in the hearts of many O.D.s is a perception that spectacles are more profitable
than contact lenses. This perception is so entrenched that in 2001, The European
Federation of National Associations for Contact Lens Manufacturers (Euromcontact),
asked Mark Ritson, Ph.D., of Melbourne, Australia, to conduct a study to determine
if it was accurate. He found that the wide-spread perception was really a misperception:
Across the average lifetime value of a patient, contact lenses are the more profitable
revenue stream. But, to realize this in your practice, you may have to make some
Just the facts
Dr. Ritson and a team from the London Business School surveyed
220 practitioners in five European countries over six months. Euromcontact had
found that many practitioners were reluctant to offer or promote contact lenses.
To get to the truth of the matter, Dr. Ritson examined the costs associated with
both contact lens and spectacle patients as well as the "lifetime value" of each
that is, how much they spend, how often and for how long over 10 years. Revenues
for each group were derived from costs-of-goods sold plus labor costs.
He found that spectacles are more profitable only if you compare
the first transaction of a spectacle vs. contact lens wearer. Looking at the lifetime
value, it was clear that contact lens wearers are the more profitable group
60% more profitable. Part of the reason is that most contact lens wearers also purchase
a pair of back-up glasses.
Assuming practices charge appropriate fees, contact lens patients
should generate more profit because they visit the practice more frequently than
spectacle wearers. According to optometrist Pete Van Hoven, of Brentwood, Tenn.,
the typical spectacle wearer visits every two to two and a half years and spends
approximately $350-$650 for an exam and a pair of glasses. Contact lens patients,
on the other hand, come in an average of one to four times a year. "In our practice,
during the same time frame, a patient wearing a premium two-week disposable lens
generates at least $1,200 in revenue (minimum of $340 in exam and fitting fees,
$560 for contacts during the period, $200 in back-up spectacles and $100 in sunglasses),"
Dr. Van Hoven says. In addition to the fee for the visit, "Consider the opportunity
created with each visit for selling solutions, etc."
Yet Dr. Ritson's findings may come as a surprise to many. John
Rumpakis, O.D., M.B.A., of Lake Oswego, Ore., points out that contact lens revenue
has been declining for the last 10 years. The reason, he claims, is optometry's
response to the commoditization of contact lenses. "O.D.s have for years put the
vast majority of their profit margin in the product itself," he says. "The reality
is that the profit margin has pretty much been eliminated" from material sales.
Thus the profitability of contacts lenses has declined because there's been no commensurate
increase in professional fees.
He believes that optometrists should charge fitting and follow-up
fees that reflect your expertise. "Patients have no problem paying the doctor for
service," Dr. Rumpakis says, whereas "They'll shop around for the lowest-priced
Charge what you're worth
Dr. Ritson advocates taking a patient-driven approach rather than
a product-driven one (look at the products as solutions to the patient's needs).
Dr. James C. Lanier, of Jacksonville, Fla., says that the proper
fee schedule is crucial. He charges patients for a contact lens evaluation, in addition
to a comprehensive annual exam. The fee varies depending on the patient's needs
and the type of fitting if it's a refitting for a new type of lens, for example,
the cost would be higher. Contact lens prescriptions expire every 12 months or less,
so the patient must return for an exam and evaluation.
Charging for follow-up visits is frequently a sticky issue because
for many years, doctors didn't. Ann Hoscheit, O.D., of Gastonia, N.C., says that
in this instance, the medical model serves O.D.s well. "If you go to your primary
care doctor for a sinus infection, but it doesn't go away, or recurs, what happens?"
she asks. "You go back for a follow-up visit and you're charged for that plus the
Getting the most out of CLs
While most contact lens patients see the value of a pair of back-up
glasses on their own, Dr. Lanier adds that the professional recommendation is helpful.
"When I get through with an exam and summarize my findings, I tell the patient I
recommend contacts for X-Y-Z reasons, but my secondary recommendation is always
for a backup pair of glasses," he says.
Keeping your patients loyal to your practice helps maximize the
profitability of contact lenses. Dr. Ritson found that while practitioners value
patient loyalty, they didn't put much effort into stimulating it. "It comes down
to communication with the patient," Dr. Rumpakis says. "Patients stay with doctors
who communicate with them." Today's contact lenses help deliver superior vision,
says Christian P. Guier, O.D., of Jacksonville, Fla., and when patients see that
you're on their side regarding their visual needs, they will be loyal .
Dr. Hoscheit points out that contacts are more profitable when
dispensed annually. Manufacturers' rebates are a helpful incentive, she says, so
her practice is utilizing them as part of a strategy to make dispensing an annual
supply of lenses, shipped directly to the patient, the norm. She also uses the prescription
itself to drive home the advantages of filling it with her practice: Diagnostic
or trial lenses are only available to patients who purchase their lenses from her.
It's a sure thing
Contact lens patients may mean a smaller profit margin and more
of your time at that first visit, but they are significantly more profitable over
time. Price your services appropriately and educate patients fully to provide them
the best possible vision and obtain a higher profit margin, too.