... or a solid credit score and a need for new technology? Here's how to
know what to buy and when to buy it.
By Gil Weber, M.B.A.
the owner, or perhaps co-owner, of a private practice. The lanes are fully equipped,
and your patient load is comfortable. Life is good.
But the constant deluge of promotional
materials for new equipment creates uncertainty. You wonder if you have all the
tools you need to offer the best care and still compete with nearby practices and
This question begets more questions.
Do you need all the latest technology to be competitive? Do you need some of it
to survive? Can you afford any of it in today's world of decreasing Medicare and
managed care reimbursements?
You need a plan to analyze when it's
prudent to make purchase decisions. Without a plan, you risk spending money on technology
that may have little or limited use and may not provide a good return on investment
Here are some suggestions to help you
decide what to buy and when to buy it.
Sometimes It's a No-brainer
Every once in a while, deciding whether or not
to buy an instrument is easy, such as when you plan to deliver a new service. In
this case, nothing short of an upgraded tool is acceptable for proper patient care,
and you must spend the dollars.
For example, in years past, a simple
millimeter ruler costing less than a dollar was sufficient for measuring pupillary
distance (PD) in the optical dispensary. Then, along came progressive lenses requiring
monocular PD measurements at the visual axis. Without a new tool, the corneal reflex
pupillometer, it was virtually impossible to fit progressive lenses properly. To
successfully dispense the new lens technology and benefit from the higher revenues
and profits of premium lenses, updating your dispensary equipment was mandatory.
Sometimes, however, the decision
isn't so simple and clear-cut.
One of the best times to invest in new, improved
technology is when it will reduce the cost of doing business. Such a purchase might
be a cost-effective alternative to adding more staff.
Practices typically delegate work-up
or pre-testing tasks to technicians, reserving the more technically challenging
tasks, such as applanation tonometry or retraction, to the most skilled technicians.
But it makes little sense for your highly skilled, highly paid technicians do work-up
tasks that clearly don't require their expertise, especially if the right equipment
is available. This is an area where you might justify the purchase of an autorefractor
or an autokeratometer or both.
In this situation, the decision process
becomes an accounting exercise whereby you measure what you'll spend to buy
or lease the equipment against your staff costs, and then consider the additional
revenue you could accrue by seeing more patients each day.
Increase Standard of Care
Although cost is always a factor, you know it's
time to buy new technology when it clearly will increase the standard of care in
your practice. One good example is the improvement in glaucoma care brought about
by optical coherence tomography and retinal nerve fiber analyzers. Pachymetry is
no longer an
optional investment in many practices.
Of course, manufacturers introduce
new technologies every month, all of which promise "newer and better" performance.
But sometimes, a new instrument clearly advances the standard of care. In those
instances, you should look into the feasibility of the acquisition.
Buying Just Enough
It's easy to get caught up in the hype of advertising
or anecdotal evidence supporting new technology. For example, a compelling sales
pitch (especially when accompanied by favorable pricing), may tempt you to buy workstations
for several locations in the front and back offices.
Upon reflection, however, you'd probably
realize that full-blown workstations at every location would be overkill and that
you could save money by forgoing all the bells and whistles. Simple "thin clients,"
which are stripped-down workstations consisting of nothing more than a monitor and
a keyboard, would be the more cost-effective choice.
In most practices, computer terminals
can and should be fed from central servers on which all programs are loaded and
onto which all data are saved. In such a set-up, there really is no reason for each
workstation to have a hard drive or a CD/DVD player/burner, or even a floppy disk
As a bonus, by not having CD/DVD and
floppy drives at each station, you're taking an important, money-saving step to
protect against the unauthorized downloading of potentially infected software or
data, or the removal of private financial data and patient records.
When It Just Makes Sense
Occasionally, you know it's right to purchase
new technology or tools simply "because." Even if older technology works well and
meets expectations, situations arise where the immediate benefits of the latest
and greatest are obvious. Digital photography is one example.
Digital photography eliminates the
cost of film, developing and printing, as well as time spent waiting for photos
to come back from the lab. If you currently process photos in-house, digital photography
will save equipment and staff costs as well as space.
When digital photography can help you
avoid all these in-house or outsourced expenses and provide instantaneous results,
isn't it the right time to move up? The money you save on film and processing can
offset the cost of a good quality digital camera and color printer. Immediate access
to electronic images (which, by the way, are easily shared with other practitioners),
also improves quality of care.
When Not to Invest
"This instrument is a great investment. You can
bill insurance for the service and recover the cost in just (fill in the blank)
years." Ask your senior colleagues how many times they've heard this pitch.
Before investing in capital equipment
or non-enforced physical plant improvements, it's essential to analyze the potential
ROI. How long will it take to recover the purchase price, and how long before the
investment actually increases profitability?
If you think you can recover the cost
of new technology by billing insurance, do some research before you buy. Confirm
that patients' insurance companies will pay for the new service. How many patients
whose insurance won't pay for the service can you reasonably assume will pay out
of pocket? Over the years, I've heard about quite a few practices that had a nasty
surprise when they invested in new equipment, only to learn some insurance companies
wouldn't pay for the service.
Eyecare practitioners across the country
experienced years of frustration over Aetna's refusal to pay for CPT 92135 (scanning
computerized ophthalmic diagnostic imaging [SCODI]). Although other insurance plans
routinely paid for this service, Aetna deemed it "experimental" or "investigational."
In areas where Aetna was the dominant third-party payer, insurance reimbursement
for a considerable patient population was not available to pay down the cost of
the equipment. In some instances, insurance companies informed doctors that they
could not bill patients for SCODI, even though the payer deemed the service non-covered.
Ask Yourself This
When do you know it's time to invest in new technology,
tools and toys? When you've identified a real (not perceived) need, when you've
done the requisite research into potential ROI and when you've confirmed that "potential"
has a real chance of becoming actuality. Ask yourself:
Why do I think we need this instrument?
What will this instrument do that we can't do now?
Will insurance companies cover this service and will some
noncovered patients pay out-of-pocket?
Do I really new equipment to do my job right?
Will a current, problematic situation continue to deteriorate
if I don't invest in capital equipment or improvements?
Few O.D.s can afford to buy equipment or upgrade
their physical plant because they hope "things may work out." In today's world of
decreasing reimbursement and increased practice costs, you must be as certain as
possible before spending your hard-earned dollars.
But when, in the final analysis, investing
in your practice makes sense, by all means, move forward.
a contributing editor to Optometric Management, is a nationally recognized author,
lecturer and practice management consultant to practitioners and the managed care
and ophthalmic industries. He has served as director of managed care for the American
Academy of Ophthalmology. You can reach him at (954) 915-6771,
or at www.gilweber.com.
Optometric Management, Issue: April 2006