!

One possible complication if you elect to go the route of my colleague: diagnostic contact lens availability. If manufacturers base your diagnostic allotment solely on your revenue sales, then you'll encounter problems obtaining diagnostic contact lenses. I'm confident that the manufacturers are taking steps to address this situation, as it's likely to increase with our changing paradigms.

One step at a time

Perhaps you think ridding your practice of soft lens sales altogether isn't exactly wise. If this is the case, then review and revamp your contact lens professional fees as outlined above, and then review and revamp your product strategy.

If you choose to actually inventory lenses, then only inventory your primary and perhaps secondary lenses. Having a few boxes from every manufacturer ties up money and shelf space. Implement an annual dispense program, which improves cash flow, decreases staff time spent on more frequent one- to two- box purchases, and increases patient compliance.

Implementing an annual dispense in conjunction with direct shipment from the manufacturer maximizes both cash flow and profitability. You receive your money from the patient before the manufacturer bills you for the lenses. Using only direct ship with a smaller margin on the lenses provides a service and value to the patients and keeps them tied in to your practice and professional services.

 

Food for Thought

 

Recently, a new "warehouse club" opened in my area with an optical but no eye doctor. My associate visited the club and asked for referrals to our practice, with the understanding that the patient would return to the warehouse club for their materials (glasses and soft contact lenses). I have fit contact lenses on many of these patients. They pay my professional fee and, once through the fitting process, take their script back to the referring optician. This has turned out as a win-win situation for everyone, as I've had no negative feedback from these patients.

Avoidable frustrations

The new contact lens prescription release law resulted from years of patients being denied their contact lens prescriptions for many reasons (both valid and invalid). I recently had a colleague deny me a patient's GP design parameters when her patient selected me as her new eye doctor. This sort of behavior enrages patients. On the other hand, we've all had patients, as I did recently, who had the same contact lens prescription refilled from another state for nine years without an examination.

Over the years, practitioners have tried to maintain lens sales to patients through a variety of means, including using off-brand or private-label lenses in hopes of tying the patient to the practice. Put yourself in the patient's shoes. Do you want your retailer "tricking" you into shopping with them? I shopped at Large Grocery Chain A for 25 years but switched when it implemented a discount shopping card. (Most people think I'm silly, but why should I have to fill out an ID card to get a better price at the same store I've shopped in for years?) Do unto others as you would have done unto you.

Bottom line: Keep 'em happy

Don't lose a patient over a few boxes of contact lenses. Keep all of your contact lens patients happy by providing them with professional, prompt, courteous service and fair prices on materials that they elect to purchase from you. You can remain profitable by providing professional care at a fair fee.

A heretic, who also happens to be the chief optometric editor of this magazine, once described a fair fee as "one which allows the patient to feel they are receiving more value than they paid for, but is high enough to maintain my interest in the procedure." Charge fees that maintain your interest and provide value to your patients, and watch your contact lens practice prosper.

Dr. Barr is a graduate of the Ohio State University College of Optometry and is a past president of the Georgia Optometric Association. She's currently in private practice.

 

 



Optometric Management, Issue: February 2004