The Growth of Specialty Care in Optometric Practices
Bryan M. Rogoff, OD, MBA, CPHM, FAAO
The forecasts of the optometric industry are extremely bullish as there is a rise in geriatric populations, rise in myopia and dry eye disease, and slowing of supply of eye care providers to meet the future demands of patients. The growing therapeutic options, along with the increasing scope of practice, has allowed optometrists to expand both corporate and private practices to offer more services than 10 - 20 years ago. Instead of referring minor and major ocular medical care, ODs can safely and effectively handle primary, tertiary, and now specialty care in an integrated fashion. The average job growth rate from the Bureau of Labor Statistics is 5% through 2028, while optometry outpaces the average with a projection of 10%.1
After returning from Vision Expo West and attending other national conferences in 2019, the continuing education trends have been focused on dry eye disease, myopia management, medically necessary contact lenses, and minor surgical and ocular disease management. As insurance reimbursement rate continue to diminish, more ODs are starting to expand their services into these areas as additional sources of revenue. However, differentiating the average optometric practice to add these additional services does require strategic planning. Staff development, equipment, non-covered services, and appointment scheduling are just some of the areas that need to be considered when ODs expand to specialty services. Also, small practice owners should conduct demographic market analysis to minimize any loss of current revenue while expanding their revenue models.
With any small business growth, change management is the key to success, besides understanding industry trends. The global dry eye disease market is expected to rise at 12.5% CAGR (Compound Annual Growth Rate) by 2023;2 the global contact lens market has been forecasted to increase 5.6% CAGR through 2025;3 and according to the Brien Holden Vision Institute, myopia prevalence in the US is 42% and continues to rise.4 With about 24 million Americans with cataracts, 2.7 million affected by glaucoma, 9.1 million with early age-related macular degeneration, and 7.7 million Americans with diabetic retinopathy, additional diagnostic and therapeutic equipment are necessary beyond the minimum state requirements to handle these increasing trends.5
The costs of additional diagnostic equipment are a major consideration when expanding into specialty care. One-time costs versus click-per-use, along with financing versus leasing can be confusing when manufacturers are all competing for your business. Traditionally, physicians applied for medical practice loans that allow generous borrowing limits, or considered equipment financing which required a simple down payment with repayment terms that lasted the life of the equipment. ODs can also apply for short-term loans or SBA loans (small business administration loans) with competitive rates but it is customary that the practitioner is established. Lines of credit are also another option if the practice demonstrates positive cash flow or has equity; however, they carry a higher interest rate. But adding long- and short-term liabilities decreases monthly, quarterly and annual cash flow. Additionally, funding has become less available for capital expenditures.
Over the past several years, asset-based financing, or asset-based loans (ABL) has become very popular to provide practices with capital to fund equipment costs and other types of expansion. This method uses collateral from your practice, such as accounts receivable, inventory, real estate, and diagnostic equipment. Essentially, you can secure the loan with the actual equipment you are about to purchase. Because new diagnostic and therapeutic equipment is typically purchased to increase future receivables and cash flow, companies can utilize these future receivables to obtain the capital to fund new equipment and charge the practice a per-usage or click fee for use. Several vendors specialize in this type of lending to get practices to acquire and utilize new diagnostic equipment and emerging technologies, such as telemedicine. One example is Physician Partnered Products where they aid ECPs to acquire dry eye disease therapeutic equipment, in addition to providing business-mentoring programs to increase utilization to maximize receivables.
Bryan M. Rogoff, OD, MBA, CPHM has a unique background in areas of holistic eye care, business management and healthcare reform. He specializes in LEAN clinical management and operations, technology implementation, healthcare strategy, and strategic partnerships. Currently, he serves as a consultant for for the FDA, Immediate Past-President & Education Chairperson for the Maryland Optometric Association, Federal Keyperson and Meetings Committee Member for the American Optometric Association, reviewer for the Council on Optometric Practitioner Education and is the Founder of Eye-Exec Consulting, LLC. To contact Bryan, visit www.eye-exec.com or email email@example.com. He can also be found on LinkedIn, Facebook, Twitter and Instagram.