Should You Accept That Vision Plan? Three Big Questions for You.
February 25, 2015
I realize that vision plans can be a hot topic among optometrists, so it is fairly bold of me to decide to tackle the topic. Many optometrists advise their colleagues to not accept vision plans, and yet the leading plans have provider networks with over 30,000 doctors, so clearly some of these doctors do not follow their own advice.
We simply can’t make blanket statements about what is right for all practices. Each doctor, each practice and each market area is unique and we must analyze them one at a time. There are many factors to consider when making the decision to become a provider for a vision plan, and I’ll cover more of them in future articles, but for now I want you to consider three key questions:
1. Do you want a large practice?
This question is not as easy as it first seems. Not every optometrist wants to have a large practice with a large staff, large office facility and high gross revenues. A smaller practice could provide a very good personal income. A smaller practice could offer more specialized care and could be more private pay based. This type of practice could have a higher net income as a percentage of gross. It is by design, however, a practice that revolves around and depends heavily on the practice owner.
But don’t overlook the benefits of a large practice either. It can be a joy to practice with a large staff, an office manager, multiple doctors, plenty of office space, all the advanced instruments and enough cash flow so you can ignore the small stuff that might otherwise stress you out. The large practice usually generates more net income in dollars.
If you want a large practice, I think you should accept most vision plans. There are definitely strategies to increase your profitability with vision plans and you should work on that. There are always exceptions and special circumstances, but most large optometric practices accept most vision plans. Large practices need high patient volume and that is very hard to achieve, without accepting vision plans. You need access to large numbers of patients and many of them will need medical eye care, premium eyeglasses, multiple pairs of eyeglasses, contact lenses and many more eye care services and products.
2. Do you have an associate or do you plan to hire one?
If you have an associate doctor (let’s say he/she is full time and is paid a typical salary plus a benefit package), you may find that you feel differently about accepting vision plans. This is actually a great way to force yourself to look at vision plans in a purely business-like way, without the emotion of judging if your personal time is worth a lower profit margin. When you have an employed doctor drawing a salary and if her schedule is not full, you may decide that having him see a vision plan patient is better than seeing no patient at all.
Hiring an associate OD is one of the best practice management strategies there is, but it takes a lot of patient demand to make it work. Usually, vision plans are necessary to create that patient demand. The best way to ensure that the new associate generates enough revenue to cover his/her compensation and produces additional profit for the owner is to have a strong backlog of patients. Of course, before hiring a doctor, it is smart to hire more technicians and other staff to allow the first doctor to practice efficiently. This is a great formula for success, but it requires a lot of patients.
I believe that practices need to work on all the traditional methods of building patient demand including all aspects of marketing, cultivating word-of-mouth referrals and strong recall methods. But even with all those efforts, I see many practices that are not busy enough. Vision plans can bring a large number of patients to the practice; I view them as another form of marketing.
3. How full is your appointment schedule?
This question is extremely important as you assess if a specific vision plan would be good for your practice. Before you can answer the question, we must define how full the schedule should be. A doctor who sees 10 exams per day may conclude that his schedule is full because all the slots are filled. I would argue that he needs way more slots. At least twice as many slots and if he had that, his schedule would be far from full.
Preappointing can be an excellent recall system, but it can delude the practice owner into thinking his schedule is full when it really isn’t. What really matters is how many patients were actually seen if we look backwards. The schedule may look full in the weeks ahead, but if a high no show rate and frequent rescheduling at the last minute makes production low, then the schedule is not really that full. A very full schedule is one where the staff has problems finding room for new patients who call or for patients who need to return for follow-up.
If your schedule is truly full I would say congratulations and let’s hire an associate and get his schedule truly full too. If you already have a busy associate, then I’d say you may want to drop some of the lower profit vision plans because you have so much patient volume that you can be selective.
The truth is that all vision plans are profitable if you have open appointment slots. If you have openings, there is no cost to seeing the additional patients that the vision plan would bring. You already have an office, equipment, staff and a frame inventory. You’re already paying for those things even if your exam chair sits empty. Every vision plan pays something, even after considering the cost of goods. You could argue that you would rather play golf or be with your family and that is very valid, but that is making it personal. That argument applies well to the smaller practice, but not to one that is going to hire an associate.
More next week on vision plans and how to determine what fees they actually pay.