Keeping Up Your Profits
Material fees aren't the only source of profit. Learn about some others.
Richard S. Kattouf, O.D.
Q I've been in corporate optometry for 20 years and have always derived my income from professional fees and contact lens collections. Now the corporation will collect the material lens fees in the optical department, reducing my income. What are my options?
Dr. T. L. Wyand, via e-mail
A: What you're experiencing is affecting the entire ophthalmic profession. Price advertising and phone-order companies have created an erosion of the contact lens patient when it comes to standard lenses. To prevent patients from buying lenses outside your office, set your material fees to be competitive with the phone-order companies. This equates into low or no profit on the materials, so raise the professional fees and add more services. The fact that you're losing the material income won't hurt your income. Just follow the example below to increase your gross and net income.
The call comes in
Dr. Spensor called me with income issues. Through our interview process and by studying his financial statements for the last five years, I noticed a decrease in his contact lens income. In studying his records, I noted that lens fits were on the decline and re-orders were almost non-existent.
When I evaluated Dr. his fees, I found that he was charging less than $50 in professional service fees for a new lens fit and $30 more on standard soft lens materials than the phone-order companies.
I showed Dr. Spensor how to develop a fee structure for materials at a break-even point by decreasing his lens cost to the patient by $30. We also designed a series of professional packages with different perks. We gave the patient a choice of packages with the lowest professional fee being $30 more than his former charge. Here are some additional services you could provide:
- Free replacement lenses if a patient opens a damaged lens;
- Mail lenses to patients at a lesser cost than the telephone-order companies;
- Contact lens solutions at reduced fees;
- Packages offering varying lengths of follow-up care and number of no-charge contact lens emergency visits;
- Reduced-rate plano sunwear;
- Prescription eyewear at a defined savings.
The concept is simple -- raise professional fees by combining more services similar to the contact lens maintenance philosophy of years past. If you're looking to make a profit on standard lenses, you'll lose income and patients.
I also showed Dr. Spensor and his staff how to add the specialty of corneal refractive therapy (orthokeratology). This developed a new profit center with high professional service fees and provided a great service to his patient base. After all that I'd taught Dr. Spensor, his gross income increased by $100,000 in one year and his net income went from 26% to 33% in one year.
It's time to take control
Dr. Wyand, make your profit through your time, skill, knowledge and risk. So let the optical side take the materials -- you concentrate on the service sector.
Doctors, learn to be creative. Don't allow the competition to beat you. Be an innovator, use your imagination, push out and make things happen.
DR. KATTOUF IS PRESIDENT AND FOUNDER OF TWO MANAGEMENT AND CONSULTING COMPANIES. FOR INFORMATION, CALL (800) 745-EYES OR E-MAIL HIM AT ADVANCEDEYECARE@HOTMAIL.COM. THE INFORMATION IN THIS COLUMN IS BASED ON ACTUAL CONSULTING FILES.